Burton Kahn v. Helvetia Asset Recovery, Inc. ( 2015 )

ACCEPTED
04-14-00569-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
9/2/2015 11:38:21 PM
KEITH HOTTLE
CLERK
04 -14 -00569- CV
FILED IN
4th COURT OF APPEALS
Jn 'ar:be QCourt 11 U.S. C. § 1509 A foreign Corporation needs to register to
have Direct Access
CONCLUSION ........................................................................... 23
PRAYER ............................................................................................... 24
VERIFICATION ............................................................................ 25
CERTIFICATE OF COMPLIANCE ................................................... 25
CERTIFICATE OF SERVICE .......................................................... 25
APPENDIX ............... ........................ .......................................... 27
EXHIBITS
I.OPINION
2. ORDER AND MOTION OF 2013-CI-17516
3. CROFT'S BANKRU
PT PETITION 11-52905-CAG
4. TRANSCRIPT MOTION TO SELL BANKRUPT CASE 14-50980-CAG
5. EMAILRWWACHSMUTHNOTNOTICED
6. EMAIL OF TRUSTEE THOMAS NO DISTRIBUTION
7. ORDER DENYING MOTION TO DISQUALIFY PUERTO VERDE
LTD. TO MAINTAIN LAWSUIOT IN TEXAS
iv
v
INDEX OF AUTHORITIES
CASES
Abramowitz v. Palmer,
999 F.2d 1274, 1277 (8th Cir. 1993) ...... ... ....... ........... ... ....... ............... 5,6
Arbaugh v. Y & H Corp.,
546 U.S. 500 ...................... ........... ... ....... ........... ... ....... ............... 10
Baumgartner v. Ford Motor Credit Co., Ltd
(W.D.Mo. 7-9-2007) ....................................................................... 5
Fariasantos v. Rosenberg & Associates,
(E.D.Va. 2-27-2015) ............ ... .................. ... .......... ..... ... .......... ..... 18
Freedom Path v. Lerner,
(N.D.Tex. 2-24-2015) ............ ... ....... ........... ... .......... ..... ... .......... ..... 18
Henderson v. Shinseki,
562 U. S.428 .. ............................ ......... ..... ......... ..... ......... .............. .............. ........... 10
In the Matter of CV,
12-10542 (5th Cir. 1-7-2013) ............ ..................... ..................... ... .... 23
In re Condor Ins. Ltd.,
601 F.3d 319, 324 (5th Cir. 2010) ....................................................... 23
In Re C-Power Prods., .Inc,
230 B.R. 800,803 ......................................................................... 16
In re Croft
737 F 3d. 372, 376-77 (5th Cir. 2013)( per curiam) .................................. 14
In Re Dewsnup,
908 F.2d 588 (10th Cir. 1998) ................ ... ...................... ... ... ... ....... 20
IN Re Marshall,
600 F3d. 1037,1047 (9th Cir 2010) ...................................................... 12
Vl
In re Wood,
825 F.2d 90, 97 (5th Cir. 1987) ............ ... .................. ...................... 6,12
Joseph v, Hess Oil V.I. Corp.,
651 F.3d 348, 351 (3d Cir. 2011) .................................................... 22
Latshaw v. Johnston,
167 F.3d 208 (5th Cir. 1999) ........................................................... 18
Northern Pipeline Constr. Co. v. Marathon Pipe Line Co.,
458 U.S. 50 ......................................................................... 8,10,11
Pacor, Inc. v. Higgins,
743 F.2d 984, 994 (3d Cir. 1984) ............. ........ ..................... ............. 6
Race Tires Am., Inc. v. Hoosier Racing Tire Corp ..
614 F.3d 57, 84 (3d Cir. 2010) ...................................................... 23
Scurlock Oil Co. v. Smithwick,
724 S.W.2d 1 (Tex. 1986) ............ ... ....... ........... ... ....... ........ ... ....... 17
Specialty Mills v. Citizens State Bank,
51F.3d770, 773 (8th Cir. 1995).......... ........... ... ....... ........ ... ......... 5,6,16
Stern v Marshall,
131 S.Ct 2594 (2011) ...................... ... ... ... ................................. 6,12
Stern v. Marshall,
01- 02-00114- CV (Tex,App.-Houston[l st Dist.] 7-14-2015) ..................... 12
Tex. Ass'n ofBus. v. Tex. Air Control Ed.,
852 S.W.2d 440, 444-45 (Tex. 1993) ...... .... .. ................ .................... 22
U.S. Home Corporation v. Settlers Crossing
(D.Md. 8-14-2012) ...... ... .......... ........................ ........... ... .......... ...... 22
United States v. Brown,
509F.Supp.2d 1239, 1246 (M.D. Fla. 2007) ............................................. 19
United States v. Cox,
Vll
575F.3d352, 356 (4th Cir. 2009) ....... ........ ... ...................... ........ ... ....... 19
United States v. Reckmever:i
836 F .2d200, 208 (4th Cir. 1987) ... ... ....... ........ ... ................................ 19
USA v. Real Property, Located at 246 Main Street,
Dansville, Livingston Co., NY
(M.D.Fla. 7-13-2015) .................................................................... 19
STATUTES
Article III of the Constitution of the United States ..................... .4,10.11,12,17
Bankruptcy Act of 1978 ....... ........ ..................... ..................... ......... 11
Fourteenth Amendment to the Constitution of the United States ..................... 17
11 U.S.C. § 363 .... ... ... ... ................................ .... ... .. ................... 19
l lU.S.C. § 544 ......... .... ... ... .. ............................... ... ............... 17, 20
11 U. S.C. § 1509 .................................................................... 17, 21
21 U.S.C. § 853 ........................... .... ... ... .................................. 9, 17
28 U.S.C. § 157 ... ... .......... ........ ..................... ... ........ 5,6,7,8,9,10,11, 14
RULES
Federal Rule of Evidence 701. ........................................................... 18
Tx. R. APP. P. 8.2 .... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ..................... 15
vm
To The Honorable Fourth Court of Appeals:
Burton Kahn (Kahn") ("Appellant") files this Motion For Rehearing and
Reinstatement in accordance with Tex.R.App.P. 49. land in support would show the
Court as follows:
I·
'
INTRODUCTION
Appellant, Kahn seeks the panel to review of the opinion in this case issued
on August 19, 2015. The panel that rendered judgment in this case consisted of
Marialyn Barnard, Justice, Patricia 0. Alvarez, Justice and Jason Pulliam, Justice.
The opinion was authored by the Honorable Marialyn Barnard , Justice. A copy
of the opinion is attached as Exhibit 1.
RESPONSE TO BACKGROUND
1. Kahn was the president, secretary, and sole director ofHelvetia from
October 2009 until he was terminated in August 2013.
Kahn was never terminated because he never worked for Robert Ripley
nor did he have any contract with Robert Ripley. Kahn was the one third owner
of the Corporation named Joabert Development Company. (5RR 343-345)
2. Upon discovering what Kahn was doing, Helvetiafi"led suit to set aside
the deeds. The trial court ordered the deeds set aside and thereafter, on
November 4, 2013,
Puerto Verde Ltd. in the name of Helvetia filed suit.
1
3. The trial court granted the ex parte order based on documents filed by
Kahn, who claimed to be acting as president and authorized representative of
Helvetia.
Kahn was the president and or visit authorized representative of Helvetia as
per the Secretary of State. (Except for period September 27, 2013 to October 4,
2013) (5RR131-136, 213) The ex parte order .(5RR 160-161) is a ministerial act
and does not make any findings as to any underlying claims of the parties.
4. Kahn failed to disclose, however, that in the prior litigation filed by
Helvetia in October 2013, another trial court had declared as fraudulent the deeds
Kahn transferred to Paradiv, determining Kahn had no authority to act on behalf
ofHelvetia.
There is no evidence that Kahn' s attorney Jay Petterson what conversations
had with Judge Gabriel and the finding was purely a ministerial act and it would
not of have made any difference.
The court does not declare as fraudulent the deeds. Order of 2013-CI- l 7 516
Exhibit 2 ((Appellate case 04-14-00357CV) (5RR 128-139) states: that the deeds
are not created by implied or express consent or agreement of the obligor debtor or
owner of the real property or by implied or express consent or agreement of an
agent to insure rather represented of that person it does state that the Court does not
grant parity any interest in the property. The Court states that it makes no finding
2
as to any underlying claims of the parties involved and expressly limits its finding
of fact and law of a ministerial act.
Kahn formed Paradiv to prevent Robert Ripley a non-owner of Joabert to
prevent a takeover of Robert Ripley. The funds that Paradiv would receive would
go to Helvetia.
5. After an evidentiary hearing in December 2013, the trial court overturned
its prior order, finding Kahn made false claims in order to secure the prior order.
The hearing of December 9 through 11 was a temporary injunction hearing
not evidentiary hearing. The Supplement Temporary Injunction Order (5RR322-
330) on page 333 only that it is probable that Kahn the made false claims not
finding.
6. After another evidentiary hearing, the trial court imposed sanctions
against Kahn. The trial court found, among other things, that Kahn did not own
Helvetia or its stock.
There was no evidentiary hearing it was a sanction hearing. The Court stated
that she would not hear any evidence in regarding ownership The Final Judgment
And Sanction Order ("Sanction Order") (5RR255-284) never states specifically
that Kahn did not own the shares of Helvetia only applies dicta.
7. Rather, the trial court determined the sole owner ofHelvetia is Puerto
Verde, Ltd. (''Puerto Verde''), which is owned by Robert Ripley.
3
The sanction order never specifically states that the sole owner of Helvetia is
Puerto Verde. The finding implies that the self serving handwritten note on an e-
mail address to Kahn was the document proving ownership. The Sanction Order
neglects to say that the document does not mention Helvetia only Holdco and that
the document was not presented at the ex parte motion of case 2003-CI-17516
(5RR 347-371) as proof of ownership and the document was not known to Robert
Ripley and the Bank Trust Officer as late as 2008.(SRR 18)
8. Kahn raises numerous issues challenging the trial court's judgment.
In response, Helvetia contends, among other things, that this court must
dismiss Kahn's appeal because we lack jurisdiction.
The issue that a foreign Corporation not registered to the Secretary of
State cannot maintain a lawsuit in Texas is paramount prior to the bankruptcy
standings and should be addressed by either denying the issue or finding for
Kahn not the foreigner Puerto Verde Ltd. (Bahamian).
ARGUMENTS AND AUTHORITIES
ISSUE 1
The Appellate Court errored when the Court declared that the trustee has exclusive
standing to assert legal claims belonging to the 2013-CI-18355 case ("Defamation
Trial Case") because it was a non-core proceeding, not in the Bankruptcy Court' s
jurisdiction to make a judgment and not was not in accordance with the
Constitution of the United States.
4
On April 4, 2014, while case 2013-CI-18355 suit was pending, but prior
to trial, Kahn filed a voluntary petition for bankruptcy, which immediately
stayed the Defamation Trial Court proceedings. The Bankruptcy Court
conducted a hearing on the lifting the automatic stay for the Defamation Trial
Case on April 28, 2014 and granted the stay. The lifting of the stay
relinquished the Bankruptcy's jurisdiction for the Defamation Trial Case.
Thereafter, the case proceeded to jury trial. The cause of action was not listed
on the bankruptcy schedules because it was purely defensive and that the
Sanction Order purported that the shares were not Kahn's. The petition wass
never reopened to include the Defamation Trial Case verdict. The Defamation
Trial Case is non-core because it was only some what related to PVL's-Helvetia
claim, and the resolution of the Trial case would have no bearing on the
bankruptcy. In Baumgartner v. Ford Motor Credit Co., Lld (W.D.Mo. 7-9-2007)
stated "the district courts shall have original but not exclusive jurisdiction of all
civil proceedings arising under title 11, or arising in or related to cases under title
11." 28 U.S.C. § 1334(b). Thus, "[c]ivil proceedings in a bankruptcy case are
divided into two categories, core proceedings and non-core, related proceedings."
Specialty Mills v. Citizens State Bank, 51 F.3d 770, 773 (8th Cir. 1995);
Abramowitz v. Palmer, 999 F.2d 1274, 1277 (8th Cir. 1993). A non-exhaustive list
of "core proceedings" is enumerated at 28 U.S.C. § 157(b)(2). In general, "core
5
proceedings" are "those which arise only in bankruptcy or involve a right created
by federal bankruptcy law." Specialty Mills, 51 F.3d at 773 (citing In re Wood, 825
F.2d 90, 97 (5th Cir. 1987); see also 28 U.S.C. § 157(b)(2). By contrast, "[n]on-
core, related proceedings are those which do not invoke a substantive right created
by federal bankruptcy law and could exist outside of a bankruptcy, although they
may be related to a bankruptcy." Specialty Mills, 51 F.3d at 773-74. In determining
whether a case falls into the latter category, the Eighth Circuit has adopted the
"conceivable effect" test developed by the Third Circuit in Pacor, Inc. v. Higgins,
743 F.2d 984, 994 (3d Cir. 1984): The test for determining whether a civil
proceeding is related to bankruptcy is whether the outcome of that proceeding
could conceivably have any effect on the estate being administered in the
bankruptcy.... An action is related to bankruptcy if the outcome could alter the
debtor's rights, liabilities, options, or freedom of action ... and which in any way
impacts upon the handling and administration of the bankrupt estate. Specialty
Mills, 51 F.3d at 74 (quotingPacor, 743 F.2d at 994); see also Abramowitz, 999
F.2d at 1278 (interpretation of "related to" jurisdiction should promote judicial
economy by facilitating resolution of all matters related to a bankruptcy case).
I.
The Supreme Court Case of Stern v Marshall, 131 S.Ct 2594 (2011) 1s
on point with the present Appeal.
6
Vickie filed suit against Pierce prior to her filing bankruptcy ... .
Pierce filed a proof of claim in that proceeding, asserting that he should be
able to recover damages from Vickie's bankruptcy estate because Vickie had
defamed him .
The Bankruptcy Court granted Vickie summary judgment on the
defamation claim and eventually awarded her hundreds of millions of dollars in
damages on her counterclaim. Pierce objected that the Bankruptcy Court lacked
jurisdiction to enter a final judgment on that counterclaim because it was not a
"core proceeding" as defined by 28 U.S.C. § 157(b)(2)(C). As set forth in§ 157(a).
Congress has divided bankruptcy proceedings into three categories: those that
"aris[e] under title 11 ";those that "aris[e] in" a Title 11 case; and those that are
"related to a case under title 11." District courts may refer all such proceedings to
the bankruptcy judges of their district, and bankruptcy courts may enter final
judgments in "all core proceedings "arising under" title 11, or "arising in" a case
under title 11." §§ 157(a), (b)(l). In non-core proceedings, by contrast, a
bankruptcy judge may only "submit proposed findings of fact and conclusions of
law to the district court." § 157(c)(1 ). Section l 57(b)(2) lists 16 categories of core
proceedings, including "counterclaims by the estate against persons filing claims
against the estate." § l 57(b)(2)(C).
7
The Bankruptcy Court lacked jurisdiction to enter a final judgment on that
counterclaim because it was not a "core proceeding" as defined by 28 U.S.C. §
157(b)(2)(C). As set forth in§ 157(a), Congress has divided bankruptcy
proceedings into three categories: those that "aris[e] under title 11 ";those that
"aris[e] in" a Title 11 case; and those that are "related to a case under title 11."
District courts may refer all such proceedings to the bankruptcy judges of their
district, and bankruptcy courts may enter final judgments in "all core proceedings
arising under title 11, or arising in a case under title 11." §§ 157(a), (b)(l). In non-
core proceedings, by contrast, a bankruptcy judge may only "submit proposed
findings of fact and conclusions of law to the district court." § 157(c )(1 ). Section
l 57(b)(2) lists 16 categories of core proceedings, including "counterclaims by the
estate against persons filing claims against the estate. " § 15 7 (b )( 2)(C).
The Bankruptcy Court concluded that Vickie's counterclaim was a core
proceeding. The District Court reversed, reading this Court's precedent in Northern
Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, to "suggest[] that it
would be unconstitutional to hold that any and all counterclaims are core." The
court held that Vickie's counterclaim was not core because it was only somewhat
related to Pierce's claim, and it accordingly treated the Bankruptcy Court's
judgment as proposed, not final. Although the Texas state court had by that time
conducted a jury trial on the merits of the parties' dispute and entered a judgment in
8
Pierce's favor, the District Court went on to decide the matter itself, in Vickie's
favor. The Court of Appeals ultimately reversed. It held that the Bankruptcy Court
lacked authority to enter final judgment on Vickie's counterclaim because the claim
was not "so closely related to [Pierce's] proof of claim that the resolution of the
counterclaim is necessary to resolve the allowance or disallowance of the claim
itself." Because that holding made the Texas probate court's judgment the earliest
final judgment on matters relevant to the case, the Court of Appeals held thatthe
District Court should have given the state judgment preclusive effect.
Held: Although the Bankruptcy Court had the statutory authority to enter judgment
on Vickie's counterclaim, it lacked the constitutional authority to do so. Pp. 6-38.
1. Section 157(b) authorized the Bankruptcy Court to enter final judgment on
Vickie's counterclaim. Pp. 8-16.
(a) The Bankruptcy Court had the statutory authority to enter final judgment on
Vickie's counterclaim as a core proceeding under§ 157(b)(2)(C). Pierce argues
that § l 57(b) authorizes bankruptcy courts to enter final judgments only in those
proceedings that are both core and either arise in a Title 11 case or arise under Title
11 itself. But that reading necessarily assumes that there is a category of core
9
proceedings that do not arise in a bankruptcy case or under bankruptcy law, and the
structure of§ 157 makes clear that no such category exists. Pp. 8-11.
(b) In the alternative, Pierce argues that the Bankruptcy Court lacked jurisdiction
to resolve Vickie's counterclaim because his defamation claim is a "personal injury
tort" that the Bankruptcy Court lacked jurisdiction to hear under § 157 (b )(5). The
Court agrees with Vickie that§ l 57(b)(5) is not jurisdictional, and Pierce
consented to the Bankruptcy Court's resolution of the defamation claim. The Court
is not inclined to interpret statutes as creating a jurisdictional bar when they are not
framed as such. See generally Henderson v. Shinseki, 562 U. S. -~
Arbaugh v. Y & H Corp., 546 U.S. 500. Section 157(b)(5) does not have the
hallmarks of a jurisdictional decree, and the statutory context belies Pierce's claim
that it is jurisdictional. Pierce consented to the Bankruptcy Court's resolution of the
defamation claim by repeatedly advising that court that he was happy to litigate his
claim there. Pp. 12-16.
2. Although § 157 allowed the Bankruptcy Court to enter final judgment on
Vickie's counterclaim, Article III of the Constitution did not. Pp. 16-38.
(a) Article III is "an inseparable element of the constitutional system of checks
and balances" that "both defines the power and protects the independence of the
10
Judicial Branch." Northern Pipeline, 458 U.S., at 58 (plurality opinion). Article III
protects liberty not only through its role in implementing the separation of powers,
but also by specifying the defining characteristics of Article III judges to protect
the integrity of judicial decision making ..
This is not the first time the Court has faced an Article III challenge to a
bankruptcy court's resolution of a debtor's suit. In Northern Pipeline, the Court
considered whether bankruptcy judges serving under the Bankruptcy Act of 1978
- who also lacked the tenure and salary guarantees of Article III - could
"constitutionally be vested with jurisdiction to decide [a] state-law contract claim"
against an entity that was not otherwise part of the bankruptcy proceedings. Id. , at
53, 87, n. 40 (plurality opinion). The plurality in Northern Pipeline recognized that
there was a category of cases involving "public rights" that Congress could
constitutionally assign to "legislative" courts for resolution. A full majority of the
Court, while not agreeing on the scope of that exception, concluded that the
doctrine did not encompass adjudication of the state law claim at issue in that case,
and rejected the debtor's argument that the Bankruptcy Court's exercise of
jurisdiction was constitutional because the bankruptcy judge was acting merely as
an adjunct of the district court or court of appeals. Id., at 69-72; see id., at 90-91
(Rehnquist, J., concurring in judgment). After the decision in Northern Pipeline,
Congress revised the statutes governing bankruptcy jurisdiction and bankruptcy
11
judges. With respect to the "core" proceedings listed in§ 157(b)(2), however, the
bankruptcy courts under the Bankruptcy Amendments and Federal Judgeship Act
of 1984 exercise the same powers they wielded under the 1978 Act. The authority
exercised by the newly constituted courts over a counterclaim such as Vickie's
exceeds the bounds of Article III. Pp. 16-22. Stern P. 1-4.
The Appellate Court in IN Re Marshall, 600 F3d. 1037,1047 (9th Cir 2010)
concluded that Vickie Lynn Marshall's counterclaim was a non-core proceeding
because it was some what related and the Court found for Peirce. The Supreme
Court in Stern affirmed the opinion of the 9th Cir. A recent Texas Case Stern v.
Marshall, 01- 02-00114- CV (Tex,App.-Houston[l st Dist.] 7-14-2015) also
affirmed that Vickie' s counterclaim was anon-core proceeding. The Houston
Court visited the core and non-core proceedings and found the same results.
II.
In this appeal the Defamation Trial claim: is not arising~ nor arising under
nor related to as described by In Re Wood, 825 F.2d 90,97 (5th Cir. 1987),
"[28] As defined above, the phrases "arising under" and "arising in" are helpful
indicators of the meaning of core proceedings. If the proceeding involves a right
created by the federal bankruptcy law, it is a core proceeding~ for example, an
action by the trustee to avoid a preference. If the proceeding is one that would arise
only in bankruptcy, it is also a core proceeding~ for example, the filing of a proof
12
of claim or an objection to the discharge of a particular debt. If the proceeding does
not invoke a substantive right created by the federal bankruptcy law and is one that
could exist outside of bankruptcy it is not a core proceeding~ it may be related to
the bankruptcy because of its potential effect, but under section 157(c)(l) it is an
"otherwise related" or non-core proceeding. [29] Finally, the interpretation of core
proceeding based on its equation with "arising under" and "arising in" proceedings
comports with the interpretation suggested by Marathon. Justice Brennan's
description of "core" matters parallels that of matters "arising under" title 11 -
matters invoking a substantive right created by federal bankruptcy law. Moreover,
his comment that the matter could have proceeded absent the bankruptcy suggests
a contrast with "arising in" proceedings - matters that could arise only in
bankruptcy. [30] We hold, therefore, that a proceeding is core under section 157 if
it invokes a substantive right provided by title 11 or if it is a proceeding that, by its
nature, could arise only in the context of a bankruptcy case. The proceeding before
us does not meet this test and, accordingly, is a non-core proceeding. The plaintiffs
suit is not based on any right created by the federal bankruptcy law. It is based on
state created rights.[fn34] Moreover, this suit is not a proceeding that could arise
only in the context of a bankruptcy. It is simply a state contract action that, had
there been no bankruptcy, could have proceeded in state court."
13
The Defamation trial case is simply a state contract action had there been
no bankruptcy has proceeded in state court and therefore is a non-core proceeding
and when the stay was lifted the Bankruptcy Court's jurisdiction to sell the non-
core case's appeal rights was relinquished.
The bankruptcy Court issued "Order Authorizing Sale of All Non-Exempt
Assets, Claims and Causes of Actions" which is a Final Order on a non-core
proceeding without submitting proposed findings of fact and conclusions of law to
the district court." 28 § 157 (c )(1). A bankruptcy judge may hear a proceeding that
is not a core proceeding but that is otherwise related to a case under title 11. In
such proceeding, the bankruptcy judge shall submit proposed findings of fact and
conclusions of law to the district court, and any final order or judgment shall be
entered by the district judge after considering the bankruptcy judge's proposed
findings and conclusions and after reviewing de novo those matters to which any
party has timely and specifically objected. The Bankruptcy Court did not submit
proposed findings of fact and conclusions of law to the district court, which is
contrary to Article III of the Constitution of the United States , Stern v. Marshall,
supra, and such sale should be null and voided. Thus the Trustee does not have
any authority to appear in the Appeal.
ISSUE 2
14
The Appellate Court errored when the court it is relied on In re Croft 737 F 3d.
372, 376-77 (5th Cir. 2013)( per curiam) because all the circumstances of this case
were not the same (core, non-core) and the appeal at no benefit a to the estate.
In re Croft 73 7 F 3d. 372, 37 6-77 (5th Cir. 2013 )( per curiam) Bradley
Croft was involved in two lawsuits that ultimately resulted in sanctions
against him and an award of attorney's fees in favor of his opponent. Id. at
374. Croft appealed those decisions to the Fourth Court of Appeals.
Thereafter, Croft filed a voluntary bankruptcy petition. As required, the
Appellate Court abated Croft's appeals because of the automatic bankruptcy
stay. Id.; see Tx. R. APP. P. 8.2 (stating bankruptcy suspends appeal). In
response, Croft filed a motion in the bankruptcy court seeking to lift the
automatic stay and allow the appeals to continue. Id. Croft's motion was
opposed under the theory that Croft's right to appeal was part of the
bankruptcy estate and only the trustee could prosecute the appeals. Id
Croft appeal was filed on August 5, 2011, before Croft filed
bankruptcy on August 24, 2011 listing the creditors of the Sanction Orders.
Exhibit 3 (Original Schedules of Croft from Bankruptcy case l l-52905cag)
By listing the creditors of the sanction order Croft made the suits a core
proceedings. Kahn agrees with the District Court and the Fifth Circuit that a
successful Appeal would have reduced Crofts debt. This would modify a
Crofts debt and would be a core proceeding under the Related definition of
-6 -
15
core proceedings. The test for determining whether a civil proceeding is related
to bankruptcy is whether the outcome of that proceeding could conceivably have
any effect on the estate being administered in the bankruptcy. . . .An action is
related to bankruptcy if the outcome could alter the debtor's rights, liabilities,
options, or freedom of action ... and which in any way impacts upon the handling
and administration of the bankrupt estate. Specialty Mills, 51 F.3d at 74
Kahn's debt from the Defamation trial case was adjudged after the
bankruptcy petition was filed. As briefed in Issue 1 the case is a non-core
proceeding and not in the jurisdiction of the bankruptcy court to sell its appeal
rights. A successful appeal of the Defamation trial case will not effect the debtor's
rights, liabilities, options, or freedom of action ... and which in any way impacts
upon the handling and administration of the bankrupt estate.
The marked difference between Kahn and Croft is that Kahn is non-core
and Croft is Core. Kahn agrees with the Court that the case of In Re C-Power
Prods., .Inc, 230 B.R. 800,803 the malpractice claim was directly related to the
bankruptcy and is a core proceeding.
ISSUE 3
The bankruptcy order entitled "Order Authorizing Sale of All Non-Exempt
Assets, Claims and Causes of Actions" should be declared null and void thus the
Trustee does not have standing in this Appeal.
16
The "Order Authorizing Sale of All Non-Exempt Assets, Claims and
Causes of Actions' ("Sales Order") should be declared null and void for the
following reasons:
I.
Order of Sale On Appeal
The motion for sale to sell is currently on appeal in the United States
District Court for the Western District of Texas case number SA-14-CA- 1109.
There are several issues of Law to be reviewed de nova: (A)Article III of the
Constitution of the United States;(B) Fourteenth Amendment to the Constitution of
the United States;.(C)l l U.S.C. § 1509 A foreign Corporation needs to register to
have Direct Access;(D) Sale procedures and bona fide purchaser 21 U.S.C. § 853
(n)(6)(B); ;(E).11 U.S.C. § 544 abandonment, Based on the In Scurlock Oil Co.
v. Smithwick, 724 S.W.2d 1 (Tex. 1986) "ta judgment is final for the purposes of
issue and claim preclusion "despite the taking of an appeal unless what is called an
appeal actually consists of a trial de novo." The Sales Order is not a final as per
Scurlock Oil Co and collateral estoppel of the Sales Order is not applicable at this
time. thus the Trustee does not have standing in this Appeal
II..
Fourteenth Amendment to the Constitution of the United States
17
The Bankruptcy Court did not allow Kahn to testify as to the value of the
Joabert property Exhibit 4 (Transcript of Motion to Sell Hearing on October 15,
2014 in Bankruptcy Case 14-50980-cag) P.92 (A violation of Kahn's Fourteenth
Amendment rights) and Court declared value to be zero. Kahn is an 1/3 owner and
a Professional Engineer, licensed in the State of Texas, who designed the project
and was the President of the contractor. Kahn has knowledge of the property and is
an expert witness. Fariasantos v. Rosenberg & Associates, (E.D.Va. 2-27-2015)
based on Federal Rule of Evidence 701, stated, "most courts have permitted the
owner or officer of a business to testify to the value ... of the business, without the
necessity of qualifying the witness ... by virtue of his or her position in the
business." In Kahn's case 2013-CI-17012 ("Joabert Case") First Amended
Original Petition Request For Appointment Of Commissioners, Alternative
Request For Appointment Of Receiver," a sworn petition has included on page 13
an detail analysis of each section of the property and an estimate of the cost to
complete. The Bankruptcy Court would not allow Kahn to testify. Kahn' s
testimony would have been enough detail to show the worth of the Joabert
property and as such that Kahn's value would exceed his debts and the sale would
not have been approved. Appellee did not file an answer to the amended petition
which is uncontroverted. In Freedom Path v. Lerner, (N.D.Tex. 2-24-2015) "a
court . . . . must accept as true the uncontroverted allegations in the complaint and
18
resolve in favor of the plaintiff any factual conflicts posed by the affidavits.
Latshaw v. Johnston, 167 F.3d 208 (5th Cir. 1999). If Kahn had testified and
showed the value of Joabert exceeded the would have exceeded the debt, the Sales
Order would not have been approved. Thus the Trustee does not have standing in
this Appeal.
III
Sale Procedures And Bona Fide Purchaser 21 U.S.C. § 853 (n)(6)(B);
11 U.S.C. § 363 requires notice prior to sale. Robert Wachsmuth a
creditor did not get notice of the sale or hearing date. Exhibit 5(Email) This
violation makes the sale null and void.
11 U.S.C. § 363 (m) (n) requires the sale to be a good faith. The sale was
to one of the creditors Helvetia who claimed 97% of the debt. Therefore with
the price of $10,000 Helvetia would get distributed back $9700, or only cost
$300. In USA v. Real Property, Located at 246 Main Street, Dansville, Livingston
Co., NY(M.D.Fla. 7-13-2015) states:
"Although we have not previously addressed this question,
we agree with the majority view that unsecured or general
creditors cannot be considered bona fide purchasers for
value within the meaning of§ 853(n)(6)(B). ")~United
States v. Reckmever, 836F.2d200, 208 (4th Cir. 1987)
(stating that the term includes "all persons who give value
... in an arms-length transaction with the expectation case
"was paid for the rendition that they would receive
equivalent value in return."). While "a person who
receives property subject to forfeiture as a 'gift' cannot be
19
a bona fide purchaser for value," United States v. Brown,
509F.Supp.2d 1239, 1246 (M.D. Fla. 2007), the term
"bona fide purchaser for value must be construed liberally
to include all persons who give value ... in an arms-
length transaction with the expectation that they would
receive equivalent value in return." United States v. Cox,
575F.3d352, 356 (4th Cir. 2009)
The sale was not to a bona fide purchaser and was not an arms length
transaction and not in good faith.
NO CONSIDERATION
The Motion to Sell was granted but the Trustee did not distribute the
funds. Exhibit 6.(E mail) The sale is not complete until the funds are distributed.
This violation makes the sale null and void until funds are distributed. Thus at
present time, the Trustee does not have standing in this Appeal until he distributes
the funds.
llU.S.C. § 554 ABANDONMENT
The hearing on the Motion to Sell was on October 15,2014. Transcripyt of
that hearing is Exhibit 4. The Court on pages 43, 45 and 93 stated that the value
of 2013-CI-18355 and its Appeal Case 05-14-00568-CV are worth zero. The
Trustee stated on page l 7and 21 that the litigation of these claims is totally
unreasonable.
11 U.S.C. § 554 states: the trustee may abandon any property of the
estate that is burdensome to the estate that is in consequential value and
20
benefit to the estate. By the Trustee and the Court finding no value the of the
causes they are abandon and reverts to the debtor and stands as if no
bankruptcy petition was filed. In Re Dewsnup, 908 F.2d 588 (1 oth Cir. 1998)
Therefore Kahn owns the cause of action and the Trustees has no standing in
the appeal.
ISSUE 4
llU.S.C. § 1509 A foreign Corporation needs to register to have
Direct Access
Registration for a foreign Corporation is a very important issue. A Foreign
Corporation can camouflage their operations and can avoid taxes and enable illegal
activities such as money laundering and terrorist activities.
Helvetia Asset Recovery, Inc. ("Helvetia"), creditor and party-in-interest, is
a misnomer. Helvetia is a Texas Corporation. Burton Kahn ("Kahn") is president
of that corporation per Secretary of State. (Except for period September 27, 2013
to October 4, 2013) (5RR131-136, 213). Record in Case 2013-CI-18394 and
Appeal 4-14-00357-CV (5RR365). This Appeal of Case 2013-CI-18355 was to
determine who owns the shares of Helvetia. The real party in interest is Puerto
Verde, Ltd a Bahamian Corporation ("PVL") Robert Ripley testified that he is
President of PVL and claims that PVL owns the shares of Helvetia. The
ownership of Helvetia' s stock was decided without litigation or jurisdiction in
21
the Final Judgment and Sanction Order dated April 1, 2014. 11 U.S. C. § 1509
requires that a foreign corporation have a Right Direct access .. A Motion to
Disqualify Puerto Verde Ltd. To Have Direct Access to this Court. (a) A foreign
representative may commence a case under section 1504 by filing directly with
the court a petition for recognition of a foreign proceeding under section 1515.
However no such request has been made. PVL does not have standing in this
court and standing is a component of subject matter jurisdiction. Tex. Ass'n
ofBus. v. Tex. Air Control Ed., 852 S.W.2d 440, 444-45 (Tex. 1993). Because
subject matter jurisdiction is essential to the authority of a court to decide a
case, it will cannot be waived and may be raised for the first time on appeal.
Thus all judgments in thus case and in other related cases are void and there is
no debt to Helvetia /PVL. The bankruptcy court's order in Denying the Motion to
Disqualify Puerto Verde Ltd. To Maintain A Lawsuit was based sole on good
cause and this Court should not allowed the Order as collateral estoppel (ECF No.
45) (Bankruptcy Court Case 14-50980-cag) Exhibit 7 states for the reason of
denial, good cause without having any evidence or reasons to dispute these
motions. This is not allowed per In U.S. Home Corporation v. Settlers Crossing
(D.Md. 8-14-2012) .. "Good cause' is understood to mean '[a] legally sufficient
reason,' and it reflects 'the burden placed on a litigant to show why a request
should be granted or an action excused." Joseph v, Hess Oil V.I. Corp., 651 F.3d
22
348, 351 (3d Cir. 2011) (quoting Blacks Law Dictionary 251 (9th ed. 2009)). The
"good cause" inquiry "focuses on the moving party's burden to show due
diligence." Race Tires Am., Inc. v. Hoosier Racing Tire Corp .. 614 F.3d 57, 84
(3d Cir. 2010).
In In the Matter ofCV, 12-10542 (5th Cir. 1-7-2013) states:
"Chapter 15 provides for a broad range of relief. This
includes the ability to sue and be sued in United States
courts, to apply directly to a United States court for
relief, to commence a non-Chapter 15 case, and to
intervene in any United States case to which the debtor is
a party. In re Condor Ins. Ltd., 601 F.3d 319, 324 (5th
Cir. 2010)"
The process in the federal system chapter 15 requires a Court order and
hearing for a foreign Corporation needs to register to have Direct Access and that
the corporation shall met specific requirements. Texas only requests filing a
registration form and a fee. However PVL has done neither and that PVL should
not be able to sue or be sued. Thus the Sales Order is null and void and the
Trustee does not have standing in this Appeal.
CONCLUSION
The Appellant has shown that this motion that the "Order
Authorizing Sale of All Non-Exempt Assets, Claims and Causes of Actions'
should be declared null and void for the following reasons: the order was in
violation of Article III of the Constitution of the United States; the 14th
23
amendment to the Constitution of the United States; the order his untimely because
of appeal which will be reviewed as de novo; sales procedures such as notice and
consideration and a bona fide purchaser and the abandonment of the cause of
action making the cause of action revert back to Kahn.
The trustee does not have standing in this appeal.
PRAYER
Appellant, Burton Kahn is an American Citizen, born in Brooklyn, New
York in 1933 from parents that were both born in Brooklyn, New York in 1904
and served his country in the United States Army for two deployments, moved to
Texas in 1977 and desires justice and his rights as an U.S. Citizen, which has
been deprived in favor of Appellee, who is a Canadian citizen living in
Columbia South America, banks in the Bahamas with secret accounts and does
not pay United States Taxes. For the reasons above Appellant prays that this
Appellate Court find that this Motion for Rehearing is Granted and that this
Honorable Court find that the Appellant is entitled to a new Trial.
Respectfully Submitted
Burton Kahn Pro-se
1706 Alpine Cir.,
San Antonio, TX 8248
glentrailyahoo.com
24
Tel (210) 408-9199
VERIFICATION
State of Texas §
County of Bexar § Tex. Civ. Prac. & Rem. Code § 132.001
My name is Burton Kahn. I am over the age of 18 and am fully competent
to make this unsworn declaration. My date of birth is in August 1933 and my
address is 1706 Alpine Circle, San Antonio, Texas 78248. I declare under penalty
of perjury that the foregoing is true and correct and the Exhibits presented are the
true and correct copies of the record. Executed in Bexar County, State of Texas
on the day of September 2, 2015.
Burton Kahn
CERTIFICATE OF COMPLIANCE WITH RULE 9.4(e), (i)
This motion complies with the type-volume limitation of Texas Rule of Appellate
Procedure 9.4(1) because, according to the Microsoft Word 2010 word count
function, it contains 5,848 words on pages 1-26, excluding the parts of the brief
exempted by Texas Rule of Appellate Procedure 9.4(e)(l)(l).
This notion complies with the typeface requirements of Texas Rule of Appellate
Procedure 9 .4(e) because it has been prepared in a proportionally spaced typeface
using Microsoft Word 2010 software in Times New Roman 14 point font in text.
Burton Kahn
CERTIFICATE OF SERVICE
I certify that a copy of this Motion was served on Appellee Helvetia Asset
Recovery Inc. through counsel of record on September 2, 2015 by
4'.ZD
Burton Kahn
Via Email
Elizabeth Conry Davidson, Attorney at Law
926 Chulie Drive
San Antonio, Texas 78216
(210) 380-4899 telephone
(210) 225-2300 facsimile
conrydavidson@gmail.com
26
APPENDIX
EXHIBITS
1.0PINION
2. ORDER AND MOTION OF 2013-Cl-17516
3. CROFT'S BANKRU
PT PETITION 11-52905-CAG
4. TRANSCRIPT MOTION TO SELL BANKRUPT CASE 14-50980-CAG
5. EMAIL RW WACHSMUTH NOT NOTICED
6. EMAIL OF TRUSTEE THOMAS NO DISTRIBUTION
7. ORDER DENYING MOTION TO DISQUALIFY PUERTO VERDE
LTD. TO MAINTAIN LAWSUIOT IN TEXAS
EXHIBIT 1
jfourtb QCourt of ~ppra:l.%
$an ~ntonio, W:exa%
OPINION
No. 04-14-00569-CV
Burton KAHN,
Appellant
V.
HELVETIA ASSET RECOVERY, INC.,
Appellee
From the 37th Judicial District Court, Bexar County, Texas
Trial Court No. 2013-CI-18355
Honorable Michael E. Mery, Judge Presiding
Opinion by: Marialyn Barnard, Justice
Sitting: Marialyn Barnard, Justice
Patricia 0. Alvarez, Justice
Jason Pulliam, Justice
Delivered and Filed: August 19, 2015
DISMISSED FOR WANT OF JURISDICTION
A jury found appellant Burton Kahn ("Kahn") breached his fiduciary duty to appellee
Helvetia Asset Recovery, Inc. ("Helvetia"), used another company to perpetrate a fraud for his
benefit, retained money belonging to Helvetia, slandered Helvetia's title to certain real property,
and filed fraudulent court records against real property owned by Helvetia. The jury awarded
sizeable actual damages as well as punitive damages and attorney's fees. The trial court rendered
.a judgment based on the jury's verdict and granted Helvetia a permanent injunction to preclude
Kahn from interfering in Helvetia's business. On appeal, Kahn raises numerous issues challenging
04-14-00569-CV
the judgment. However, because Kahn lacks standing to prosecute this appeal, we have no
jurisdiction and dismiss the appeal.
BACKGROUND
Given our disposition of the appeal, a detailed rendition of the facts 1s unnecessary.
Accordingly, we provide only a brief factual and procedural statement for context.
Helvetia is a company that owns and sells real estate lots to builders in San Antonio. Kahn
was the president, secretary, and sole director of Helvetia from October 2009 until he was
- terininafed in August 201 :r. Kfter he wa-s terminated, Kahn b-egan to take actions detrimental to
Helvetia, including transferring by deed numerous properties owned by Helvetia to a company
created by Kahn after his termination - Paradiv Corporation. Upon discovering what Kahn was
doing, Helvetia filed suit to set aside the deeds. The trial court ordered the deeds set aside and
thereafter, on November 4, 2013, Helvetia filed a suit against Kahn alleging numerous causes of
action based on Kahn's activities after his termination. 1
1The day after Helvetia filed suit, Kahn also filed suit, seeking to set aside several deeds from Helvetia to certain
buyers ("the Lien Case"). Kahn claimed the deeds from Helvetia to the buyers were fraudulent. Initially, the trial
court granted the relief sought by Kahn, rendering an ex parte temporary restraining order. Kahn filed that order in
the deed records, thereby clouding Helvetia' s title. The trial court granted the ex parte order based on documents filed
by Kahn, who claimed to be acting as president and authorized representative of Helvetia. Kahn failed to disclose,
however, that in the prior- litigation-filed by Helvetia-in October 20Br>motheLtrial cnurtllad declared as fraudulent
the deeds Kahn transferred to Paradiv, determining Kahn had no authority to act on behalf of Helvetia. After Helvetia
discovered what Kahn had done, Helvetia filed a motion to set aside the trial court's order, advising the trial court of
the prior ruling and seeking injunctive relief to preclude Kahn from interfering with Helvetia's business or holding
himself out as an authorized representative. After an evidentiary hearing in December 2013, the trial court overturned
its prior order, finding Kahn made false claims in order to secure the prior order. The trial court enjoined Kahn from
acting on behalf of Helvetia in the future.
In addition to seeking to set aside the trial court's order in the Lien Case, Helvetia sought sanctions against Kahn.
After another evidentiary hearing, the trial court imposed sanctions against Kahn. The trial court found, among other
things, that Kahn did not own Helvetia or its stock. Rather, the trial court determined the sole owner of Helvetia is
Puerto Verde, Ltd. ("Puerto Verde"), which is owned by Robert Ripley. Kahn appealed the sanctions order to this
court. On July 22, 2015, this court dismissed Kahn's appeal for want of prosecution. See Jn Re A Purported Lien or.
Claim Against Helvetia Asset Recovery, Inc., No. 04-14-00357-CV, 2015 WL 4479600, at *1-*2 (Tex. App.-San
Antonio July 22, 2015, no pet. h.) (mem. op.).
-2-
04-14-00569-CV
On April 4, 2014, while Helvetia's suit was pending, but prior to trial, Kahn filed a
voluntary petition for bankruptcy, which immediately stayed the trial court proceedings. However,
the bankruptcy stay was lifted by order of the bankruptcy court on April 28, 2014. Thereafter, the
case proceeded to trial.
Ultimately, the jury found Kahn breached his fiduciary duty to Helvetia, misappropriated
funds from Helvetia, used Paradiv to perpetrate a fraud for his benefit, held money belonging to
Helvetia, slandered Helvetia's title to certain real property, and filed a fraudulent court record or
document against real property owned by Helvetia. The jury awarded damages for each claim.
The jury also determined Kahn's breach of fiduciary duty and perpetration of fraud was committed
"either maliciously, fraudulently, or through gross neglect," resulting in an award of punitive
damages in favor of Helvetia in the amount of $900,000.00. Finally, the jury awarded trial and
appellate attorney's fees. The trial court rendered judgment based on the jury's verdict and
rendered a permanent injunction, precluding Kahn from interfering in Helvetia's business. Kahn
perfected an appeal from the judgment.
ANALYSIS
Kahn raises numerous issues challenging the trial court's judgment. In response, Helvetia
contends, among other things, that this court must. dismiss Kahn's appeal because we lack
jurisdiction. More specifically, Helvetia contends that as a result of his decision to file a voluntary
bankruptcy petition, Kahn has no standing to pursue this appeal because his appellate rights in this
appeal vested with the bankruptcy trustee, who sold those rights to Helvetia in a sale approved by
the bankruptcy court. Thus, before we can review any issues raised by Kahn, we must first
determine whether he has standing to pursue this appeal.
-3-
04-14-00569-CV
Standard ofReview & Relevant Law - Standing
Standing is a component of subject matter jurisdiction that we review de novo. Sneed v.
Webre, No. 12-0045, 2015 WL 3451653, at *7 (Tex. May 29, 2015) (citing Tex. Dep 't ofTransp.
v. City ofSunset Valley, 146 S.W.3d 637, 646 (Tex. 2004); Tex. Ass'n ofBus. v. Tex. Air Control
Bd, 852 S.W.2d 440, 444-45 (Tex. 1993)). Standing is a constitutional prerequisite to maintaining
suit. Sneed, 2015 WL 3451653, at *7 (quoting Williams v. Lara, 52 S.W.3d 171, 178 (Tex. 2001)).
In the absence of standing, a court lacks subject matter jurisdiction to hear the case. Austin Nursing
Ctr, Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005); Wolff v. Deputy Constables Ass 'n, 441
S.W.3d 362, 365 (Tex. App.-San Antonio 2013, no pet.).
As recently reiterated by the supreme court in Sneed, "[t]he issue of standing focuses on
whether a party has a sufficient relationship with the lawsuit so as to have a 'justiciable interest'
in its outcome." 2015 WL 3451653, at *7 (quoting Lovato, 171 S.W.3d at 848). In Texas, standing
does not exists unless (a) there is a real controversy between the parties, which (b) will be actually
determined by the judicial declaration sought. Id. (quoting Tex. Ass 'n ofBus., 852 S.W.2d at 446)
(quoting Bd of Water Eng'rs v. City of San Antonio, 155 Tex. 111, 283 S.W.2d 722, 724 (Tex.
1955)). A determination of standing focuses on whether a party has a "justiciable interest" in the
outcome of the lawsuit, such as when it is personally aggrieved or has an enforceable right or
interest. Lovato, f71 S.W.3d af849 (citing Nootsie, Ltd v. Williamson Cnty. Appraisal Dist., 925
S.W.2d 659, 661 (Tex. 1996)); Wolff, 441 S.W.3d at 365.
Application - Standing
In this case, Helvetia contends Kahn lacks standing to prosecute this appeal as a result of
his voluntary bankruptcy filing. According to Helvetia, Kahn's right to pursue this appeal vested
in the bankruptcy trustee, who sold those rights to Helvetia - an action approved by the
-4-
04-14-00569-{;V
bankruptcy court. Accordingly, Helvetia contends Kahn no longer has any right or interest in this
appeal, and therefore, no standing to pursue it.
Filing a voluntary petition for bankruptcy creates a bankruptcy estate, which is comprised
of "all legal or equitable interests of the debtor in property as of the commencement of the case."
11 U.S.C. § 541 (a); see Douglas v. Delp, 987 S.W.2d 879, 882 (Tex. 1999); Rodriguez v. City of
San Antonio, 113 S.W.3d 378, 380 (Tex. App.-San Antonio 2003, pet. denied). This includes
causes of action or legal claims that belonged to the debtor before the bankruptcy petition was
filed. Douglas, 987 S.W.2d at 882. The bankruptcy trustee, as the representative of the bankruptcy
estate, has exclusive standing to assert legal claims that become part of the estate. Douglas, 987
S.W.2d at 882; Rodriguez, 113 S.W.3d at 381. In other words, by voluntarily filing a bankruptcy
petition, the bankruptcy debtor relinquishes to the trustee any standing to prosecute or dispose of
the claims included in the estate. Douglas, 987 S.W.2d at 882; Rodriguez, 113 S.W.3d at 381.
It is not simply causes of action or claims that become part of the bankruptcy estate. The
Fifth Circuit, applying Texas law, has specifically held that defensive appellate rights are property
under Texas law and become part of the bankruptcy estate. In re Croft, 737 F.3d 372, 376--77 (5th
Cir. 2013) (per curiam). As the court explained, "[w]hile it is true that a judgment against the
debtor is an obligation and has no value to the estate-and would therefore not be included in a
list of property-the right to appeal that judgment certainly has a quantifiable ~alue to the debtor,
and therefore constitutes property under Texas law." Id. (emphasis in original). Thus, property
rights in a legal cause of action include not only the cause of action itself, but any appellate rights
related thereto. Id. at 375.
We find the Fifth Circuit's decision in Croft instructive. In Croft, Bradley Croft was
involved in two lawsuits that ultimately resulted in sanctions against him and an award of
·attorney's fees in favor of his opponent. Id. at 374. Croft appealed those decisions to this court.
-5-
04-14-00569-CV
Id. Thereafter, Croft filed a voluntary bankruptcy petition. Id As required, we abated Croft's
appeals because of the automatic bankruptcy stay. Id.; see TEX. R. APP. P. 8.2 (stating bankruptcy
suspends appeal). In response, Croft filed a motion in the bankruptcy court seeking to lift the
automatic stay and allow the appeals to continue. Id Croft's motion was opposed under the theory
that Croft's right to appeal was part of the bankruptcy estate and only the trustee could prosecute
the appeals. Id
The Fifth Circuit, applying Texas property law, held Croft's defensive appellate rights,
allowing him to appeal the sanctions order and award of attorney's fees, became part of the
bankruptcy estate when he filed the voluntary bankruptcy petition. Id. at 378. Accordingly, Croft
no longer had standing to pursue the appeals because his defensive rights in the appeals were
property of the bankruptcy estate and thus, the bankruptcy trustee had the right to sell the appellate
rights pursuant to a bankruptcy court order of sale. Id
Here, as described above, Kahn was involved in a lawsuit that ultimately resulted in the
award of monetary damages against him, including punitive damages and attorney's fees. Kahn
voluntarily filed a petition for bankruptcy, creating a bankruptcy estate. Thus, Kahn's legal claims,
as well as his defensive appellate rights in this appeal, i.e., his right to appeal the judgment in this
case, was a valuable property right that became part of the bankruptcy estate. See id. The
bankruptcy court recognized that this appeal was part of the bankruptcy estate as demonstrated in
its order entitled "Order Authorizing Sale of Aii Non-Exempt Assets, Claims and Causes of
Actions." In that order, the bankruptcy court specifically listed this appeal - or the rights to
pursue it - among the assets the trustee was authorized to sell. The relevant portion of the order
states:
ORDERED that movant, Johnny W. Thomas, Trustee, be and is hereby authorized
and directed to sell all property owned or claimed to be owned by the Debtor to
include all the Debtor's non-exempt assets, claims and causes of action now
-6-
04-14-00569-CV
existing or hereafter arising, all rights, titles and interests in any business or
business enterprise that currently exist or has ever existed to Helvetia Asset
Recovery, Inc. or its assigns, for $!0,000.00. This property includes, but is not
limited to, the following:
* * *
All claims or causes of action held by or for the debtor, including but not limited to
the following:
Burton Kahn v. Helvetia Asset Recovery, Inc., No. 04-14-00569-CV; Fourth Court
of Appeals, San Antonio, Texas.
The trustee, in order to maximize the estate's value, sold the defensive appellate rights to
Helvetia, a sale that was approved by the bankruptcy court. Accordingly, we hold Kahn has no
"justiciable interest" in this appeal as he has no enforceable rights therein. See Sneed, 2015 WL
3451653, at *7; Lovato, 171 S.W.3d at 849; Wolff, 441 S.W.3d at 365. It therefore follows, and
we hold, Kahn has no standing to pursue this appeal as that right has been sold as part of the estate
by the trustee, who had exclusive standing to prosecute or dispose of the property of the bankruptcy
estate. See Croft, 737 F.3d at 376-77; Douglas, 987 S.W.2d at 882; Rodriguez, 113 S.W.3d at
381.
In his reply brief, Kahn argues his defensive appellate rights in this appeal are not part of
the bankruptcy estate because the trial court's judgment was rendered after the commencement of
the bankruptcy proceeding. Thus, according to Kahn, the defensive appellate rights created by the
judgment were not part of the bankruptcy estate. We disagree. Although this case is
distinguishable from Croft because in Croft, the defensive appellate rights were created prior to
the filing of bankruptcy, the bankruptcy code specifically states that any interest in property that
the estate acquired after commencement of the case becomes property of the bankruptcy estate.
11 U.S.C. § 541(a)(7) (2015); see In re C-Power Prods., Inc., 230 B.R. 800, 803 (Bankr. N.D.
-7 -
04-14-00569-CV
Tex. 1998) (holding that not only pre-bankruptcy petition malpractice claim became property of
bankruptcy estate, but post-bankruptcy petition malpractice claim likewise became property of
bankruptcy estate.). Accordingly, we hold the fact that the trial court's judgment was not rendered
until after the bankruptcy petition was filed is irrelevant. Kahn's defensive appellate rights in the
appeal became a part of the bankruptcy estate whether they existed before or after the bankruptcy
petition was filed by Kahn. See 11 U.S.C. § 541(a)(7); C-Power Prods., 230 B.R. at 803.
CONCLUSION
Based on the foregoing, we hold Kahn had no justiciable interest in the right to pursue this
appeal. The defensive rights to this appeal became part of Kahn's bankruptcy estate, and the
trustee was authorized to sell the rights pursuant to the bankruptcy court's order. Accordingly, we
hold Kahn has no standing. Given Kahn's lack of standing, a component of subject matter
jurisdiction, we hold we have no jurisdiction over this appeal. Accordingly, we dismiss the appeal
for want of jurisdiction.
Marialyn Barnard, Justice
-8-
jfourtb QCourt of ~ppeals
g,an ©:ntonio, \!rexag
August 19, 2015
No. 04-14-00569-CV
Burton KAHN,
Appellant
v.
HELVETIA ASSET RECOVERY, INC.,
Appellee
From the 37th Judicial District Court, Bexar County, Texas
Trial Court No. 2013-CI-18355
Honorable Michael E. Mery, Judge Presiding
ORDER
In accordance with this court's opinion of this date, this appeal is DISMISSED FOR
WANT OF JURISDICTION.
We order that appellee Helvetia Asset Recovery, Inc. recover its costs of this appeal from
appellant Burton Kahn.
It is so ORDERED on August 19, 2015.
d affixed the seal of the said
EXHIBIT 2
• ~ EXHIBIT
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... 7.WT60,BLOCK7LOT61,BLOCK7LOT62
-. - - - ' _, BLOCK7LOT63
- ' "
BLOCK 7 LOT 64 , BLOCK. 7 LOT &S, BLOCK 7 LOT 66 , BLOCK 8 LOT .I ,
BLOCK 8 .LOT 2, BLOCK 8 LOT 3, BLOCK 8 LOT4, BLOCK 8 LOT .s, BLOCK 8 LOT 6,
BLOC!( R LOT Ii. RJ.QCl(.t IDT IQ ,BJ..OC.ICllLOT20 ,BLOC:K:iLOT 21 ,BL()Cl:'. a. LOT 2:2,
BLOCK 8 LOT 23 , BLOCK 8 LOT24 , BLOCK 8 LOT 25 , BLOCK 8 LOT 26 • BLOCK 8 LOT 27 ,
BLOCK 8 LOT 28, BLOCK 8, LOT 29, BLOCK 8, LOT 30 , BLOCK 8, LOT 31 • BLOCK 8, LOT
32, BLOCK 8, LOT 33 • BLOCKS, LOT 34,
BLOCK 9 LOT I , BLOCK 9 LOT 2 , BLOCK 9 LOT 3 , BLOCK 9 LOT 4 , BLOCK 9 LOT 5 ,
BLOCK9 LOT 6, BLOCK 9 LOT 7, BLOCK 9 LOT B, BLOCK 9 LOT 9; BLOCK 9 Lot 10,
BLOCK.!/ LUI' l I, HLUCK!I LU'!' ll ,HLUUI. !I LOT 13, l!LOCK9 LOT 14, HLOCK 9 LOT 15
.BLOCK9 LOT 16 ,BLOCK.9LOT17,BLOCK9LOT18,,BLOCK9LOT 19 ,BLOCK 9LOT
20, BLOCK 9LOT 21 , BLOCK 9 LOT 22, BLOCK 9 Lot 23 , BLOCK 9 LOT 24 , BLOCK.9
LOT :ZS ,BLOCK I> LOT :l6, BLOCK!> LOT 27, BLOCK 9 LOT 28, BLOCK 9 LOT W, BLOCK
9LOT 30 ,BLOCK9 LOTJI ,BLOCK 9 LOT 32,BLOCK9 LOT33 ,BLOCK9 LOT34,
. KEY LARGO SUBDIVISION CB 05065 IN BEXAR COUNTY, TEXAS AS PLAT RECORDED JN
VOLOMe 9573 PAGE 13 Property Records, BeJW"CQUlllY. Texas,
... : .
RllsERVATION From anQ Exceptions to Conveyance and Wan:anty:
Easements, rights-of-way, and ~riptivc rights, whether of record or not; all presenlly
ra;;opJcd Iu:strum~nt.:f. utlK:.r ibmJ li~JJft w:xJ convgywn.;;cs, ·lhaL llflbct lbQ prupc;;ny; ~c:s fur '11e current
year, the payment of which Grantee assumes.
Grantnr~ fnr th~ cnn.qidemtion.. ~eipt nf which i,::: ar.lmnwlP..cfet-.rl._ A-nd ~nhjP.cl fn the n!V!t'VA1_i~n~
from and cx4'C)ltions to conveyance and wammty, grants, sells and conveys to GTantee the propeny,
together with all and singular the rights and appunenances thereto in any wise. belonging to have lllJd
hold it to Grantee, Grantee's heirs, executor, administrators, successors or assigns forever. Gtantor
binds Grarttor anc1 Grantor's heirs, executors, adlnmistmtors ancl successors to w!lmllll ancl 1orever
defend all and siugular the properly to Gtantee and Grantee's heirs, executon; administllltors,
successors and assigns against every person whomsoeverlawfully claiming or to claim the same or any
part thotoof,, oxocipt ao to tho reDervntioJtG &om and oxooptio~:to QOnvoycmoo cand Vt'QITIUtty.
nouns and pronouns include the plllllll.
Thi• instrument was acknowledged before me on Septembe~20!3 by Bm1on KJihn.
President, Helvetia Asset ]lecovery, fac. ·
!.
SEP 3D2013
·--·-
oom:.s OF .CQIFillENJ'Il\LITY RIGllfS: IF YOU ~ II Nll1'URAL l'ERSOO,
Ulf :rnr; fyLU.M.lf«.:i _J..rU!\JIU'V\'1..lU'f .t\QIJ l'H.l::S J.N:;fntU'ZNl" ~UlQ:i
YOO MAY R 9:f/:J l'AGh IJ l'l'Openy RecOl'Y Burton .~
President, Helvetia Asset Recovery, Inc.
-----·---
OCT 4 20l3
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. 'BBXAR.COUNTYtmrAS 0 -.
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GMND&: PARADIVca.tPORATION tiljOllDllUllNlilllfl
BmcARcotlNTY. 'JECAS '!!-~T~2~
c JJ ,.- 'IllNANDNIYIOOnoltARS_.ollowllD04-' • "' .,_ r
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Bl)XX31D'r6,mnrs:3UJr7 .J!WCX 3LOJ'l,'ll'.Ta .BIDClt5J.QT9•mocr5r.or10.
BLOCX s LOT 11,BLOClt swr 12,BLOCK:sLOT13. m.ocxswr 14,Bl'...oa:s rm 1s.
moorswr it. arnrs:star rt ,m.oats:rnr llBLOCr: SIDI' 19 ,Bl.OCXSim.20.
B1QCXswr21 ,BLOtar10,
BLOCltSI LOJ.'22 ,DJ.0Cr9 LOT23, BUXX 9LO'l'24,Bl..(J(X9
Wf25 ,llUXX9 IDr26 ,BLC>Clt9I.Or'ZI ,BLOCK9LO'J'21, BtOCK9LOr29. BLOCK
9 LOT JO ,m.oa::t LC1r 31,BLOC:lt 9I.Of 32,BLOCZ9Wf33. mocr !IJ.01' 34,
KBYLAROOSIJBDMSl)NCB OSll6SJNBl!XAllOOUNTY,'l'BXAS AS PLATRl!C(J!I&> IN
VOLUME9S73l'A.0Bl3Ptupid.Jlt1ca dl,BmKQaSJ, t.aa
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lauld it ton. 0 ,,, 0 t •• ~ - . . . . . . . . 2 ••• •• • ............. ~
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This Deed Is fil
ACl.by and throuah hisal!OnxWofrccord. Sam M. Cfrey) Yates. lll. lllllCCto enttY ofthe
0 following Findings of Fuct and Concbt.slom of Law in support of an Agrtttl Final .1udgtrttN of
hbltc Re[Jl'/mand.
L lll'il>INGS OF FACT
I. HOWARD M. KAHN is ID attoxncy licemed to pnctice law in !he Stete of Texas and is a
""""""'" nf•"" S'rATF. HAR Of' TRxuc
2. Respondent'a STATE BAR OI' 'fexAS Bar Cani Number is 11072500.
3. lbspondent maintained his principal place of praclice in Hanis County, Tcxu, on the date
this CUC 1Mlll first filc:d.
4. Sarah Keplinger, a licenaed n:al esbUe agent, rented aboUlle owned by her daughter and son-
in·law. Sherry and Hc:rlicrt Lllncuter.
S. Keplinger and the Lancm1en executed a writf!:n i11$1IUmcnt. The Lan.:astcn tbQught the
insuwni:nt reflected Kepli.ogcr's intent to purchase. the property in the fllnR. along with a
l'llo I
i ! EXHIBIT
.~§ --L----to
.
.-
- .
m:itationofthc amount of rent Keplinger wu to pay CllCh month to satisfy lhc purchase
price or one hlllllt!al rony lhOmlnd.lllld llOflOO '.IP CODE 78238 I
il.1'uiling Addr~~ Qf Dcbl1Jr_(if dlfli::rctn troin: Stred. 2ddrcss): M'i:iifffig Address nfJQini Debtur-(ifi:liffercnt tr01n s.tre~t :td l.-1..C 2n~t LLP)
Partr.c:r:>hir
()1her ;1f debtor is. not one of Lh~:ahovc cmiti<:s,
ID
0
f(a1!rnad
Sto~kbrtJkcr
Commodil)· llntker
)§ Chapter 12
Chupt~• J:t
D Clmplt'r 15 Petition l'Or
Rr Nan1re of.Of!bt~
(Chci;fi one 00.x.}
Tax~f.:Yhnpl Entirr
(Check box, if:npplicable) I[,?] Debts a~ primarify: con.sur.rit"r 0 l)i;bts ~re orirnari!v
debti;, defined. in I:! { ).~:C bu..;;incss debts. •
D Debtor is a ta."\"--c;o::n:;pt illrl"k.':l!l~. Ruic: J!X}()(b,i. S-i:e OtTicia! Fi:inn JA..
Filing Fe,.; w~ivJ;::r ri;;quc:>R.d {app!il:tih!c ~o .;liapt0r 7 ind1v1dtiafs oa!y;. !vfost
1
0
Dd~
Dcbt11r h: no\ a M~w.I! busin~s d;:-bror as dt:Iint". t::Or<$!dcr.J.rio11. S:e-.:: Otttcial fo:m 3B. ----· -- --- . -- -- --- - - - -- . -- - -- - -- -- -
r Chr:rtk all. 11,ppfkabl.e fm~es:
i0 A r.;<;'.°~
I?.! 0 0 [j 0 0 D '..,,,.,,,,,
~o tc S.'!O.frJI :,, $1.000.0f)l ~50.IX!O,fJOl '.b100.oor:=.001
itl j; Ji]t}
milli,)n mii/i1;n mil!ivn ;nj]li(lf; mi!ikm:
E~fimlltC~i ~.foOiiili(!s
r-,
'-'
~I (<;
0
$S':U.l0l . musi &e comf)fet1'ri and i?l;:din ~1.'i."1)'-r:ase.i CRQFTi BRADLEY, L.
All Pl'ior Ban'knintcy Cast:s filed. "'.ithia r.a8t. 8 Years {'It' more lha."l twO. u.uaa:b. add-i1ional sh Rl> !ridi~·iduu!
{Ttl be .::.oinpkLed ifuant· !o Section 13 C\ _15(di of111~
Scce.riri..:~ J-:xchan_gt~ At:r ~1f i 93-~ aud is rc.qu...---:>thig_ re:lief ·under chaprcr 1 L) I, rhe ailom._:y for th~ pctitiont::r na1m.~d i11 the foregoing 11ctition. dedare rh:-ir f
hll\'e informed rhe petirioncr thal-[ht) or~hcj nmy p1oceed 1111Jc1·ch~1pr..:r7, ·i I, 12,
or 13 oftiUc J J. Unitt.'it Stares Codi;, and hav?: c·:q11ained lbt- ri:tlief~ ...-ailabk undt.>r
euh snch .dmpt".r. I further ccrtjfj Thai l haw:.f dc!i'i'Cl't..._1 !O !he dehtor th1: 11ctici!
:qu~dhy ll lLSC !7~~;.J/ (~ 1./
0 Exhibit A rs-artad1cd an;rri,;t for /St; ..-Jays immedia.td!'
precedi11g the date or"thi:; p.:liLit•n ;)r fin a kmg..::r p;:r! ofsnch 180 da}'.<. lh.Un i11 any olht'!r Oi!>1ric1.
0 I
[J De-Ot-t.1r i'i::; dcbtcr !n a {i)n:ign p:n:'\:e.'~ding and h.as irs prilldpa? place ofb11siJ?.;s.<; oc pnncij)fiJ i">ssr.:is in iho::- Cnit..:xi S~ates in rhi;; l.}i~,trict. or ha~
l~O prin.;:fp:iJ pllhX. i)f busillc.s~; irr as-;ci~ in lb~ United St.ales but i:> a detl'fl:;.:> will 1)-.:. ~-1 ';';.;~ _in rt:i;iird w tilt'· relief .<;(ltlgflt In this !Jfatrict
Ii
Ceotificatw11 l:ly ;:i Deb!uo \\'ill) ~tside:i: &:1 a f emrnf of Rt!t.iilcntial Pro-µt!'ty
~C-hr,:ck ell 11T1pl!:-:;1~1l..: b 1;xcs.)
0
I
D J;cbtm· d.:1ims lliai u.r.di::r a_pµ!iC:: uonba11kruprcy k1w, iherc_ii.n: 1;ircmnstanct>s uncli:r which ih.;: ddi\or '8f1Hld be r-c:rmin.:-J-ro.c1!rc !lJt:
eil'.ir~ mrn~~"lai.1 •Jcf~nH Uw.~ µ:a;·c: 1·i:.->~ z, the.-judgn1~1Jt f,1r j:)\ISk,-;.S;:'.):-J .• aft<;;~ Ille- .iu: fHing
,,~-the p~~ liion.
11-52905-cag Doc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 3 of 15
H! ((\fft(;illl Fumu l (4/l()',:
Volunt.a11' t"etition
rThis :"J/JF'I..' nnt.;;f bt· coml){efed •?1rd ,filed ffi ever;..' ·~a.w:.)
l det.-bLre und('.f pcualty l)f pt.7j11ry that tlK iu!"Otnmtinn prnvi.:kd in thi!": peii\i,10 i~ true f dedare under P'..:naii}' of perjuty that tl;t: itifonaaHon p.rnvidcd m this Dt:lilion is
and eiJrrect true r I J 11f tillc i I. !)nftcd States Codt:, undCP.'itaud fl:lt' tclit:-f~walli!hle undcr ea.;:b ~mch
(Chtck :>nly on.e !'lox.]
chap1cr. an.> :>.ttOl'iluy :.:pre:.~nT!l inc ?.nd fa\ bunkruptJ,;y p;;::titim; ;.."';1-Cpir.J iln; pt:tiJiuuJ
D ! rcquest_relicfin acc1xdan~ \'lilh i.:ha_r-tcr 1" 11frirlr- 11 I in11Nt .~t('!tL~.- Code.
Cer'l'il'icd 'upie:; ufthe document:; requln.'!J h,v l J U.S.C. § 15 l 5 ::.re ar.achcd.
J1:~vc 0bl:ained and rc.riJ 1hct?Otice !t!qtLired hy '! 1 U.~.C- § 342.(J:i).
0 Pi.1r:>.llil.nl to 11_ U._S,C. § J5 l ! , -\crequcst reli_ef in.ac:C(\rdancc with th.,;-
ch';lPiel' of title t ! ::pccitied ~n dtis l'>Cti'titXl .t\ (:Crti1ic1I copy of th<:
<:":rdcr gt"t!!ll[ng rcco)'?.JJilk)n ofrhe lbr~ign m:tiu pro::e¢dini; ir.. arwchcd.
x NIA
(Sigr.uturc offcrdg.11 Repre.sc-ntatlvc')
-------·····-------
---~----
"ttlf~§~~6¥11ber (if not rcprc:senl-:.'-11 by ::attor11cy-·J -------···--------·--·· .. ---------·--·--·
Dare
Date
Signniture of Attornl':y:.t· Signann"f of~o:n-Att.orney B1n1kruplty Pr:titfon Prtpa,.er
x l dec/11rc_ n11dcr penally of perjury thnt: 1. L} I -am u bitnkrup1cy petition pre.parer ?.S
defim::Ll in 1-l lJ.S.C. § 110~ (2) I prcpar.xithis dtic11mcri1 for COHlptnsntiim ~tl)d have:
f.'JfC"t'i.:idtd the deht iuid infur:natiori
Printt:J Name l)f .<\.ttOr/11!).' n~r 'J)c:btor(S)
---------·-. ··------- required under J l ll.$.!.'. ~§I t!)(h), lJO(h), and 342\_h); r.nive Deen pro1m1fgated pursmml to Jl U.S.C. S rl(ith) se1ti11g a
mu.x.imum fee fof services d1arg(~aJ)k b;,.. bankrupti.:y pcriti(Jll .Preparers, l h~vc giv . . . n
the Jebtor norkc of the nia.xim~ amown bio:foril preparirig any di."1Cl.1rrient for filiT1g
for a debtor (1r at:ci::pting any lt:e TI-om tht: r.leblor:· as ocqu.ircd iti that ~ei..:tirn-..
(lftic,f11 Form_[<) j,.;-atm-::_bcd
·-·--·-···- ··-·----------
Adi:lress
S0dal-Stcuri1y 1iumber i!f the hankniptc.y pi:tifion. _preparer i.~ net afi
iudividual. ;,t:1k: the Sod~l-S.ecurity nt!mbcr nf !ltl' officer. principnt_
"In a '.A:l.SC i11 whk~b § 707(h-.l(4 t(D) ::tpp-liei>. thii; ~ignntur-t .· no- kDC1.'!!kdg_e.aikr ar. .inq!iiry· that the i0forn~atirm hy l J U.S.C. § r HJ.}
ii~ th.;; :><:hi.·... tlilc~ i~ ini_·on(;l.:l.
Sig:oatu1~ ofUi:bl~hi~-per.">on,
or purtnt~r v.i1r;s.c Sor..:ial.~Security numfx:r i-J pn~.,.iUed !<~>\iC.
--~-- ........
-r;a e or Atltlloriud Inciividua~
-----~- - ~----·---------·
I;., ; .
N nf all otfo:r fndivid11-ah w-,.._,..1 rrepa;ed >1r
assi;;tt:d in prepsri,1g-this ;Jor.:t11n!!flf o.u;k.~<; the l;::tnkropi..::y 1v..:ti!i.!fTlwn
pi::r:ffj!l.
pri!pater ·8 .f{2ff;<.~e Hi compiy H"fT~I r11e pra1·i.~~r;n.~ r;f r.irfr. I I
,;fJJankrupi('_l' P-:-(xedr;rtl mttr re:;Ulf i11/in~·.1· or im1)r-i.mm 1ffnt
and rhe l·'edera/1?.ul~.s
urboih. ,:-: U S.C;; ilO; !-8 f.:.S.C. _.:: J-56.
11-52905-cag Doc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 4 of 15
UNITED STATES BANKRUPTCY COlTRT
fn re_<:;R,OFT, BRAD!.,EY, L___ _ Case No.
Debt1ee or bankruptcy
administrator tlmt outlined the opportunities for available credit counseling mid assisted me in
_perfo1ming a refated budget ana1ysis7 but I do not have a _ccttificat.e frorn the agency t(V <.'.{J.re is_tlled
11-52905-cag Doc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 5 of 15
B !D(OOicfol t:{'!m1 t, E)~h. D)(Jl/091-Cont.
0 3. I certi l) that I requested credit counseling services from an approved agency hut
was unable tQ obtain the services during the seven days from the time I made my request, and the
foJJo,,.ing exigent circumstances merit a temporary waiver ofllie crcdir cotmseling requirement
so I can file my hankruptey· c:.:t'"'?. no-..\;. [~un1n1ari:tl! e.:-vith respect to financial responsibilities.);
n Disability. (Defined in 11 U.S.C. § l09(h)(4) as physically impaired to the
extent ofbe.ing unable. after reasonable effort. to participate in a credit counseling
briefing in person, by telephone, or through the Internet.);
;'.1 Active military duty in a military combat zone.
CJ 5. The United Stales trustee or bankruptcy administrator has detennined that the credit
counseling requirement of 11 U.S.C. § 109(11) docs not apply in this district.
I certify um:!er pcm!liy of perjury that the infnrm01tiM1 provided above is true and
cmTect
Date: 08/2312011
11-52905-cag Doc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 6 of 15
ln re _G~F:_()f=T, Bf3ADlEY, L c·ast.No.
Dcbl<>r {If known)
SCHEDULED - CREDITORS HOLDING SECURED CLAIMS
~;t1ttc ihi::- uouw;c, u~ai!..iuis addn:~!i,,. irn.;'ludir~g 1.ip-••:otie, MI~ use !ht: coritinuation she.et pro.'ltidcd.
If any entity nthcr than a spou:>i:'. in a joint ca<;e niay he jointly liabk on a dai1n. place an "x··~ in lhe colun111 labeled "CodC"bl'or," indudc rbc
i.::::nri.i:y 1;n the apprupriati.:: schcduk. of credilnrs, nnd cornplet.c Schcdu!c J-r-... Cndi::htors. If ujoint petition is fifed, stat~ 1-vh~ther tht." husband. \VitC,
holb ol' !h.:n1. or the n1arit.a! cGn1nn1ni1y ni:.iy be liable on each elairn lry pla,,,;ing an '·fl,'' ''\1i./,'' ;'1." <)r '·C"' In. the column .labeled "f lusband, V./ifc,
J<1irrt or Cnnn11unitv."
rr the c!ai~1 is .:.·.ontinge.nt. f)iace an ··x"" irl the t:nlurnn !ahded ··(:onrinzl".nt.''' rr lhe dairn j~ unliqui.1~1ed, pl~..:e ~m ~nc 11f
the~- 'three co1trmns.J
Total the ·co1wuns bbefed-'"A1noonl of Claim \Vithour l)eductiog 'V~lw~ of Collateral" and ''U1tsccliJ'~1J .P(1rtioo. if Any'" in the-box~s
lnbc.k:d ·"'[\•ta!(_<::)" o-n tl'te. kist ~ht::.:t of the eompktcd scheduh:;. R-epoM thd totaJ f'rom the -ct\hitn;;:; h1b.;lcd -AmoUin of t;tai1n \V~thct:t- DeJuciing Val:.ic
of Cc;U.at:;'.:ral" nbo on tbc. SufnnHl1}.--flf Schedules ~ind. if th_c debtor is an individusl wiLb prfr;:iariI:y con<>unler debts, report tl1c iota! from the. c11lunu1
labeled "l>nscc:.ired-Portion. if At1:/" on the-Statistic.al Sumn1ary t.i!"L:erLain Li.ahilitics anc.I Re.lrtted Dal Schcdnk J).
11:-~~~~r~._~5,;~~~~~~-.vAND l f.·~· ~"-;o :_.zf_· DA~~Zt~;~~D~A·:~I: ~ ~-· 9 AYto~i~·iii~~LAIM ~~~~?~~~-. i
j INCLlllJING ZIP CODE ~
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CHASE BANK
p 0. BOX 94014
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LIFE ESTATE OR I
1' HOMESTEAD I
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x ,I 405.000.00 I
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25,000.00 I
I1 PALANTINE, IL 60094 I 1. ~---- I J I \ I I
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SECURITY SERVICE FCU
.1 16211 LA CANTERA PKY i H lI MDX
2007 ACUP.A
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i 19,000.00 -0-
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II SAN ANTONIO. TX 78256 ! I I I ,
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FIRSTMARK 1 !
! P.O. BOX 701650 \ \ H . \ X 6,800.00 -0-
SAN ANTONIO. TX 78270 1 .. J_ i ii.-~ir£$ _j_Q_OO.O•.QQJ,_ _,__'---+-~ . ../
eonrinuation sh¢:::\.<; ~uhh~mt i> j$ !$ 1
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(ti~C-1.)Jl})' O!! ;i:.!;.,t pa;.!.t::)
i_;s_·____ 4 ii.oaa:oo·-r ~ ---2-s-.o-_0-9-:0-01
(~e.v011 l:'J':iG rn;. Su11?mar_.· ,,f (If <:ipf1fi.:11hl:::. n.:p:in
S.:::heduk;..) u!S.{< ;Jn S1a!i~:u:::1.i
~u!el forth dn th_t: 5heets prcvipriati: 0cheduk: orcri:<.filors, and cornplcte SChetlulc H-Codebtors. lfajoi.t1I pt::litiori is tiled. m:.:.te \.Vhelher the husband. \>t·itC~
both ofthcui, tir lhe i1Jarital conHnnnity ff«1Y b~ liable on each clairn by placing an ''H,'' "\V ," "J," tlr "C" i[l tb<.'.. colu1'an lnhek~cJ "Husband. \Vifc,
Soint_. or Co1nn1unity." 1( thf: dalln is contingent~ pJsce an "X'· in the cnlnrnn l~hdt!d "Cernti11_~;ent_" lffh~ cfaitn. is ;.1nJi,1uidatt'd, pla<,;e n.n "'X" In th.:
C{)n.mn Jab..:;l..;d 11 lJnliqlddt1ted" l l'tb..:o clain1 is dispute~i~ pine~ ;111 ''X" .in the colu1nn labded "Dispuhxl.'' (You m:iy !Jt'."t::d lQ p!aet: an "X" in 1norc
than one of lh~:;~ three colu111n.'i.)
REporL the tot::>! ~)fctaim~ li.c!ed on ~lit-h. sh~ct in the bo:t. lubcl . .xI "Subtoto.I s" nn c" un each sheet RcrL.nt 1hi.:- fo!af of ail
amount..:; nor cnth.led to priority li&icd on lhb Schedule E in rhc box labeled "Totals" on the Ja.."1: s.he~1. ofthr; cotnpI~tcd .sclt:'.duic. lnJi-..-ftlt1a.i dc-btur~
i.\'hh primarily cOnsuiner debts,report thjs total aiso on 1he Stal.i:st.ica1 Summary nfCenain Liabilities and .Related Dal.it
0 Domestic Suppnrc OblJgatJuns
(:lairn.) for Jom..::stk support ;J1a1 an: (I Wed t~) or r.:-cnverahle by il :-i.puusc. foimcr Sj)nuse, or child of the debtor. nl' t'le. psrenl: lt~gal guardb-'..il~ t)f
rcsponsihfe l'eia.:·ive of such a child, cir a g_;Jvern.rnental un.it ro \Vhon1 Sl!Ch a tlo~ne~tk .s.upporc ciaiin has teen <::.'lSi:;ncd tt) tl\i': C\"t:eJ?t f>r«1\"'• !t~d fri
i I ti.S.C. § 507(a)fl).
o· ti:x1cnsiOas lif credit in Dll invofunt.ary ease
Claims aris:ing ie the orin~s~ or financial ::i.iT'1ir:...: at1.:r tI1,,;: c~immence:rnenl of the 1;~:isc but hef1';rc tht t.'arlicr of the
ai1pointmi;;nt of a trustee or th~ o:rder for relief I 1 U}l.C'. § 50?(aJ{3 ).
\V;.iges, salarie.. ,,.. a-nd cnnVA'li·.:;sioris.. !1H.·ludir1g vacar.lon, .scveiatin;1 of t1.1sin;:;ss, \vhicf::lcycr 01.::~u:rred firi>L lt} th;.: cxt(:.1ir prnvidtd 11\ J l C. S.C. § 507\a.)(4.J.
0 Cfl;n!r-ibutions t~ employee h~~n~i'h p·!;;n,;
fVl<)!JL'.V 1.;W~d (\~ ·.-.!npk,\.t:C ilcn:;;fi1 p.hiJ~!> f\,!J .~<,;t 1,·i.:..;...::-; t°(:'.jl'.Jcft:Li n'ilf!i~l j 30 d~)'S i1nn1ediari:Jy lJNCt'dlng th<: f1J.:!1Q. t)f· t!JC Oftglii~d p-;..'tltiOtL ()f \!\l:
C~:i~i.Ui~n of tw~iH~~s. \rhh:h-:ver (~CJ;i.:ff"ed nrsL lo 1.hc extent provided in l .! U.S. C. s507(i!.)(5 ).
11-52905-cag Doc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 8 of 15
In re CROFT,B.~R~A~D'-L=E~Y'-'''-"l~"------­ C'asO?- No. _____________
Ochtor (ij"knor.,1'ij
0 Certajn farmers -=tnd fishtr1nen
{]ain1~ of Certain fam1crs and fishcsrrttt:~n. up-kl $5, 775* ~r"fittmcr or fish.:nnan, a.gainsl th~.dcbto.r~ as provit.fod in } I U.S.C. § 501(~)(6).
0 Deposit$ by in:dt\·iduals
Claims of !ndivitiuaf~ up to $2~600~ fOr depo::.:ils iiJr th..: jJllrchase. .l~sse,.t.ir rental (1f property vr .scrvicts tbr pcr::;onat fa;nily, o:· bous~h0ki w-=i.:-.
thal 'Nen: 1101 d('Jivi'.'n::d or provfUW. 1 J U.S.C. S 507UL)(7}.
0 Taxes and c:ert~in 0th.er. Debts ()n1~d tn Go\.·ernmenfri.l Unitl:
Taxes, cus1on1s-dutlcs, and penaaies O\.\'ing to fc-dcraL .<:;t""Jte, and local gov..:-rn1rrc11ta! unils as sCt f :fwreqfii•r li'ilh re:-::pect r.o 1...'ases·cnmr1u'1u.·ed on e;·r af!f.rr tht: dr.tte aj·
a<(ius(trl.f'ni
c{,11tin11ati.on shctts ;tltci.chef thc:. p...:-tition. 'l1;_c ci:in1pJi:l~ ;:u.x;t.n:ut nuinho..:1· of ~illy accounr rlli.3 11el)lur tws vrith the crcdfrnt is
w;eii.1i to the tr:.1~1:ee aud the creditor and 1nay be proviC~rl if the dehto; choo.ses to do so. !f 11 n2i11or child is.a l..'.:redi'ior, ~!~le th\:. child's initia3s and \be na1nc and
nddri::ss oftht: child':\ parer11: Or-guardifm, such as "...\.B .. ~ 1ninor.chUd. b.Y io}1n Dot~ gua.rdian.'1 l)o not d:is<:1osc-thc <:hild',s name:. Sec, l l U.S.C. ~ l 12 und F\:d.
R. Bankr. P. J OO?(n1). Do m.1"! lne-ludt>. tlc.im~~ lisre.d. ln Sd1edu!~s D ~•nd E. If ail cn.."(l_ilors will nol fit on this p. m1securOO cJauns to re.oorr on this Sch~ dnIc,.
0 Ch "
t!]
CRPDfTOR'S NAME, ~
~ o: r
> DA TE CLAIM WAS 0 AMOlJNTO!'
r
MAILING ADDRESS
INCLLiD!NG 7.!P CODE, "'rc ;r'"~o ~
c
;z
.:....:·;.::i
z ~
lNCUR1UoD AND
CONSIDERATION FOR
z
CD
\:)
f:
«:
Cl
8.
f::
CLAIM
AND ACCOUNT NUMBER "'
'1.) <-.;::;
co 0 ""'=.
CLAIM. z s
~S°t'•' trr:strr1t.:fion.> at~·1v,o.: Q
0 ~...., 9. JF CLA[M IS SlJBJECTTO
"'u z~
?l:
<>::
:!!
I r_;
I
~ ~
:t: SETOFF, 80 STATE. ~
Cl
ACCOUNT T>:(.J. 4006
:.:.i
----·I
CREDIT CARD DEBT
I I
I AMERICAN EXPRESS H x I
50.000.00
p_Q. BOX 650440 ,
DALLAS, TX
!' I
ACCOUNT KO.
CHASE BANK
54 19
I H
CREDIT CARD DEBT
x I
l
j
40,000.00 I
P .0. BOX 94014
P.~LANTiNE. JL 60094
I l
,..\C('OUNf NO. 6402 CREDIT CARD DEBT
I
!
BANK OF AMERICA
P,0 BOX 851001
DALLAS, TX 75285
;\CCOUNT NO. 5086
I
I
I
H
II
!
i
I
1
x
,._l_ _
I
I
25.000,00'
Ii
,
dA CARD SERv ICEti
~
r.o. oox 10222
...
S.4N Af'JTONIO, TX 73247
~
II l
I
I CRED!T Cf.-..RO DEBT
! I
I
x
I
l' 25,000.DO t
I
SubtctiJ> 140.000.00 I
T('tl.!>
t'Uilt' unly (•n !......;;r p3ge of th~ ~·omplei~ ):c.111..-duk: F.)
O<:i:;rr.n ~is<: cii S.1mlmary or;.:dM~dulc~.. ~J1d. i! i;ppficehJe, nn th::: Siati~;liot!
· :}LlJr>!WlrJ< vrcen.;it11l:fabilt.K:?.1mo J~d-~.~ect D~M.>
I
BoH(>tlrci!,k,~9.!?-z,\;ff9o,goc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 10 of
15
In r~ _J::_ROFT, BRADLEY, L
Case N o . - - - - - - - - - - -
Debtor (if known)
SCHEDULE F - CREDITORS HOLDING UNSECURED NONPRJORITY CLAlJ\lS
(Conlinuation Sheet)
CREDITOR'S NMvlF., DATE CLAIM WAS r- Cl AMDUNTOF
z c
JvlAfLING A DD RESS
!NCUJDING ZIP CODE,
fNCURRED AND
CONSIDERAlfON FOR l 0"' UNT NO.
LEGAL FEES
MYST! MURPHY
5625 BROADWAY, #2
SAN ANTONIO, TX
H
I x I 10,000.00
ACCOlrl'tf NO. CLAIMS
!
BARBARA LOWRY
1600 NE LOOP 410, #202
SAN ANTONIO, TX 78209
! H
! x i00,000.00
ACCOU~f NO. LEGAL FEES
CHARLES GORHAM
1250 NE LOOP 410,#830
! H 10.000.00 II
SAN ANTONIO, TX 78209
-Ac-_C_'C_>1-!N_T_N-'0--------1,f---~._..----1f-LE_G_A_L_F_E_E_S________ ··--,
1-_
JONA THAN YEDOR l H x 5.000_00
100 NE LOOP 4-iG, #1075
SANANTONIO, TX 78209 l
ACCf.Jl.r}.'T NO. I LEGAi l=EES
CHARLES RILEY x
I
15,000.00
320 LEX!NGTON AVE
SAN ANTONIO, TX 78215
~hect no. of .. :;on~inillitin11 shccrs Cittachtd
lo S.:.hedt;k t)fCrcd~t~;.; Holding i.\nsccur.co
N,~>10prk\rity C!:1.i.t1.r:-;
n 6 r,omc.lkJ?.~~91tm~JJ:,.m~oc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 11 of
15
Jn re CROFT, BRADLEY, L.
Case N o . - - - - -
Debtor --------~ (if known)
SCHEDULE F - CREDITORS HOLDING UNSECURED NONPRIORJTY CLAIMS
(Continuaiion Shcc-t}
~
CREDITOR ·s NAME.
MAILING ADDRESS
""
f'?
~-
.v
S'i E
~
DATC CLAIM
INCURRED AND
wAS
:fj
~
;-
AMOUNT OF
CLAIM
INCLUD ING ZIP CODE, ro
w 2;: ~::;:
:z0 C.: CONS_ !DE_RAT!_ON FOR 2;
'" <
8
AND ACCOUNT NUMBER O <0 ::;: CLAIM. t; ;::o
1&emstruct1om>t1bu"tl 0 ~....., IF CLAb\1 IS SLlBJE.(;f'f() ,,.~ Q'
I
r"'.
'-' u R
1~ -
~
;: SETOFF. SO STA TR. -~ g
~=~~ ,;o; - -· I CRCm CARO ~;,. ,_x·--l--~--l--+---2--0::-0.-00
__
P O. BOX 182564
COLOMB US, OH 43218
ACCOL"NTNO 7218 CREDIT CARD DEBT
HSABANK c x 25.000 00
605 N. 8TH ST., SUITE 320
SHEBOYGAN, WI 53081
-.\Ct::OUNT NO. 0893 REVOLVING
SEARS
P.O. BOX 183081
c x 3,000.00 !
'
I
I
DAViD MCLANE H x 8,000.00
1924 N. M.l\IN ST.
SAN ANTONIO, TX 78212
ACCOUNT NO. SPOUSAL SUPPORT
CHERIE JEFFCOAT H x 6,000.00
5625 BROADWAY, #2
I SAN ANTONIO, Tl< 70209
S11c~~t ni:t ·------ {!( ____ c-;:mti.nuntion sheets.: ;.n:.ached
Snomml> l_S------1
~ 62,000.00 I
IU~ or1iy on last page .)fth I i>
i ~port ahli 1::;ble- 1Jn _1he Si:.1i:i~o_<:-:d t
$iJmmary nfC~rtain Lia.hi!itie~ and Relat~d 1.>lita.i l-.1----~-'
I'6fi/}fficJk~~R~.s:ff!b,Q_oc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 12 of
15
lnre ______
Case-No.---·------------~-
Debtor (ifkMwn)
SCHEDULE F - CREDITORS HOLDING UNSECURED NONPRIORITY CLAIM:S
(Contiot1~ui.un Sheet)
r CRCOITOR"·S NAM£,
Ml\ILING ADDRESS
INCLUDING ZIP COIJE,
AND ACCOUNT NUMBER

(Rf:rin•! ,d..;e 1 1111 ~H~i·n~;:.-- .;:-,fSelv~drJ,,..~ 11nd. :r :1.p~li!..'~01.,, 011 th:,, l::t:ltisti.:;il
Ii $
58, ,00 0.00
7
I
l
S1!r!E.'"11'vJ ofCe11ai1~ L\ahi!ilie1' ,'rnd Related D;:..t.:..) ,_1 ------J
11-52905-cag Doc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 13 of
15
IN THE UNITED STATES BANKRUPTCY COUKf
FOR THE WESTERN DISTRfCT OF TEXAS
SAN ANTONIO DIVISION
JN RE: CROF"I', BRADLEY L
CASE NO.
Debtor
VERIFICATION OF CREDITOR MATRIX
The above named Debtor hereby verify that the attached list of creditors
is true and correct to the best of his knowledge and that it cooresponds to the
creditors listed in my schedules.
Dated: August 23, 2011
11-52905-cag Doc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 14 of
15
Chase Bank
P.O. Box 04014
Palantine, IL 60094
Security Service FCU
1621 i La C;mtern Pky
Sau Antonio, TX 78256
First Mark
P.O. Box 701650
San Antonio, TX 78270
Mysti Murphy
5625 Broadway #2
Sai1 Antqnio, TX 78209
Barbara Lo\v1)'
1600 NE Loop 410
San Antonio, TX 78209
Ci!iBank
P.O. Box 182564
Colombus, OH 43218
Sears
P.O. Box 183081
Colornbus, OH 43218
Cherie Jeffcoat
c/o Mysti Murphy
5625 Broadway,#2
San Antonio. TX 78209
American Express
P.O. Box 65044ll
Dallas, TX 75285
Chase Ba.'1k
P.O. Box 94014
Palantine, lL 60094
Bank of _i.\;n_erlca
P.O. Box 851001
Dallas, TX 75285
11-52905-cag Doc#2 Filed 08/23/11 Entered 08/24/1115:26:16 Main Document Pg 15 of
15
US Bank
P.O. Rox 790179
SL Luuis, MO 63179
Charles B. Gorham
1250 NE Loop 410, Suite 830
San Antoniu, TX 78209
Jonathan Yedor
100 N.E. Loop 410. Suite 1075
San Antonio, TX 78216
John Cave
:ioo Convent #1080
San Antonio, TX 78205
EXHIBIT 4
1
1 IN THE UNITED STATES BANKRUPTCY COURT
2 FOR THE WESTERN DISTRICT OF TEXAS
3 SAN ANTONIO DIVISION
4
IN RE: * Case No. 14-50980-cag
5 *
BURTON M. KAHN, *
6 *
Debtor. * October 15, 2014
7
8
9 ----------------------------------------------------
10 BEFORE THE HONORABLE CRAIG A. GARGOTTA
11 BANKRUPTCY JUDGE
12 ----------------------------------------------------
13
14 #59 - Trustee's Motion to Sell All Non-Exempt Assets,
Claims and Causes of Action.
15
**********
16
17
18
19
20
21
22
23
ORIGINAL
24 Proceedings recorded by electronic sound recording,
transcript produced by transcription service.
25
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
2
1 A P P E A R A N C E S
2
3 HAYNES and BOONE, LLP
By: Ms. Lisa S. Barkley
4 112 East Pecan Street, Suite 1200
San Antonio, Texas 78205
5 Appearing for Helvetia Asset Recovery, Inc.;
6
7 PRO SE DEBTOR
By: Mr. Burton Kahn
8 1706 Alpine Circle
San Antonio, Texas 78248
9 Appearing pro se as the Debtor;
10
11 HAYNES and BOONE
By: Mr. Werner A. Powers
12 2323 Victory Avenue, Suite 700
Dallas, Texas 75219
__
". /
13 Appearing for Helvetia Asset Recovery, Inc.;
14
15 CHAPTER 7 TRUSTEE
By: Mr. Johnny Thomas
16 St. Paul square
1153 E. Commerce
17 San Antonio, Texas 78205
Appearing as the Chapter 7 Trustee.
18
19
20
21
22
23
24
25
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
3
1 INDEX
2
3 WITNESSES Direct Cross Redirect Recross
4 Gary Mowrey 83
5
6 EXHIBITS: Offered Received
7 (No exhibits offered in this hearing.)
8
9 RULING OF THE COURT: 91
10
************
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
4
''-__..-' 1 THE COURT: We have one 9:00 o'clock matter
2 on our docket this morning. This is on Page 1. Case
3 Number 14-50980, Burton M. Kahn. This is on ECF
4 Number 59, the Trustee's Motion to Sell All Nonexempt
5 Assets, Claims and Causes of Action.
6 May I please have announcements.
7 MR. POWERS: Your Honor, Werner Powers and
8 Ms. Lisa Barkley for Helvetia, which is -- who is the
9 purchaser.
10 MR. KAHN: Burton Kahn, who's the Debtor,
11 your Honor.
12 THE COURT: Thank you.
13 We are missing the Trustee.
14 Did you see Mr. Thomas this morning?
15 MR. POWERS: We did not, your Honor.
16 THE COURT: All right. We obviously can't
17 proceed on this without the Trustee being here, so.
18 MR. POWERS: Should we go call him real
19 quickly, your Honor?
20 THE COURT: We'll take care of that. We'll
21 find out. And I ' l l ask my law clerk in --
22 (Sotto voce exchange.)
23 THE COURT: I'm sorry for the delay, but
24 we have to have him here.
25 I assume -- I've read the moving papers. You
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
5
1 contest the motion to sell; is that correct, Mr. Kahn?
2 MR. KAHN: Correct, your Honor.
3 THE COURT: All right. And I certainly want
4 to hear
5 And you all support the motion to sell.
6 So, very good. I do have a 9:30 matter. Once we
7 get Mr. Thomas here, we'll proceed, ladies and
8 gentlemen. But, obviously, I can't go forward until
9 Mr. Thomas gets here. So, we'll find out where he is.
10 Are there any witnesses, or anything like that,
11 or is it just argument?
12 MR. KAHN: Yes, Your Honor, there's one
13 witness.
14 THE COURT: Who would that be, Mr. Kahn?
15 MR. KAHN: That would be Mr. Mowrey. He's
16 an appraiser, and he made the -- the appraisal of the
17 Joabert property.
18 THE COURT: Okay. Were you all aware that
19 Mr. Mowrey was going to be called as a witness?
20 MR. POWERS: We -- We sort of suspected he
21 might, your Honor, but we don't think that he has
22 test- --
23 MR. KAHN: Your Honor, I sent them a copy of
24 the -- the subpoena that I served Mr. Mowrey.
25 THE COURT: Okay. We'll take that up.
'---/
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
6
1 Because I need to have Mr. Thomas here. He needs to
2 be a participant in this discussion. So, we're going
3 to I apologize, but we -- we've got to have him
4 here, so ... Maybe he was delayed in traffic, maybe
5 he got his times ... But he's very punctual. This is
6 highly unusual for him.
7 So, if you don't mind, please, what I'm going to
8 do is step away, and then we'll start as soon as he
9 gets here. All right?
10 MR. POWERS: Very good, Judge.
11 THE COURT: So, if you'll -- you'll just
12 stand down for a minute.
'-____/
13 Do you have exhibits to present?
14 MR. KAHN: Yes, your Honor.
15 THE COURT: Okay. And do you have exhibits
16 to present?
17 MR. POWERS: We have impeachment exhibits,
18 your Honor.
19 THE COURT: All right.
20 MR. POWERS: And if he And if he's
21 allowed to put this witness on, I'm sure we will call,
22 as an adverse witness, the Debtor.
23 THE COURT: All right. Well, we•ll deal
24 with that when Mr. Thomas gets here.
25 Mr. Kahn, do you have the -- do you have copies
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
7
1 of your exhibits for the Court and also for opposing
2 counsel?
3 MR. KAHN: Yes.
4 THE COURT: All right. Very --
5 Ah. There's Mr. Thomas.
6 MR. THOMAS: I'm sorry, Judge. It was a bad
7 morning.
8 THE COURT: Mr. Thomas, do you need just a
9 minute, and then we can start? Would that help you?
10 MR. THOMAS: That'll be fine, Judge.
11 THE COURT: All right. So I ' l l --
12 Mr. Thomas is here. And I ' l l -- I ' l l come out in,
13 like, five minutes. I do have a 9:30 matter. I'll
14 probably ask the parties how long that's going to
15 take, because this, I think, is going to take longer,
16 if I'm just going to make an educated guess.
17 Mr. Ayers, good morning.
18 MR. AYERS: Your Honor, we think about 20
19 minutes. I mean, it's very straightforward.
20 (Another matter taken up briefly.)
21 THE COURT: So, you think about 20 minutes.
22 I assume that your matter may take a little bit
23 longer; is that correct, Mr. Thomas?
24 MR. THOMAS: I think so, Judge.
25 THE COURT: All right. Let me step away.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
8
1 If you all want to talk for a minute, get situated,
2 and then we'll start the matter. I might -- To be
3 fair to you all -- or, I'm sorry, I might break to
4 take up the other matter. All right?
5 MR. POWERS: Yes, sir.
6 THE COURT: So, just to let you know.
7 All right, ladies and gentlemen. We'll take a
8 five-minute recess. Okay? Thank you.
9 COURTROOM DEPUTY: All rise.
10 (Recess.)
11 THE COURT: Mr. Thomas, could you -- could
12 you come to the podium, please?
13 MR. THOMAS: Good morning, Judge.
14 THE COURT: Good morning. This is on your
15 motion to sell. We have two interested parties. We
16 have the Debtor, Mr. Kahn, and also we have -- Is it
17 Helvetia, is how you pronounce it?
18 MR. THOMAS: Yes, your Honor.
19 THE COURT: And they're the purchaser of
20 the -- of the cause of action, and, I ' l l just say,
21 generically, the nonexempt assets, claims --
22 MR. THOMAS: That's correct, Judge.
23 THE COURT: -- and causes of action.
24 I think this is going to take a little bit of
25 time. Were you aware of that?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
9
,'--._./,
1 MR. THOMAS: Yes, sir. I had seen the
2 exhibits, and the objections, of course.
3 THE COURT: I would We could go for about
4 two minutes, then I'd have I'd call the 9:30
5 matter. I don't think the 9:30 matter, as Mr. Ayers
6 has described on the record, is going to take more
7 than 20 minutes. So, what I'd like to do -- Do you
8 have
9 Does anyone have other engagements later on this
10 morning? Because I would take you all next.
11 MR. POWERS: No, your Honor.
12 THE COURT: Mr.
13 MR. KAHN: Your Honor, I do have a witness
14 that is an expert witness, and -- and I have to pay
15 him, you know, his fee, which is kind of blood money
16 at this particular time, so ... And this delay is
17 costing me money.
18 THE COURT: I understand that, sir.
19 MR. KAHN: If I -- If -- If If I could,
20 in our few minutes, just put him on. The only thing
21 he's going to do is submit this -- this appraisal, and
22 that he made the appraisal, and just a question, "Did
23 you make it," et cetera, and that's it.
24 THE COURT: I -- Mr. Kahn, I certainly
,___,, 25 appreciate, from your perspective, it may take a
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
10
1 couple of minutes, but based upon my years of both
2 being a lawyer and a judge, I suspect it will take
3 longer. So, while I am sympathetic to the cost
4 involved, the fact we're in court, there's an inherent
5 cost to it. I'm going to ask -- ask you to stand
6 down.
7 Mr. Thomas, I ' l l come back to your matter in just
8 a minute. I'm going to deal with the Valence
9 MR. THOMAS: That would be fine.
10 THE COURT: matter.
11 So, if you all want to step out for a minute, you
12 may do so. You can leave your stuff here.
,_____, 13 But, Mr. Kahn, you're just going to have to wait,
14 so Certainly, I am sensitive to that, but I don't
15 think this matter is going to take, necessarily, all
16 that long.
17 MR. POWERS: Thank you, your Honor. We'll
18 be outside.
19 MR. KAHN: (Inaudible; too far from
20 microphone.)
21 THE COURT: Well, I've excused the -- Go to
22 the podium, please. What's your question, Mr. Kahn?
23 MR. KAHN: I did not submit -- bring with me
24 five copies of the appraisal, I had three, so that I'm
25 going to -- in this time period I'm going to run over
'--._/
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
11
1 to the Clerk's office and get a couple of -- of
2 exhibits that I want to put in, then I will have five.
3 But the appraisal is -- was -- was submitted in
4 the -- in the filing of my motion -- my objection.
5 Also, I have a chart that was also filed in the
6 objection, and which I have a large scale of it, so
7 that you could easily see it. And I don't have five
8 copies of that.
9 THE COURT: I ' l l take that up when we come
10 back. The local rules are pretty clear on the
11 requirements in terms of number of exhibits, why we
12 need the number of exhibits for purposes of conducting
\ ....___./ 13 the hearing. While I'm sympathetic to your situation,
14 as a pro se debtor, you're not excused in those
15 requirements.
16 MR. KAHN: I'm not asking -- It -- The
17 one thing that I'm going to do, if I ever get this
18 this -- this whole situation squared away, is I am
19 going to go to law school, and not be a -- and -- and
20 not go to -- I should have gone to law school, instead
21 of engineering school. But, anyway, I will do that
22 when I -- when this is over.
23 Thank you, your Honor.
24 THE COURT: All right. So, I ' l l come back
25 to the matter, and we'll -- we'll deal with all of
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
12
1 that.
2 (Sotto voce exchange.)
3 (Other matter taken up.)
4 THE COURT: I'm going to take, like, a
5 three-minute recess, and then we're going to start,
6 Mr. Kahn.
7 MR. KAHN: Thank you, your Honor.
8 THE COURT: Thank you, sir.
9 All right. So, just a very short recess, and
10 then we'll begin with the Kahn matter.
11 COURTROOM DEPUTY: All rise.
12 (Recess.)
13 THE COURT: All right, Mr. Thomas. This is
14 your motion. We're going to start with you first,
15 then I ' l l hear from the other interested parties.
16 MR. THOMAS: Mr. Johnny Thomas, Trustee and
17 Movant.
18 This is an application to sell the nonexempt
19 property of the estate. It mainly involves some
20 shares in Helvetia, a thousand shares; a hundred
21 shares in another corporation called Joabert; and,
22 then, numerous lawsuits that he -- that Mr. Kahn,
23 the Debtor, claims are valued at $1,470,940.
24 THE COURT: A million or a hundred million?
25 MR. THOMAS: One million.
'~
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
13
1 THE COURT: Okay.
2 MR. THOMAS: And the -- the shares, he's
3 valued at 3,734,309.
4 THE COURT: So, may we break it down,
5 just -- I know I asked you to go through a recitation,
6 but help me out. So, we -- You want to sell a hundred
7 shares of stock in Helvetia?
8 MR. THOMAS: Yes -- Oh, Helvetia, 1,000
9 shares.
10 THE COURT: One thousand. Then a hundred
11 shares in what?
12 MR. THOMAS: Joabert, J-0-A-B-E-R-T.
13 THE COURT: Do you know what Joabert is?
14 MR. THOMAS: Where it is?
15 THE COURT: No, what it is, what kind of
16 entity it is.
17 MR. THOMAS: Oh, these are development
18 companies. They - -
19 THE COURT: Development companies?
20 MR. THOMAS: Yes, sir.
21 THE COURT: All right. Then you said some
22 causes of action, the rest are causes of action?
23 MR. THOMAS: Yes, sir. Item 21 on Schedule B
24 outlines those lawsuits involving
25 THE COURT: How many are there, please?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
14
'-.__./ 1 MR. THOMAS: Seven.
2 THE COURT: All right. Can we -- Just for
3 purposes of the record, and I appreciate you -- you
4 trying to get to the point, but let's break these
5 down. Go -- Go through them one-by-one so I have a
6 record of what -- what these causes of action are.
7 MR. THOMAS: Yes, sir. There's one lawsuit
8 against Haynes and Boone,
9 THE COURT: Okay.
10 MR. THOMAS: -- 1,400,000.
11 There's a lawsuit against the City of San Antonio
12 for 70,000.
13 There's a lawsuit against -- Burton Kahn versus
14 Helvetia. He doesn't value that lawsuit.
15 THE COURT: Okay.
16 MR. THOMAS: There's another lawsuit. If I
17 can give you the case number, Judge: The last four
18 digits 0014, Burton Kahn versus Helvetia; the last
19 four 0258, Burton Kahn versus Helvetia; 0319, Burton
20 Kahn versus Helvetia;
21 These are all state court cases. I'm sorry.
22 These are all, yeah, state court cases that are now on
23 appeal.
24 0357, Burton Kahn versus Helvetia.
25 The cases now still in district court, 2013
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
15
~- 1 cases: Last four 8355, Helvetia Recovery versus Kahn;
2 and then, 2013, 8394, Helvetia Recovery.
3 Those are the lawsuits, as I understand them,
4 Judge.
5 THE COURT: Very -- If I may interrupt you
6 again, because I'm trying to get some context.
7 Have -- You mentioned appeals. Have there been a
8 number of determinations on these causes of action?
9 MR. THOMAS: Yes, Judge. I believe they
10 were all against Mr. Kahn, but he appealed them.
11 THE COURT: Okay. So, we -- For purposes of
12 the record, on the causes of action, even though it
13 appears that Mr. Kahn was the plaintiff in all of
14 these, there was a determination at the trial level in
15 favor of the collectively, of the defendants,
16 You'll get your turn, Mr. Kahn.
17 and those matters are up on appeal; is that
18 correct?
19 MR. THOMAS: That's my -- According to his
20 schedules.
21 THE COURT: All right.
22 MR. THOMAS: That's what he's indicated.
23 THE COURT: Okay. So, what other assets are
24 you trying to sell?
25 MR. THOMAS: Then there were some other
'._/
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
16
1 small businesses that Some are operating and some
2 are not. In addition to Joabert and Helvetia, there
3 was something called Trail Construction Company;
4 Puerto Verde, Ltd.; Key Largo Homeowners Association;
5 Royal Crest Homeowners Association; Contour
6 Construction; Ideal Travel Company; Paradiv,
7 P-A-R-A-D-I-V, Corporation; and Terob, T-E-R-0-B,
8 Corporation.
9 And some of these, he says they're presently
10 operating, some he says are not operating. We're not
11 clear on all of them. But we want to
12 THE COURT: Does he ascribe a value to them?
13 MR. THOMAS: He did not, to these
14 corporations, Judge.
15 THE COURT: Is there Is it listed as
16 unknown, or just no value listed?
17 MR. THOMAS: No bank account, unknown. Some
18 are unknown and some say no bank account.
19 THE COURT: All right. Please continue. Is
20 there -- Are there any other assets?
21 MR. THOMAS: These are the assets, as I
22 understand them, Judge. And I think these are the
23 assets that the buyer was mainly interested in
24 recovering, your Honor.
25 THE COURT: All right. so , 1 et me - - 1 et me
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
17
1 just stop you right there. And there's a reason why
2 I'm going through this.
3 So, we have shares of stock in two entities. we
4 have, I believe you indicated, seven causes of action.
5 Then we have these businesses that may or may not be
6 operating.
7 You've conducted -- Have you concluded the 341
8 meeting?
9 MR. THOMAS: Yes, Judge. We -- I think
10 there were at least four resets. The last one was
11 completed in July.
12 I did have an attorney assist me at the
13 beginning. we made a determination that it'd be hard
14 to litigate all these lawsuits. And we just -- I just
15 didn't feel -- or the attorney didn't feel it was
16 marketable. It would take several thousands of
17 dollars to litigate the claims, and so forth. And
18 even the ownership interest, it would take some --
19 some litigation to resolve the actual -- whether or
20 not he owns that interest.
21 The clearest might be that he owns one/third of
22 Joabert, but then it doesn't appear that Joabert has
23 any equity.
24 THE COURT: Okay.
25 MR. THOMAS: And so, with that, I
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
18
1 toward -- I guess in August, after we concluded the
2 341 meetings, the Helvetia offered $10,000 to buy
3 all of these properties,
4 THE COURT: When you say "properties,•
5 MR. THOMAS: which would amount --
6 THE COURT: May I -- May I interrupt you
7 again? Everything?
8 MR. THOMAS: Everything. Yes, sir.
9 THE COURT: Stock, causes of action,
10 interest in whatever these -- these entities are.
11 Is that correct?
12 MR. THOMAS: Yes, sir. That's correct.
13 THE COURT: All right.
14 MR. THOMAS: And for about $10,000, I think
15 we would get somewhere between two and three percent
16 interest for the unsecured.
17 THE COURT: Okay.
18 MR. THOMAS: And, so, i t ' s above one
19 percent. If i t ' s above one percent and -- I've always
20 considered that incon- -- more than inconsequential.
21 So, I think there's some value, and something for
22 creditors, as opposed to nothing.
23 THE COURT: In your capacity as the
24 Trustee -- And how long have you been a Panel Trustee?
25 MR. THOMAS: Since '96. 1996.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
19
1 THE COURT: So, you have -- And I genuinely
2 mean this. You have considerable experience in this
3 regard.
4 MR. THOMAS: Yes, sir.
5 THE COURT: Obviously, you conducted the
6 341 meeting. Did you -- Based upon -- As you
7 understand the facts of this case, and you've analyzed
8 this case both for its own facts and based upon your
9 experience as a trustee, do you think -- I mean, did
10 you think it was appropriate to market these assets,
11 or simply seek I mean, how did you go about the
12 $10,000 number with Helvetia?
13 MR. THOMAS: Judge, I was in the process of
14 probably no-asseting the case, or at least holding on
15 to see what would happen to the litigation as it was
16 proceeding. And, in the middle of that, I was offered
17 the $10,000. It was initially five, but at least
18 ten five would have -- $5,000 would have been less
19 than one percent, which I didn't think would have --
20 have much value to the estate. Ten thousand would get
21 at least -- get me to at least two or three thousand,
22 and that was the offer on the table.
23 And part of my concern was that something like
24 this sometimes needs to be brought to the attention of
25 the Court, and that's what I wanted to do, also.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
20
1 THE COURT: No, you did exactly right,
2 because essentially--I mean, let's be honest, we're
3 all adults here--they're buying peace.
4 MR. THOMAS: That's correct.
5 THE COURT: If I If I approve the sale to
6 them, it cuts off Mr. Kahn's ability to pursue these
7 cases as the Debtor.
8 MR. THOMAS: That's correct.
9 THE COURT: I think you would agree with
10 this statement. First of all, these are all
11 prepetition causes of action, so they enure to the
12 Chapter 7 estate, of which you're the Panel Trustee.
'-----"'
13 Would you agree with that statement?
14 MR. THOMAS: I agree. And that's -- I think
15 Mr. Kahn agrees with that, also.
16 THE COURT: All right. From the
17 perspective, if you have a position, does Mr. Kahn, as
18 the Debtor, have any standing to object to this based
19 upon the fact that they're You know, a lot of times
20 when we look at objections to claim, the analogy where
21 I'm going is, is if a debtor wants to intervene in a
22 trustee's claims objection, one of the things I have
23 to evaluate is whether or not there's any -- there's
24 going to be any return to the debtor. If there isn't,
25 the debtor doesn't have standing to object to the
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
21
1 claim.
2 Does Mr. Kahn have any standing to object to the
3 sale, given that there's only going to be a, we'll
4 say, three percent distribution to unsecureds?
5 MR. THOMAS: Judge, if everything went
6 right, I don't think there'd be money back to Mr. Kahn.
7 If most of -- You know, if -- if even fifty percent,
8 ten percent of the values come out right, I don't see
9 any money going back to Mr. Kahn.
10 THE COURT: All right.
11 MR. THOMAS: And, so, I certainly don't see
12 $10,000 giving any benefit to Mr. Kahn.
13 THE COURT: So, let's
'---../
14 MR. THOMAS: And, so, I do question it.
15 THE COURT: So, you agree with me that there
16 may -- Is there or is there not a standing issue?
17 MR. THOMAS: I think there's a standing
18 issue, Judge. If you look at his value, he thinks
19 that these have some equity down the road. I just
20 think i t ' s totally unreasonable.
21 THE COURT: All right. So, let's -- let's
22 focus back on one other thing for a minute, and then
23 I ' l l hear anything else you have to say, is, let's
24 assume that you got no tender from Helvetia of any
,__./ 25 monies, you know, the case proceeded along. How long
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
22
1 would you keep this case open, given the
2 administrative costs versus what might happen with
3 regard to the lawsuits, and the value of the business
4 entities, and the value of the shares? What would you
5 do? would you -- Would you file a no-asset report?
6 MR. THOMAS: Yes, sir. A lot of times, when
7 a lot of litigation is going on like this, I would
8 hold off on the no-asset report and at least let some
9 of the cases resolve. So, hopefully, within a year
10 I'd be able to let it -- go ahead and file the
11 no-asset case, and the creditors would get nothing.
12 THE COURT: All right. So, you would delay
13 closing the case to see what would unfold with regard
14 to these causes of action?
15 MR. THOMAS: That's correct, Judge.
16 THE COURT: All right. What else do you
17 wish to tell me?
18 MR. THOMAS: Judge, that was the -- those
19 were all the issues I had in mind. And, also, I would
20 add that the estate has no money to pursue a lot of
21 the litigation.
22 THE COURT: Thank you. That was the last
23 point. Let's talk briefly about that.
24 Now, what's your commission on a case like this?
25 MR. THOMAS: Twenty-five the first 5,000.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
23
1 It's the standard statutory. Twenty-five percent the
2 first 5,000, ten percent up to 45,000, and three
3 percent up to 100,000, something like that.
4 THE COURT: So, let's assume you didn't have
5 an offer on the table for the $10,000--I'll come back
6 to that--what would be your fee in this case?
7 MR. THOMAS: Probably about 3,000.
8 THE COURT: $3,000 is all you get. And
9 there's no money on hand; correct?
10 MR. THOMAS: There's no money on hand. This
11 would be the -- Well, but they did prepay the $10,000.
12 I did ask for them to do that.
13 THE COURT: All right. So, you'll get --
14 you'll get a component of -- a portion of that, and
15 then the rest, the balance of the proceeds will be
16 remitted to the benefit of the creditors; correct?
17 MR. THOMAS: That's correct. That's
18 correct, Judge.
19 THE COURT: All right. Do you -- Is there
20 anything else you wish to tell me?
21 MR. THOMAS: I think that would be all I'd
22 have right now, Judge.
23 THE COURT: All right. Mr. Kahn, I'm going
24 to hear from you last. I want to hear from Helvetia,
25 because I think you're going to take the longest.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
24
1 All right. Sir, if you'll come to the podium.
2 And, again, state your name for the record.
3 MR. POWERS: Your Honor, Werner Powers, and
4 Ms. Barkely, Haynes and Boone, for Helvetia Asset
5 Recovery, Inc.
6 By way of explanation of who we represent --
7 THE COURT: Yes, please.
8 MR. POWERS: Helvetia Asset Recovery, Inc.,
9 is by far and away the largest creditor of the estate.
10 Helvetia has two judgments against Mr. Kahn, both
11 final, one judgment by --
12 Let me get my notes here.
13 THE COURT: Yeah. Let's be -- Let's have an
14 accurate record, because this will inform my ruling.
15 MR. POWERS: Judge, one finding by a
16 judgment for sanctions by Judge Tanner, a state court
17 judgment, for approximately $253,000, where the court
18 found that Mr. Kahn committed a fraud on the court,
19 and made false filings, and claimed to be an owner of
20 Helvetia Asset Recovery, Inc., when he was not, in
21 order to cloud title to real estate that Helvetia
22 Asset Recovery, Inc., owned here in Bexar County.
23 THE COURT: Is that order final?
24 MR. POWERS: It is a final judgment,
25 your Honor. I -- I He has prosecuted an appeal
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
25
',______/ 1 from it, so that appeal, I think, is pending.
2 THE COURT: okay.
3 MR. POWERS: There's a question as to
4 whether it will -- well, as to whether he can appeal,
5 given some orders of the appellate court, which I ' l l
6 talk about in a minute.
7 In addition to that, there is a judgment for
8 over $2 million, a unanimous verdict returned against
9 Mr. Kahn in Judge Bery's (sic) court, for breach of
10 fiduciary duty --
11 THE COURT: Which Judge Biery --
12 MR. POWERS: B-E-R- --
13 MS. BARKLEY: Michael Mery.
14 MR. POWERS: Michael Bery (sic) okay.
15 THE COURT: Okay. I thought you said Biery.
16 That's why I asked.
17 MR. POWERS: oh, no. The state --
18 THE COURT: I'm thinking of -- So, state
19 court?
20 MR. POWERS: Yes.
21 THE COURT: Michael Bery (sic). Go ahead,
22 sir.
23 MR. POWERS: Yeah, Bery (sic) Michael - -
24 MS. BARKLEY: Mery, M-E-
25 MR. POWERS: B-E-R-
'-.__/
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
26
1 MS. BARKLEY: M-E-R-Y.
2 MR. POWERS: Oh, Mery. I said Bery. Excuse
3 me. Mery. And --
4 THE COURT: Thank you.
5 MR. POWERS: Thank you. And -- I tried the
6 case for two weeks. I should know that. But, anyway.
7 So, it's about approximately $2 million,
8 findings of breach of fiduciary duty, embezzlement of
9 funds belonging to Helvetia, punitive damages of about
10 a million dollars, as I recall. I think that judgment
11 is, in all things, final. Mr.
12 THE COURT: No further appeals?
'---./
13 MR. POWERS: Well, let me explain my
14 position. Mr. Mr. Kahn filed a notice of appeal.
15 He then dismissed his appeal. Okay? He now has filed
16 a second appeal of that judgment -- not of the
17 judgment, but of an order that refused to grant him a
18 new trial.
19 THE COURT: Okay.
20 MR. POWERS: The appellate court recently
21 issued an order, I think last week, saying
22 explaining why we should not dismiss this because you
23 can't appeal that type of an order. The time to
24 appeal the final judgment's over. You only get one
25 appeal. He dismissed his appeal. I think it's final.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
27
1 But he -- he would probably disagree with me on that.
2 But that's what the status is. And I think the court
3 of appeals now has clearly indicated that it's having
4 a hard time seeing why it has any jurisdiction over
5 this.
6 There -- I want to -- When the assets were being
7 listed off, just to be clear, Mr. Kahn put
8 There's -- There's two companies, two corporations
9 that own real estate here in Bexar County. One is
10 Helvetia, and they own a subdivision called Key Largo.
11 The -- The other is Joabert, which owns the Royal
12 Crest Subdivision.
'.___/
13 THE COURT: Royal Crest?
14 MR. POWERS: Royal Crest Subdivision.
15 THE COURT: Go ahead.
16 MR. POWERS: As to Key Largo and -- and --
17 and Helvetia, Mr. Kahn was fired as an officer, and
18 that was the subject of the judgment in Judge Mery•s
19 court. And And what he did is, he issued himself
20 stock after he was fired. He claims that he owned the
21 company. And then -- And that was the subject of the
22 sanction order that was entered against him.
23 So, he -- he doesn't own any stock in Helvetia.
24 That's not one of his assets. The court's adjudicated
25 that and that's over.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
28
As to the Joabert and the Royal Crest
Subdivision, Mr. Kahn claims to own a minority
one/third interest in the stock of that company. And
that's going to be important in a moment because the
appraisal that we're going to be -- if you want to
call it an appraisal, doesn't even attempt to appraise
his minority interest in -- in Joabert.
THE COURT: And Joabert is a development
company that owns raw land that they're going to
develop for residential?
MR. POWERS: Exactly.
THE COURT: All right.
MR. POWERS: And -- And while your Honor
touched that point, the -- the appraisal that is done
is rather unusual. It purports to be an appraisal
that speaks to the future, and it's -- it has a future
date. And it assumes that, somehow, this land is all
finished-out and ready for sale and fully developed.
And it doesn't even purport to opine as to how much it
would cost to do that.
THE COURT: You'll get your shot, Mr. Kahn.
Just be patient.
MR. KAHN: I can't object while he's saying
something?
THE COURT: I'm -- This is only just
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
29
',._, 1 argument. So, you -- I ' l l I ' l l hear what you have
2 to say in just a minute. This is not evidence at this
3 point. You're just telling me what your position is.
4 MR. POWERS: Our position
5 THE COURT: And I understand you disagree
6 with it. Believe me, I recognize that.
7 Go ahead, sir.
8 MR. POWERS: Anyway, your Honor, I don't
9 think it's I don't even think it sustains a Daubert
10 challenge, would -- would withstand a Daubert
11 challenge, because it's so speculative.
12 But it's also irrelevant, because he doesn't own
13 any of the real estate. He owns, or purports to own,
14 a minority interest in -- in stock in the -- in the
15 company. He has no rights to put the stock. He has
16 no rights to, you know, require it be purchased. It's
17 just ...
18 And And his ownership of that stock is in
19 real doubt. He -- He was supposed to -- He -- He was
20 supposed to earn that stock through sweat equity in
21 doing engineering work on the project. He was fired
22 because he was not -- allegedly incompetent. And, so,
23 there's real questions as to whether he ever performed
24 the services to get that one/third minority interest.
;i 5 In addition to that -- And the appraisal -- or
-~,.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
30
1 another reason the appraisal is just totally
2 irrelevant, there's approximately four --
3 four-and-a-half million dollars of debt on the
4 property. The appraisal didn't even take into account
5 the debt on the property. And Mr. As Mr. Kahn
6 knows, his arrangement was never that he would get
7 paid before the debt, you know, if that company were
8 liquidated. So, that's our position on that.
9 The lawsuits -- Your Honor is right. Part of
10 this is to buy peace. I mean, we --
11 THE COURT: I mean, let's be candid.
12 MR. POWERS: We'll be candid. That's what
,____, 13 it is. I mean, we -- Every time we turn around,
14 there's some new lawsuit that gets filed, a
15 speculative lawsuit. You know, they -- they -- they
16 sue my law firm. They file motions for sanctions.
17 And whatever they want to do, I gather -- he wants to
18 do, he just sits with his typewriter and does this.
19 And it's expensive. It's expensive to continue
20 to keep coming down and having to argue these silly --
21 these silly lawsuits. And we want to just kind of buy
22 peace and get rid of this. And that's what the
23 $10,000 is for, because he doesn't have any assets.
24 I -- Again, I can't emphasize enough, the major
25 creditor here is Helvetia. I mean, we're the one --
'-,
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
31
1 we're the ones who -- who stand to gain whatever
2 assets there may be in this estate.
3 I also want to point out one other thing,
4 your Honor. We filed a complaint with the Court to
5 declare the judgments nondischargeable. And
6 THE COURT: The judgments that you took
7 against Mr. Kahn?
8 MR. POWERS: Yes.
9 THE COURT: Under what provisions of the
10 Bankruptcy Code?
11 MS. BARKLEY: Your Honor, Section 523 (a) (4)
12 and (a) (6).
13 THE COURT: So, breach of fiduciary duty --
14 MR. POWERS: Right.
15 THE COURT: or defalcation, and (a) (6),
16 malicious -- willful and malicious injury?
17 MR. POWERS: Yes.
18 THE COURT: All right. What's the status of
19 that lawsuit? Do you know, Ms. Barkely?
20 MS. BARKLEY: We are drafting a summary
21 judgment based on collateral estoppel. And it should
22 be filed very shortly.
23 MR. POWERS: Hopefully -- Hopefully, today.
24 THE COURT: So, you A complaint was
~~
25 filed. Mr. Kahn answered?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
32
~ 1 MR. POWERS: Yes.
2 MS. BARKLEY: Yes, your Honor.
3 THE COURT: All right. So, a scheduling
4 order has been issued?
5 MS. BARKLEY: Yes. I believe so,
6 your Honor. I think we have a deadline to amend
7 pleadings within the next few days.
8 THE COURT: All right. So, this is the only
9 complaint that you filed in the context of this
10 bankruptcy case, is a dischargeability action against
11 him?
12 MR. POWERS: That is correct.
13 THE COURT: And the relevance, it's just
14 informational for me, or what?
15 MR. POWERS: Well, the relevance is that not
16 only are we the -- by far and away the largest
17 creditor, we have nondischargeable indebtedness here.
18 So ...
19 THE COURT: So you assert. I haven't made
20 that determination.
21 MR. POWERS: So we assert. And we
22 understand you have not made that determination. But
23 we also think that the law in this district is pretty
24 clear on collateral estoppel; that is that, when you
25 have a final adjudication of this type of misconduct,
'----../
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
33
1 that it is, as a matter of law, going to be
2 nondischargeable, which should
3 THE COURT: So, if I make the determination
4 down the road that it is a nondischargeable debt--and
5 I haven't looked at the complaint or the answer to
6 that; I'm letting the process unfold--what does that
7 do to any of this?
8 MR. POWERS: Well, in in a sense, I don't
9 know that it does all -- Because, either way, we've
10 got over $2 million worth of debt, whether it's
11 dischargeable or nondischargeable, and by far and away
12 the largest creditor of the estate.
13 THE COURT: Okay.
14 MR. POWERS: So, that's the -- That's, I
15 guess, the major point there.
16 A few points about procedural points. The local
17 rules, as your Honor knows, require that there be a
18 witness list and an exhibit list exchanged five days
19 before, and I think it's five business days before a
20 hearing. That did not happen here. There was no
21 witness list, there was no exhibit list.
22 We did get notice that he served a subpoena on
23 his expert witness. And I think that notice was given
24 to us sometime late Thursday, which is hard -- which I
25 think is -- Let me see. Monday was a -- was a
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
34
1 holiday.
2 THE COURT: Right.
3 MR. POWERS: So, I don't think that's five
4 days. And, on top of that, no witness list was ever
5 served. Okay? Just the subpoena. And, of course, no
6 exhibit list was served, though he did attach that
7 appraisal to his objections.
8 I want to make my objection that he has not
9 complied with the local rules, because he has not.
10 THE COURT: On the exhibit list and the
11 witness?
12 MR. POWERS: And the witness list.
13 THE COURT: All right. That's fine.
14 MR. POWERS: And I want to preserve that
15 objection, your Honor. I know your Honor will
16 probably want to hear from the expert. And, quite
17 frankly, I don't want to give him another appellate
18 point, you know. But I want to make this objection,
19 nonetheless, because I do want to - - I don't want to
20 give up that issue.
21 THE COURT: Okay.
22 MR. POWERS: Again, thank you, your Honor.
23 THE COURT: All right. Now, Mr. Kahn.
24 MR. KAHN: Thank you, your Honor.
25 I would like to start off saying that a lot of
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
35
1 this information that Mr. Powers just said is
'--'
2 incorrect. Number one,
3 THE COURT: Is it -- Let's -- If I may, sir.
4 MR. KAHN: And I will go through it in
5 THE COURT: Wait. Just wait. No, no. The
6 way this works is, when I ask a question, you stop
7 talking and you answer my question.
8 MR. KAHN: Sorry, your Honor.
9 THE COURT: So. And you'll learn this
10 if you go to law school. By the way, I teach at
11 law school, too.
12 For your information, I want to know, you -- you
13 should -- I hope you noted that I I sort of
14 examined Mr. -- the Trustee in this case, Mr. Thomas,
15 about a number of things. Do you disagree or contest
16 anything that he told me?
17 MR. KAHN: Practically everything,
18 your Honor.
19 THE COURT: Practically everything. Okay.
20 So, we'll need to deal with that, as well.
21 So, I just want to get that -- I know you
22 disagree with Mr. Powers. You -- Basically,
23 everything that Mr. Thomas said you disagree with, as
24 well; is that correct?
25 MR. KAHN: well, there's a lot of things
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
36
1 that Mr. -- what Mr. Thomas said that I can clarify,
2 THE COURT: Okay.
3 MR. KAHN: I would like to clarify.
4 To start off with, is that the many different
5 companies and -- are not -- there is no more
6 companies. They've all been shut down, so ... And
7 there's no assets in any of them, so ...
8 THE COURT: There's nothing to sell?
9 MR. KAHN: There's nothing there.
10 THE COURT: All right.
11 MR. KAHN: Okay. The -- I have a chart
12 which I submitted which I submitted to the -- in
13 in my pleading.
14 THE COURT: Okay.
15 MR. KAHN: And if I may --
16 THE COURT: Do you all have a copy of this
17 chart?
18 MR. KAHN: They have a -- They have a copy.
19 MR. POWERS: Your Honor, no exhibits were
20 exchanged.
21 THE COURT: Well, this is -- I view this as
22 demonstrative evidence. So, do you have a copy of
23 this chart?
24 MR. KAHN: In In the supplemental --
25 MS. BARKLEY: No objection, your Honor. Let
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
37
1 me --
2 THE COURT: Okay. So, we want to make
3 sure -- I appreciate you putting this together. This
4 is a chart of issues as of October 9th, 2014.
5 Do you have a copy of this, Mr. Thomas?
6 MR. KAHN: Yes. He -- He --
7 MR. THOMAS: I got the same email that he --
8 MR. KAHN: It's in the -- in the -- in the
9 motion, itself.
10 MR. THOMAS: Supplemental motion.
11 THE COURT: All right. So, you all have
12 this. So, I'm not treating this as an exhibit. I'm
'--../
13 treating this as a demonstrative.
'
14 You're going to tell me about the assets in your
15 case?
16 MR. KAHN: I'm going to tell you about --
17 THE COURT: Are we picking him up, by the
18 way?
19 ERO: Yes, sir.
20 THE COURT: All right. Go ahead, sir.
21 MR. KAHN: One of the -- They keep on
22 talking about all these different cases, and I'm
23 I'm going to -- to go over them slightly, and -- and
24 also on the appeals process. Because, you know, if
25 you recall, your Honor, I also filed an adver- --
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
38
1 there was an adversary proceeding, of which, to start
2 off with this guy here, who -- who only knows --
3 doesn't know to tell the truth, claimed that I stole
4 over a million dollars out of Helvetia's funds.
5 THE COURT: Okay.
6 MR. KAHN: And, to answer that, in the
7 answer of the adversary proceeding, I submitted every
8 check, every for every bank account. And they --
9 So -- And an analysis of it, which I I will show
10 which I which is also there, and it's also -- so
11 that to show that this -- this is -- you know, this
12 is being prosecuted.
13 One of the things that's in their -- in their --
14 in their motion is they claim I stole $60,000. And
15 one This is one section. They have different ones.
16 THE COURT: Which motion are you referring
17 to, Mr. Kahn?
18 MR. KAHN: In the adversary -- adversary
19 proceeding.
20 THE COURT: If I may, the adversary
21 proceeding's not before the Court. What's before the
22 Court is this issue. The issue is whether or not the
23 Trustee can sell these assets. You've objected.
24 MR. KAHN: Well, I have also I have also
25 a -- a hearing for sanctions against him for a million
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
39
1 dollars that's scheduled to be heard Tuesday, sir, on
2 the 29th of this month.
3 THE COURT: Okay. And I don't think --
4 Mr. Thomas, is that part of what you're selling?
5 MR. THOMAS: I don't --
6 THE COURT: I don't -- I didn't think so.
7 MR. THOMAS: I don't -- I don't think so,
8 Judge. I was going by the schedules, the schedules
9 that were filed in the case. And I think this
10 sanction came up after it, as part of the adversary.
11 THE COURT: Is that correct, Mr. Kahn?
12 MR. KAHN: This -- This -- This came up
13 The adversary proceeding --
14 MR. THOMAS: Right.
15 MR. KAHN: -- you're involved in. And
16 you've gotten -- You were noticed --
17 MR. THOMAS: That's postpetition. Those
18 MR. KAHN: You were noticed about the
19 adversary proceeding, and you were also noticed
20 also noticed --
21 I'm sorry, your Honor. And I'm also sorry about,
22 sometimes I'm closing my eyes. I -- I've had some
23 surgery. So ...
24 THE COURT: Well, that's all right.
25 So, but this -- this is -- this is a lawsuit you
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
40
·-~
1 filed after you filed bankruptcy; right?
2 MR. KAHN: No. No, no. No, wait a minute.
3 They filed an adversary proceeding.
4 THE COURT: 11
They," who is?
5 MR. KAHN: Helvetia.
6 THE COURT: Right. And that's the
7 dischargeablity action against you?
8 MR. KAHN: Right. Then I came back, in my
9 answer -- in my answer, I answered them. And then I
10 made I also filed a motion for sanctions, let 21
11 days go by so that they could change it, or anything.
12 And I filed a motion for sanctions.
13 THE COURT: In the adversary proceeding?
14 MR. KAHN: In the adversary.
15 THE COURT: Okay.
16 MR. KAHN: But this is -- this -- this is a
17 giant asset. Because in the adversary, I have,
18 essentially, a thousand pages, over a thousand pages,
19 you know, the checks, you know, the checks of each one
20 of the people that I sent to, you know. So, the
21 complete explanation of all the funds that I've sent,
22 so that.I didn't steal any of the money.
23 The -- The -- With this -- As I was saying in
24 that $60,000 example of one of the -- This is one of
25 the examples. I needed -- I wrote a check out for --
'-__/
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
41
1 for Mr. Ripley to get their -- their -- their
2 THE COURT: Okay. We're not trying the
3 case. You've actually answered my question, which is,
4 this is -- this is a pleading that you filed against
5 Helvetia or Haynes and Boone asking for sanctions of a
6 million dollars.
7 MR. KAHN: Right.
8 THE COURT: Mr. Thomas, does the Chapter 7
9 estate have an interest in that -- in that motion for
10 sanctions?
11 MR. THOMAS: We do not, Judge, have an
12 interest in the sanction motion filed in the
13 adversary.
14 THE COURT: So, it's not an asset he's
15 trying to sell, nor he's claimed any interest in.
16 So, it's -- it's not part of the motion today. If
17 If you prevail on that, that's -- that's -- whatever
18 accrues as a result of that, that's your money, it's
19 not the estate's money.
20 MR. KAHN: Okay.
21 THE COURT: So, we don't need to get into
22 that. I understand you filed the motion, but that's
23 not part of what's before the Court today.
24 MR. KAHN: Well, one of the things,
25 your Honor, that they -- they mentioned is -- was --
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
42
1 Let's go into the -- the sanction -- the sanction
2 case.
3 THE COURT: The one that they -- that
4 Haynes that Helvetia filed against you; correct,
5 sir?
6 MR. KAHN: Helvetia filed against me.
7 THE COURT: Right.
8 MR. KAHN: I -- I am charged, under -- In
9 Texas Civil -- Civil Remedies, Chapter 10, sanctions
10 cannot be charged against a party who is represented.
11 I didn't sign that -- that -- that pleading,
12 an -- an attorney signed the pleading. So, that is
13 that is just, basically, major in that I -- I am not
14 responsible for it.
15 Then, this is -- this is almost the same thing
16 with the $60,000 that they played games with. Let me
17 just clarify that, your Honor, because it's -- it's a
18 typical situation that I have been plagued with
19 throughout -- throughout these proceedings, which have
20 gone on for over a year now.
21 I -- And -- But I hit the -- the button for
22 $20,000 so I could pay so I can pay Mr. Ripley,
23 Mr. Ripley's credit card. Okay? But I made a
24 mistake and I -- it didn't come up to twenty, I hit
25 it again and I hit it again. So, I hit three times.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
43
1 So, I took $60,000 out of Helvetia and put it into
2 I believe I put it into Joabert because Joabert is
3 the one who put spent the money. I don't know.
4 Then --
5 THE COURT: But is this part of the lawsuit
6 that's pending in state court?
7 MR. KAHN: Yes.
8 THE COURT: Stop. Stop. You're missing the
9 essential point. I'm not going to make a
10 determination on any of that. That's -- Don't
11 Don't
12 MR. KAHN: Well, I'm not asking you to --
13 THE COURT: Focus. Focus on what I'm trying
14 to ask you.
15 So, the merits of those lawsuits will be
16 determined by a state court. Do you disagree
17 Listen to my question. Do you disagree that what
18 Mr. Powers said about all of the lawsuits that you
19 filed, that judgment has been entered against you?
20 MR. KAHN: Judgment has been entered against
21 me, and it is on appeal, your Honor.
22 THE COURT: All right. So, i t ' s on appeal.
23 But right now, right now, as it stands right now,
24 those -- those lawsuits are worth nothing, because you
-.__/
25 lost. Would you agree with that?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
44
1 MR. KAHN: That's correct.
2 THE COURT: All right. So, your point is
3 what on going through this rendition on the lawsuits?
4 They're on appeal. I understand that. You might get
5 them reversed. But the value of the lawsuits right
6 now is nothing.
7 MR. KAHN: Well, it's -- Well, that's
8 that's because i t ' s in the negative -- negative
9 amount.
10 Now, one of the things is, what they did on the
11 same -- on the sanction motion hearing, which which
12 I was unsuccessful on, the -- But it was -- Number
13 one, it -- it was -- It's got all to do with this man
14 named Daggett (phonetic).
15 THE COURT: You're arguing the merits again.
16 MR. KAHN: I I I I know. I'm just
17 trying to
18 THE COURT: You're missing the point.
19 You're -- With all due respect to you, you're missing
20 the point. My job, as it stands right now, is the
21 Trustee's filed a motion before this Court, and says,
22 Judge, I need to administer this estate, and here are
23 the assets I need to administer.
24 He's described -- You've already agreed as to,
,_____,, 25 I have three categories of assets. I have interest in
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
45
1 small businesses. You've conceded that they have no
2 value.
3 MR. KAHN: Right.
4 THE COURT: Then I have shares of stock,
5 which we'll come to in a minute, in Helvetia and
6 Joabert or Joabert. And then I've got all these
7 causes of action, which we're talking about right now.
8 You've conceded that you've lost all of these cases.
9 You filed them and you lost. They may or may not --
10 MR. KAHN: But But
11 THE COURT: Don't interrupt me.
12 They may or may not be on appeal. Their value as
13 to -- What you need to understand, their value right
14 now is zero. Despite the fact they're on appeal,
15 they're final determinations. They're not worth
16 anything.
17 So, what is it that -- What's the value to the
18 estate?
19 MR. KAHN: The value to the estate is to
20 Joabert, the shares in Joabert, which is worth
21 $3 million.
22 THE COURT: Well, let's -- let's -- But I'm
23 asking you about the causes of action. So, we've
24 You've already said on the record --
25 MR. KAHN: That's a -- That's a cause of
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
46
'---/
1 action ending in 17012.
2 THE COURT: Okay.
3 MR. KAHN: And -- And that's where --
4 That -- That cause of action is is pending. And
5 it -- In fact, it -- it is in this court, because the
6 state court sent it over here. So, I don't know if
7 we're going to get that heard in this -- in this
8 court.
9 THE COURT: And state -- I can tell you this
10 much. State courts don't send me anything. I send
11 stuff to the state court.
12 So, what -- All we have right now is, we've got a
13 dischargeability action pending against you. In the
14 context of the dischargeability action, you've got a
15 motion for sanctions against the plaintiff. If you
16 prevail
17 You need to back away from that. You're a little
18 close.
19 MR. KAHN: I'm sorry, your Honor.
20 THE COURT: If you prevail on the motion for
21 sanctions, and you win any monetary relief, that's
22 yours. I've already asked the Trustee. He says, I
23 agree with you, Judge. That's yours.
24 So, again, we need to focus on what's before the
25 Court. What's before the Court is a motion to sell
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
47
nonexempt assets. And, as best I can tell right now,
you have no value in these businesses you've listed.
And all the causes of action, judgment has been
rendered against you, they're final, they have no
value, and you've moved to appeal them.
MR. KAHN: Not -- There's no cause of
action -- nothing in 1701. The Joabert one has not --
has not been -- has not been adjudicated at all. And
that's the -- That's where I might -- where I have the
value of -- of at least $3 million, in round numbers.
THE COURT: All right. So, you -- you've
sued Joabert, or Joabert sued you?
MR. KAHN: I sued Joabert.
THE COURT: Okay.
MR. KAHN: I sued Joabert, as a minority
stockholder.
THE COURT: Go ahead.
MR. KAHN: ' And Based on that I was -- I
was taken advantage of,
THE COURT: Okay.
MR. KAHN: -- as a minority stockholder.
And that I had one/third -- There's -- There's three
hundred shares; I own a hundred and Mr. Ripley owns
two hundred. Now, that is the
THE COURT: Where is that case pending?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
48
·.--._../ 1 MR. KAHN: It's dead. In other words, it --
2 it isn't pending at all. I wish I -- I'd like it
3 to get pending. And -- And
4 THE COURT: What do you mean by •dead," sir?
5 MR. KAHN: I mean, it's -- it's here. It --
6 It's been stayed.
7 THE COURT: Okay. So, you're saying that
8 you filed a cause of action against Joabert in this
9 court?
10 MR. KAHN: No, not in this court, in the
11 state court.
12 THE COURT: Okay. And are you the plaintiff
13 or the defendant?
14 MR. KAHN: The plaintiff.
15 THE COURT: And what -- When you say "dead,"
16 what do you mean by •dead''?
17 MR. KAHN: It -- It was -- It was put into
18 bankruptcy, and the -- the state court said it's now
19 in -- into the bankruptcy court.
20 THE COURT: So, that's what the state court
21 said?
22 MR. KAHN: That's what the state court said.
23 THE COURT: All right.
24 MR. KAHN: But they -- they -- If I can get
25 a -- a lift stay and -- and have that heard, because
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
49
1 the -- the assets of the -- of the -- of the -- of the
2 company, my assets, are -- are -- are related to
3 Joabert.
4 THE COURT: Okay.
5 MR. KAHN: Now, I -- Also, there's a claim
6 of action against the City of San Antonio that's been
7 also stayed. And that one was something that the City
8 raised the road -- raised their road up, and, because
9 of that, there was some CP- -- some some pipes in
10 the ground down below, and they had to be raised up.
11 And because of that -- Of course -- Of course, I don't
12 want to plead the -- the litigation. But that's
'-._/
13 Because Because of that, they -- they made a claim
14 against me in -- for three thousand some-odd dollars
15 for -- for the pipes that -- that were underground.
16 And I counter-claimed them for for all the fill and
17 all the work that I had to do.
18 However, on my chart, I've reduced it because
19 it's -- the -- the value -- the value on that lawsuit,
20 one/third goes to me, one -- and two/thirds goes to
21 Joabert. It belongs to Joabert, which would --
22 Joabert is -- Even though I'm the -- the -- the
23 the defendant in that case, and the counter-plaintiff,
24 the -- the actual benefit or cost was -- was Joabert's
25 not Bert Kahn.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
50
1 THE COURT: Is the Trustee selling this
2 cause of action to Helvetia?
3 MR. KAHN: Yes.
4 THE COURT: Which one is that?
5 MR. KAHN: That -- That is Counter-
6 Counter-Claim 389092.
7 THE COURT: Okay. And you maintain that
8 case is pending in our court, in bankruptcy court?
9 MR. KAHN: It -- It When -- When I filed
10 bankruptcy, at the advice of my son, which was wrong,
11 I shouldn't have done that, but at the -- at the
12 THE COURT: You can dismiss your case. Have
13 you thought about that?
14 MR. KAHN: Pardon?
15 THE COURT: You can dismiss your case, ask
16 the Court to dismiss your case.
17 MR. KAHN: I even -- I even said that to --
18 I sent, even, a memo Mr. Thomas at one point to
19 dismiss this -- dismiss -- to dismiss the -- the
20 the case, and he said no.
21 THE COURT: Okay. Well, I mean, if
22 MR. KAHN: I should have just filed it.
23 I -- I might seem to be trying to be an adversary, but
24 I'm not, your Honor.
25 THE COURT: All right. So, let -- let's --
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
51
1 let me stop you --
2 MR. KAHN: I'm just defensive.
3 THE COURT: Let me -- Let me stop you right
4 here. We've checked. There's only The only
5 The only related lawsuit that's pending in the
6 United States Bankruptcy Court is the dischargeability
7 action. No case has been removed here. So, there
8 aren't any pending cases. If they're in state court,
9 they're in state court, they're not here. So, I can't
10 deal with those. They -- They're pending in another
11 court.
12 So, back to my point. If they're "dead" right
13 now, and they're not progressing, they have no value.
14 MR. KAHN: Well, how do I get them out of
15 state court -- out of -- Can I file a motion right now
16 to -- to
17 THE COURT: I can't give you legal advice.
18 You filed this case.
19 MR. KAHN: Well,
20 THE COURT: If you think -- If you need to
21 take some remedy, that's something you'll have to
22 decide. Is your son a lawyer?
23 MR. KAHN: Yes.
24 THE COURT: Then maybe you can talk to him.
25 MR. KAHN: But he doesn't know anything
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
52
1 about bankruptcy, except he told me to go to
2 bankruptcy.
3 THE COURT: Okay.
4 MR. KAHN: So,
5 THE COURT: So, let me help you out.
6 We're - - With all due respect, we're moving on from
7 the causes of action, because I can tell you right
8 now, you notwithstanding your dispute as to the
9 value of or legitimacy of these causes of action,
10 they have no value right now.
11 Now, you've subpoenaed a gentleman to be here.
12 Who is this individual you've subpoenaed?
13 MR. KAHN: The man is a -- an appraiser who
14 has appraised the property.
15 THE COURT: Which property?
16 MR. KAHN: The Royal Crest Subdivision.
17 THE COURT: Okay.
18 MR. KAHN: And he has - - he's recently
19 appraised it. He has appraised this property
20 previously, for Falcon Bank. That's why I chose him
21 to appraise this property.
22 THE COURT: And why do I need to hear
23 testimony from this gentleman?
24 MR. KAHN: Because he said the value of the
25 property is nominally $12 million.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
53
1 THE COURT: So you say? Or he says?
2 MR. KAHN: He says.
3 THE COURT: All right.
4 MR. KAHN: Anc, also, in my lawsuit, where I
5 worked out a cost analysis, it also comes out that the
6 value at the -- at the present time is worth $12 million
7 THE COURT: Okay. And the point of this is
8 what? Let's assume he's correct, just for discussion
9 purposes. Why -- Why is that relevant to today's
10 proceedings?
11 MR. KAHN: Well, then, that means I have an
12 asset of $3 million. Actually, it's four million, but
13 there's -- there's set-offs. So, let's say I have an
14 asset of $3 million, which I show right here. It'd be
15 three million one hundred and -- you know.
16 THE COURT: But you realize your ownership
17 interest is contested, as to -- as it relates to that,
18 first of all, and that the value is also contested?
19 You would recognize that?
20 MR. KAHN: The value is not contested.
21 THE COURT: It's not?
22 MR. KAHN: Who contests it?
23 THE COURT: Well, I mean, we have a -- You
24 say it's part of the lawsuit, and the lawsuit has
25 basically been -- you've lost.
FEDERAL COURT REPORTERE OF SAN ANTONIO (210) 340-6464
54
1 MR. KAHN: The lawsuit hasn't -- hasn't --
2 hasn't -- The Joabert lawsuit has not -- The Joabert
3 lawsuit has not -- is not doing anything at the
4 present time.
5 THE COURT: Okay. So, why do I need to hear
6 testimony from this gentleman, who's sat patiently --
7 MR. KAHN: Well, i t ' l l show that my assets
8 are -- are are beyond -- a lot -- a lot more than
9 $10,000.
10 THE COURT: Okay. So, this -- Does this
11 relate to the lawsuit, sir, or your shares of stock in
12 Joabert?
'--/
13 MR. KAHN: It relates to my shares of stock
14 in Joabert.
15 THE COURT: Now, how much of a value did you
16 place on the -- the shares of stock in Joabert on your
17 schedules?
18 MR. KAHN: It's three million -- I have --
19 In the schedules, I had it a little -- it was a little
20 bit different because I refined it down. It's three
21 million -- Right now, it's $3,103,000.
22 I adjusted it because Mr. Ripley had taken
23 $160,000 out of out of the -- out of the funds, and
24 that would reduce -- reduce his -- his loan, which
25 would -- you know, which -- which would make the
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
55
1 profit of -- of the -- Joabert a little bit more. So,
2 I -- I adjusted that.
3 THE COURT: All right.
4 MR. KAHN: So,
5 THE COURT: So, I need to hear testimony
6 from this gentleman because he's going to tell me that
7 the value of this development is -- is $12 million, of
8 which your share would be a little over $3 million; is
9 that correct?
10 MR. KAHN: That's correct.
11 THE COURT: All right. So -- And how do
12 And that relates to your shares of stock, and also
13 maybe the lawsuit that you filed that you lost on; is
14 that correct?
15 MR. KAHN: No. I didn't lose on it.
16 THE COURT: You didn't lose?
17 MR. KAHN: No.
18 THE COURT: What happened?
19 MR. KAHN: We lost on -- We -- We lost on --
20 on -- on Helvetia, or the Key Largo Subdivision, I've
21 lost on. But I didn't -- Royal Crest, I have not lost
22 on it. It has not -- has not been adjudicated.
23 THE COURT: Okay. So, what is it
24 Let's -- Let's get to the essential point. Do you
25 want me to deny the Trustee's motion?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 MR. KAHN: Yes, your Honor.
2 THE COURT: Why?
3 MR. KAHN: Because I have -- Because the
4 value is a lot -- worth a lot more than -- than
5 $10,000, and the Trustee did not -- one, didn't
6 didn't get any -- any other bids. And according
7 according to some case law that I -- I found,
8 Merry-Go-Round (phonetic) and Rose versus Logan
9 (phonetic), it's supposed to be that the Trustee,
10 to sell, has to do some due diligence, and to show
11 that -- that there's -- that this is the highest and
12 best price.
13 I can -- I can grab the -- the words on that,
14 your Honor.
15 THE COURT: That's fine.
16 MR. KAHN: But it basically says that in two
17 district court cases, Rose versus Logan and in
18 Merry-Go-Round. So -- And that's in my
19 THE COURT: So, who else is going to buy
20 these assets, if not Helvetia? Who's going to buy
21 them?
22 MR. KAHN: You -- You mean, in in
23 Joabert?
24 THE COURT: All of this stuff. Whether it's
25 the causes of action, the interest in the business, or
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
57
1 the shares of stock, who else is in a position to buy
2 these assets? You raised the question, well, he
3 should have exposed it to a bid. So, my question to
4 you is, who else would buy these assets?
5 MR. KAHN: Anybody -- Any developer would
6 want to buy the assets to -- for -- for -- for
7 Joabert.
8 THE COURT: Okay. What's the status of
9 Joabert right now, in terms of development?
10 MR. KAHN: Pardon?
11 THE COURT: What's the status of Joabert
12 right now, in terms of development?
13 MR. KAHN: It's in the - - They were not - -
14 Excuse me. I would - - Let me show you another picture
15 here.
16 THE COURT: Okay.
17 MR. KAHN: This is Joabert, your Honor, or
18 the Royal Crest Subdivision.
19 THE COURT: You can come around,
20 Ms. Barkley, and watch. That's not a problem.
21 So, this is the development otherwise known as
22 Royal Crest; is that correct?
23 MR. KAHN: That's correct. And this is the
24 approved master plan that I did, that's getting
25 approved by the city.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 THE COURT: Okay. And has it been approved
2 by the city?
3 MR. KAHN: Yes, it has.
4 THE COURT: Have there been any lots that
5 have been developed? I mean, have --
6 MR. KAHN: There -- There are lots of -- The
7 first section has got about $250,000 more work to be
8 done to be complete.
9 THE COURT: And when you say "complete,"
10 what do you mean?
11 MR. KAHN: That -- That -- To be able to get
12 final inspection and to sell lots.
'--./
13 THE COURT: All right. So, the -- Have all
14 the entitlements been done?
15 MR. KAHN: What do you mean, "the
16 entitlements"?
17 THE COURT: Well, the improvements. Do we
18 have sewer lines in, electricity?
19 MR. KAHN: We have sewer lines, we have
20 electric lines, we have
21 THE COURT: Have the roads been paved, curbs
22 put in?
23 MR. KAHN: The roads have not been. That's
24 the work that has to be done, the final. The road
25 hasn't been paved and -- and the curbs haven't put
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 on -- been put on.
2 THE COURT: All right. And who's going to
3 put that money in to have that done?
4 MR. KAHN: Well, we had that money. We had
5 that money reserved, and that money was put into the
6 registry of the court at one point.
7 Which court?
8 In the state court.
10 And then they claimed that
11
12 Who's "they"?
13 Helvetia.
14 Okay.
15 Which I object to Helvetia
16 because it -- Helvetia is the -- the corporation,
17 and it shouldn't even be here, and it shouldn't even
18 be in -- in --
19 THE COURT: They're a creditor, though.
20 They're a creditor of your case. They have two
21 judgments against you.
22 MR. KAHN: Well, helvetia has that, but
23 Helvetia doesn't really have standing. And we've
24 You even ruled about that, I -- when I complained
25 about, they're a foreign corporation.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 THE COURT: Oh, I remember this discussion.
2 So,
3 MR. KAHN: But I'm -- I'm not -- I don't
4 want to relit- -- I'm not trying to relitigate
5 anything, your Honor.
6 THE COURT: Okay.
7 MR. KAHN: But that that -- that issue,
8 that particular issue, is in the Supreme Court right
9 now, in regards to standing, and -- and -- and this
10 whole process.
11 THE COURT: Okay. Well, let's put that
12 aside.
13 So, what we have right now is, how many lots are
14 ready to be developed?
15 MR. KAHN: Forty-seven.
16 THE COURT: And you've indicated that some
17 entitlement work's been done, you've had
18 MR. KAHN: Not -- Most of it. Practically
19 all of it.
20 THE COURT: Well, you'd recognize you've got
21 to have paved roads. That's kind of a prerequisite to
22 selling lots.
23 So, have the lots been platted?
24 MR. KAHN: Oh, yes. They're all platted.
25 THE COURT: All right. So, the question
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 then is, you just need the city's final approval
2 before you could sell?
3 MR. KAHN: And -- And to put the I have
4 to put the roads in, and the curbs in, and and then
5 a couple of, you know, minor things. I've got to put
6 the road signs in, which we own the road signs.
7 There's just a couple of little things I have to do.
8 THE COURT: So, but you mentioned there was
9 $250,000 set aside for this. The money is tied up in
10 the registry of the state court; is that correct?
11 MR. KAHN: It was, but but Helvetia took
12 the money.
13 THE COURT: So, they have the money now.
14 So, there is not money, unless you have it, to do the
15 development; is that correct?
16 MR. KAHN: If I get it, I can get the money.
17 I can go and borrow the money.
18 THE COURT: How are you going to borrow
19 money? You're in Chapter 7 bankruptcy right now.
20 MR. KAHN: I'm going to -- From what -- I'm
21 going to -- going to get out of that.
22 THE COURT: How are you going to do that?
23 MR. KAHN: I I wish I knew. I'm -- I'm
24 going to file a motion to get out.
25 THE COURT: Okay. So, we -- Who -- Is
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 this -- Is this property being actively marketed? Is
2 there -- I mean, is there a broker selling the lots?
3 MR. KAHN: What has happened -- What
4 happened is that, when we were just about a month
5 away, and I'm working on the final grades with the
6 with the men in the field, they decided that they
7 didn't want to pay me my -- my share, after working
8 eight years on this thing. I did everything right.
9 It's been I'm the one getting -- We didn't hire
10 anything. I did all the engineering work, all -- and
11 all the -- all the "dog" work. And I never -- I never
12 took any money, because I wanted to just leave any
'~
13 money, and I put -- invested money. I invested over
14 a hundred thousand dollars I had. And I didn't And
15 I didn't take any money. And I'm working -- I'm
16 working there at -- at 6:00 o'clock in the morning
17 and -- and --
18 THE COURT: So, are you working for Joabert,
19 still? Are you an employee?
20 MR. KAHN: I --
21 THE COURT: Are you an employee of Joabert?
22 MR. KAHN: Not at the present time, no. I
23 don't - - I I was -- I I was a -- Was I an
24 employee? I never collected any money, so ...
25 THE COURT: All right. So, you're not an
' .....__./
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 employee. Are you an investor in Joabert?
2 You need to back away from it. You're a little
3 too close. Back away. Thank you.
4 MR. KAHN: Sorry.
5 THE COURT: That's all right. Go ahead.
6 So, you're not an employee of Joabert. Do you
7 have -- Do you have some sort of -- You've got shares
8 in Joabert; is that correct?
9 MR. KAHN: I -- We had a contract with
10 Mr. Ripley, which is -- Joabert turned into a
11 corporation because we thought that the corporation
12 was the -- was -- the -- the format was
13 THE COURT: Are you an officer, or were you
14 an officer of Joabert?
15 MR. KAHN: Absolutely. I was the
16 vice-president.
17 THE COURT: Are you still the
18 vice-president?
19 MR. KAHN: They -- They changed -- They
20 changed it. They -- No.
21 THE COURT: All right. So, you're not an
22 officer, you're not an employee. You
23 MR. KAHN: That's today.
24 THE COURT: Today. Listen to my -- I
25 understand that.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
64
1 So, you have shares in Joabert. But as
2 Joabert stands right now, all Joabert -- Joabert has
3 is raw land and partially developed land; is that
4 correct?
5 MR. KAHN: And an approved plat. We have an
6 approved plat here, for this one, and an approved
7 master plan. And practically all of this, the
8 development has been substan- -- a good part of it is
9 substantially done.
10 THE COURT: So, your only interest in
11 Joabert, based upon what you've told me, is your
12 hundred shares of stock?
13 MR. KAHN: Right.
14 THE COURT: And the only way that you're
15 going to get anything out of that after -- There's
16 debt in the case; correct? I mean, they -- they --
17 Joabert
18 MR. KAHN: Well, debt to - - debt to - - to
19 Ripley and myself, who were the two owners.
20 THE COURT: All right. So, but there's
21 there's debt. Didn't you Didn't Joabert borrow
22 money to acquire this land?
23 MR. KAHN: No.
24 THE COURT: So, they bought the land
25 outright?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
65
1 MR. KAHN: Yes.
2 THE COURT: Not -- Not one bit of debt, at
3 all?
4 MR. KAHN: Wait a minute. There is one
5 debt, one -- one debt to Mr. Gatsby. If we sell
6 When, and only when, we sell these -- some -- a few of
7 those lots, there's -- there's a debt of -- of
8 $250,000.
9 THE COURT: All right. So, you're
10 representing to the Court that Joabert has no debt.
11 And you have shares -- You have a stock share interest
12 in -- in Joabert; is that correct, sir?
13 MR. KAHN: That's correct.
14 THE COURT: All right. Now, you recognize
15 that you're not going to -- Is it -- Or do you agree
16 that you're not going to get paid anything on your
17 shares until these lots are developed? I mean,
18 there's no money to get out of the entity right now
19 because nothing•s been built.
20 MR. KAHN: Well, no. It -- It's -- No.
21 It There's electric. There's -- There's --
22 THE COURT: No, I mean, homes. No homes
23 MR. KAHN: There's impact (indiscernible;
24 simultaneous speakers) dollars, your Honor.
25 THE COURT: There's no homes that have been
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
66
1 built.
2 MR. KAHN: No homes -- There's -- No, no
3 homes have been built.
4 THE COURT: Okay.
5 MR. KAHN: But there's -- there's -- there's
6 the roads. There's -- There's impact fees of -- of at
7 least $2 million that have been paid to the sanitary
8 and water systems. So, the value of this is -- And
9 all these -- all these roads -- all these roads have
10 been carved in and graded -- and substantially graded
11 out. A couple of roads over in here haven't -- The
12 main road coming in is all graded up. It's -- It
13 needs -- What it needs to do is, you know, we need
14 to -- The plan was, is to sell this section, take the
15 money and then -- you know, and --
16 THE COURT: I understand.
17 MR. KAHN: and -- and forward it.
18 THE COURT: What's the name of the gentleman
19 that you brought in as the appraiser?
20 MR. KAHN: Mr. Gary Mowrey.
21 THE COURT: Mr. Mowrey, could you come to
22 the podium, please.
23 MR. MOWREY: Yes, sir.
24 THE COURT: Mr. Mowrey, are you here of your
25 own volition this morning?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
67
1 MR. MOWREY: I was subpoenaed.
2 THE COURT: All right. So, you're answering
3 a subpoena.
4 What's -- What's your relationship -- First of
5 all, give me your background. What kind of appraiser
6 are you, sir?
7 MR. MOWREY: I'm a commercial real estate
8 appraiser, I've been doing it for 25 years, with
9 Stouffer & Associates.
10 THE COURT: All right.
11 MR. MOWREY: I appraise subdivisions, is one
12 of my specialties. I've done it -- hundreds and
13 hundreds of subdivisions.
14 THE COURT: Thank you. Did you appraise
15 this property?
16 MR. MOWREY: Yes, I did.
17 THE COURT: When?
18 MR. MOWREY: April of this year.
19 THE COURT: All right. And who did you do
20 the appraisal for?
21 MR. MOWREY: Mr. Kahn.
22 THE COURT: All right. So, he - - he engaged
23 you to do an appraisal. And, so, you have -- you have
24 an opinion as to value on this?
,_ 25 MR. MOWREY: Yes, sir.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 THE COURT: All right. So, you understand
2 that you're here this morning. You've sat, and I
3 appreciate it, very patiently through these
4 proceedings. And you understand that the reason
5 you've been If I let you testify--! haven't decided
6 whether I'm not going to, or I'm going to allow you to
7 do it--you're going to give an opinion as to value of
8 the subdivision.
9 Now, the one thing I will let you answer right
10 now is, you noticed I've asked Mr. Kahn lots of
11 questions about the status of the development. Is his
12 rendition accurate, that there has been -- that it's
13 been platted, there's been some utilities in, but the
14 roads still need to be constructed, curbs need to be
15 put in? Is that accurate?
16 MR. MOWREY: I'm not an engineer, but I
17 believe that's accurate.
18 THE COURT: All right. There -- There
19 are -- Are -- There are not any lots for sale right
20 now; is that correct?
21 MR. MOWREY: Correct.
22 THE COURT: All right. Thank you.
23 Could you step away for a moment, please?
24 Thank you.
25 So, do you want to -- Do you want to put -- You
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
69
1 said he's costing you money. Do you want to put his
2 testimony on?
3 MR. KAHN: Yes, your Honor.
4 THE COURT: All right. And he's going to
5 give testimony as to what?
6 MR. KAHN: As to the value of -- of -- The
7 as-is as-is value of the -- of the -- of the
8 property right now.
9 THE COURT: Okay. And you're -- Let's be
10 clear. Your interest in -- in the property is derived
11 from your stock -- ownership of shares of stock in
12 Joabert?
-...___/
13 MR. KAHN: That's -- That's correct.
14 THE COURT: All right. Yield the podium.
15 I want to hear from the other parties, please. If
16 you'll step away. Take your -- Take your drawings,
17 if you could, please.
18 All right. Mr. Powers.
19 MR. POWERS: Yes, your Honor.
20 THE COURT: So, you've raised the objection
21 that that Mr. Kahn is not in compliance with the
22 local rules, that he -- he did not provide you a
23 witness list nor an exhibit list five days in advance,
24 as prescribed under the local rules, as to the
25 gentleman testifying and also his appraisal; is that
~--
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
70
1 correct?
2 MR. POWERS: That is correct, your Honor.
3 No witness list or exhibit list was exchanged.
4 THE COURT: All right. So, I ' l l deal with
5 that in just a minute. So, let's back up.
6 What is your understanding, I'm asking for your
7 opinion, of Mr. Kahn's interest in Joabert?
8 MR. POWERS: He claims to have a one/third
9 interest in the equity of Joabert.
10 THE COURT: Okay.
11 MR. POWERS: Okay? Not in the land.
12 THE COURT: I understood that distinction.
__
'-- / 13 MR. POWERS: Okay. And, your Honor, I --
14 I don't know if he was under oath just now when he was
15 saying about
16 THE COURT: I didn't swear him in, I just
17 asked him some questions. You're right.
18 MR. POWERS: When -- About the property --
19 MR. KAHN: I tell the truth.
20 THE COURT: Don't interrupt. You'll get
21 your chance, Mr. Kahn.
22 Go ahead, Mr. Powers.
23 MR. POWERS: You asked questions, I think,
24 about the debt on the property.
25 THE COURT: Right.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
71
1 MR. POWERS: I have, in my hand, Mr. Kahn's
2 state court action, which has been dormant in state
3 court for some time, against Joabert Development
4 Corporation, because nobody will prosecute it. And
5 THE COURT: Is he the plaintiff in that
6 case?
7 MR. POWERS: He's the plaintiff in that
8 case.
9 THE COURT: Is there a reason why the case
10 isn't going forward?
11 MR. POWERS: None that I know of, because
12 it's not stayed by this Court.
13 THE COURT: Correct.
14 MR. POWERS: And the Trustee, if he -- if he
15 thought it had value, would have intervened as the
16 plaintiff, and I don't hear him
17 THE COURT: Let me -- Maintain your
18 thought. I want to acknowledge on the record that
19 your -- your recitation of the law is correct. The
20 stay does not preclude the Debtor from bringing causes
21 of action against other parties. Further, to the
22 extent that this is a cause of action that belongs to
23 the estate, the Trustee has the right to intervene and
24 take over control of the lawsuit, and he has not done
25 that.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
72
1 So, please continue.
2 MR. POWERS: That is correct, your Honor.
3 And, for the record, that is Cause Number 2013,
4 Prepetition Lawsuit Cll7012.
5 But in this pleading filed by Mr. Kahn, he says,
6 the outstanding debt, which is understated, but he
7 admits the outstanding debt, he says, the property is
8 encumbered, total outstanding, $3,377,000.
9 THE COURT: Is there a lien on the property,
10 to your knowledge?
11 MR. POWERS: Your Honor, I don't know if
12 there -- if it's actually -- I don't know. I don't
13 know if there's a deed of trust on it. But I know
14 that the debt on the property -- The property had to
15 be acquired, it had to be developed, it had to be
16 THE COURT: That's why I ask the question.
17 MR. POWERS: Yeah. So, that's why that --
18 that -- So, there's indebtedness, and there's loans on
19 the property. And even the document through which he
20 claims a one/third interest in the equity acknowledges
21 that all debt has to be paid before he gets a dime.
22 So, that's -- that's point one.
23 With respect to this opinion, I again, I don't
24 understand the relevance of it because, one, it's not
25 an opinion as to the value of his shares, which is the
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
73
1 only thing relevant in this case, and that is, what is
2 the value of a minority interest in an undeveloped
3 real estate project. And that -- And, so, his opinion
4 does not -- does not go to any germane issue here.
5 Number two is that the property, itself, he
6 doesn't appraise the property as it is, in its current
7 condition, he appraises it as a completed project.
8 Nor does he opine as to how much it would cost to get
9 the project to be completed. And, as he admitted to
10 the Court, he's not an engineer, he doesn't know how
11 much it would cost to get the thing completed.
12 So, what he has given is a speculative opinion
13 about what the property might be worth, if it were
14 developed, which it is not, and he has no opinion as
15 to the cost of the development.
16 He also gives no opinion as to the debt that's on
17 the property or the indebtedness that has to be paid
18 with respect to the corporate obligations to repay
19 that debt with respect to the improvements to the
20 property.
21 So, I I -- Also, your Honor, I for what
22 it's worth, we do have an offer that was made on the
23 property for -- as- as-is, which, for whatever
24 reason, was not done. It was like, I think, four
25 million dollars.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
74
1 THE COURT: I'm sorry. Say that again?
2 MR. POWERS: Four million -- Four million
3 dollars as-is.
4 THE COURT: The statement before, that you
5 said something prior to your statement about the four
6 million dollars.
7 MR. POWERS: Well, I don't know why it
8 wasn't taken into account, into the opinion but -- of
9 the property -- real estate. But there was an offer
10 for the property, and we have a written offer from --
11 K.B. Homes, is that who it is?
12 K.B. Homes, which is
13 THE COURT: Who has a written offer?
14 MR. POWERS: We do, for -- for -- Joabert
15 does, for $4.5 million, as-is.
16 THE COURT: Is -- Is -- Is Joabert your
17 client?
18 MR. POWERS: Joabert's a client, yes.
19 THE COURT: Okay. And how -- how do you
20 represent them? How did you come to represent them?
21 MR. POWERS: I represent the -- John -- John
22 Ripley and Bob Ripley are brothers. Bob Ripley owned
23 the Helvetia project, John Ripley owned the other
24 project.
25 THE COURT: The Joabert project?
·-~
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 MR. POWERS: The Joabert project.
2 THE COURT: So, that's how you came to
3 represent both of them?
4 MR. POWERS: Yeah. Both of them.
5 THE COURT: Okay. Now I understand.
6 MR. POWERS: And -- And, so, the point of
7 all this is, your Honor, that you've got all this debt
8 on the property, it's not complete, i t ' s not has to
9 be finished out, nobody's offering to finish it out to
10 get it into final form.
11 He doesn't have rights in the property, to begin
12 with. His claim to stock ownership is -- is nebulous,
13 and in dispute. There's been a lawsuit to try to
14 establish his interest, that's been pending for some
15 time. Nobody -- The estate doesn't have the assets to
16 prosecute that frivolous piece of litigation. Nobody
17 has stepped up to take it. They can't find a lawyer
18 who would do it.
19 And I guess that's all I have to say about that,
20 your Honor.
21 THE COURT: All right. What's -- Mr.
22 Hang on.
23 Mr. Thomas, do you have any position on this?
24 MR. THOMAS: Judge, I wouldn't have anything
25 to add.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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1 THE COURT: What is the total debt in this
2 case; do you all know?
3 MR. POWERS: our debt is 2,300,000. And
4 the -- And the rest is, kind of, credit card debt,
5 isn't it?
6 (Sotto voce exchange.)
7 MR. THOMAS: Judge, he's -- he's listed
8 304,000 unsecured debt.
9 THE COURT: Okay.
10 MR. THOMAS: He didn't take into account --
11 And that's where I came up with my percentage. So, he
12 didn't take into account a lot of the corporate debt.
13 THE COURT: Okay. And what's the amount of
14 the assets in the case?
15 MR. THOMAS: He's stating the value of the
16 lawsuits and the interest in the corporations at
17 $5,470,729.
18 THE COURT: All right. Thank you. Thank
19 you.
20 So, I need to hear -- Go ahead. Did you want to
21 say anything else, Mr. Powers?
22 MR. POWERS: I just wondered, am I through?
23 THE COURT: Yes, you're through.
24 So, Mr. Kahn, you want me to hear from this
25 gentleman. He's going to give an opinion of value?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210} 340-6464
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1 MR. KAHN: Well, I'd like to get something
2 straight in regards to the -- in regards to the
3 debt --
4 THE COURT: Okay.
5 MR. KAHN: -- that I listed and that we had,
6 is Mr. Ripley Ripley's -- in -- in the contract
7 that we had that was -- which turned into the -- to
8 the -- basically, a partnership agreement that turned
9 into a stock corporation, was that Mr. Ripley would
10 supply all the money and I would -- I would do all the
11 work, in very simple terms.
12 Mr. Mr. Ripley's put in something like
'-.
13 $2 million, over $2 million in properties. And that's
14 what -- That's the money we used to -- that I used to
15 buy all this property up, buy the property and --
16 and and then start to develop it, and pay all the
17 people that were there.
18 The So, this -- this grand There was no
19 other -- The only other debt, as I stated, was that,
20 in one section of the -- of the property, it went --
21 it -- when that sold, there was a debt of the $250,000
22 to Mr. Harold Gatsby. But, otherwise, the --
23 There's also a debt owed to me of a hundred -- a
24 hundred thousand dollars, because I put that money in
25 to -- to -- to get this thing started, so... But
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
78
1 there is no nobody else.
2 As far as K.B. Homes, K.B. Homes was trying to
3 buy this property before we even -- even had the
4 the master plan. And -- And they -- they had a bid of
5 five -- They were going to pay something like, I think
6 it was five or six million, five million dollars. It
7 was -- It was even more than that. It was -- It was
8 somewhere -- Oh, for a certain section. It was
9 somewhere around $5 million before we did too much
10 an awful lot more work.
11 There's now -- A bid of 4.5 is another one of the
12 baloney that this man is always --
13 THE COURT: You didn't accept the offer of
14 five to six million dollars, did you?
15 MR. KAHN: No.
16 THE COURT: So, i t was -- That's all it was,
17 was an offer.
18 MR. KAHN: Okay. And now he's saying that
19 after after we did that, and -- and the impact fees
20 changed from -- from, like, five -- a million dollars
21 to two million dollars, that we're going to take 4.5
22 million.
23 THE COURT: All right. So, let's
24 MR. KAHN: There -- There is
25 THE COURT: Let's get to the matter at
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
79
1 hand. I've -- Did you, in advance of the hearing
2 today, one, provide a copy of the appraisal to counsel
3 for Helvetia and the Trustee?
4 And, two, did you identify -- What's the
5 gentleman's name again? I'm sorry?
6 MR. KAHN: Mr. Mowrey.
7 THE COURT: Did you identify Mr. Mowrey as a
8 potential witness for the hearing today?
9 MR. KAHN: Yes, I did.
10 THE COURT: When?
11 MR. KAHN: I -- I sent -- When I -- When
12 I -- When When I got the subpoena, and when the
13 subpoena was issued, which was -- I believe it was
14 last last Thursday. So, it's six days that
15 that that he's had it. He doesn't want to --
16 So,
17 THE COURT: Well, let's -- let's look.
18 We have -- With the Court, we have your
19 supplemental objection. I don't see -- The motion to
20 sell was filed on August 29th, so that's some time
21 ago. Then you filed an objection on September 17th.
22 Then the Court, on September 22nd, set the hearing for
23 today. You moved to continue; I denied that at the
24 hearing. Then you filed a supplemental objection.
25 Where is your exhibit list or designation of
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
80
1 witnesses, because it's not of record with the Court?
2 MR. KAHN: I didn't supply one, your Honor.
3 THE COURT: All right. So, how -- What
4 proof do you have that you -- you sent to opposing
5 counsel and the Trustee a designation of exhibits and
6 witnesses?
7 MR. KAHN: I -- I sent -- I sent them in
8 the -- In my motion, I attached the exhibits.
9 THE COURT: Okay. And did that include
10 Did that include the appraisal?
11 MR. KAHN: The appraisal and -- Yes. I
12 The appraisal, it included the appraisal, and the
13 chart that I just showed you.
14 THE COURT: Right. What about designating
15 Mr. Mowrey as a witness?
16 MR. KAHN: I -- My designation was that --
17 that, I sent them a copy of the subpoena before -- I
18 sent a -- the copy of the subpoena not on Thursday, on
19 Wednesday, a day before.
20 THE COURT: Wednesday of when? Last week,
21 sir?
22 MR. KAHN: Last week. Yes, sir.
23 THE COURT: Do you have proof of that?
24 MR. KAHN: I -- I -- I have it in an email.
'..._...___...,--
25 THE COURT: Okay. Do you all dispute that,
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
81
1 that he, one, attached a copy of the appraisal with
2 his motion; and, two, sent you a copy of the subpoena
3 last Wednesday?
4 Ms. Barkley?
5 MS. BARKLEY: Your Honor, we did get a copy
6 of the Stouffer appraisal. But I believe--and I can
7 show you in an email from my secretary--that we got
8 the subpoena on Thursday.
9 MR. KAHN: Oh, then it got There's
10 THE COURT: Of last week, Ms. Barkley? Is
11 that correct?
12 MS. BARKLEY: Yes, your Honor.
13 MR. KAHN: Oh. Then that's when I got it
14 served. So, it was last Thursday, they got the copy
15 of the subpoena, sir.
16 THE COURT: Okay. So, what I ' l l do is, for
17 purposes of the record, I under- -- your objection is
18 noted. I'm going to rule the over objection (sic).
19 I'm going to take testimony from Mr. Mowrey.
20 Now, let -- let me caution you. If the -- the
21 testimony that you're eliciting is not focused and
22 relevant, I will cut you off. And i t ' l l -- i t ' l l be
23 real short. So, I want you to focus on what it is.
24 Now, you're going to have to demonstrate to the
25 Court -- Because you have a standing problem in this
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
82
1 case. And -- And the law, frankly, is pretty clear.
2 I had one of my law clerks look because, you know,
3 they -- they're smart. And there's a case on point
4 that talks about as follows: The Chapter 7 debtor is
5 a party in interest and has standing to object to a
6 sale of assets or otherwise participate in litigation
7 surrounding assets of the estate only if there could
8 be a surplus after all creditors' claims are paid.
9 This is a Second Circuit opinion, In re: 60 East
10 80th Street Equities, Inc., 218 F.3d 109, Second
11 Circuit, 2000.
12 I don't know if there's a case on point in the
13 Fifth Circuit, but you are not the first Chapter 7
14 pro se debtor I've had where there's been an objection
15 raised to a sale of property.
16 So, you need to establish that your interest in
17 Joabert exceeds the amount of the claims in this
18 case. And if you can't do that pretty quickly, I'm
19 cutting you off and the hearing will be over.
20 So, we're going to take a five-minute recess, and
21 then I'm going to hear from your witness.
22 MR. KAHN: Thank you, your Honor.
23 THE COURT: All right. Short recess.
24 COURTROOM DEPUTY: All rise.
25 (Recess.)
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
Mowre - Direct
83
1 THE COURT: All right, Mr. Kahn. You can
2 call your witness.
3 MR. KAHN: Mr. Mowrey, please take the --
4 take the witness --
5 THE COURT: Mr. Mowrey, will you come
6 forward please and appear in front of Ms. Gutierrez?
7 She's going to administer the oath, sir.
8 (Witness sworn by the Courtroom Deputy.)
9 COURTROOM DEPUTY: Would you please state
10 your first and last name, spelling your last?
11 THE WITNESS: Gary Mowrey, M-0-W-R-E-Y.
12 THE COURT: M-0-W ...
13 THE WITNESS: ... R-E-Y.
14 THE COURT: Thank you.
15 You may proceed, Mr. Kahn.
16 MR. KAHN: Thank you, your Honor.
17 DIRECT EXAMINATION
18 BY MR. KAHN:
19 Q. Good morning, Mr. Mowrey.
20 I had -- Did you make an appraisal of the Royal
21 Crest Subdivision in and around April of this year?
22 A. Yes, sir.
23 Q. What did you ~- What did you consider as, as-is,
24 the the value of that property?
25 MR. POWERS: Objection; no predicate.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
Mowrey - Direct
84
1 THE COURT: Sustained.
2 You're going to have to develop, sir, how he
3 reached his conclusion as to the value. You simply
4 can't ask him that. You've got to go through and ask
5 Mr. Mowrey how he reached his conclusion on value.
6 MR. KAHN: Okay.
7 Q. (By Mr. Kahn) Mr. Mr. Mowrey, do you have a
8 standard procedure in your -- when you appraise real
9 estate subdivisions?
10 A. Yes, sir.
11 Q. Could you please state what the -- that procedure
12 is?
13 A. We estimate the current as-is value of the lots,
14 as if they were developed. Then we estimate the
15 absorption period that it would take to sell these
16 lots to builders. We do a discounted cash flow over
17 the estimated absorption period, come up to a net
18 present value after subtracting expenses to develop
19 the property. And the conclusion is prospective value
20 upon completion of construction.
21 Q. And did - -
22 THE COURT: Is that of all the lots, sir?
23 THE WITNESS: Yes. That's 444 lots.
24 THE COURT: Thank you.
25 Go ahead, sir.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
Mowrev - Direct
85
1 Q. (By Mr. Kahn) And did you follow those rules
2 when you made the appraisal of the property?
3 A. They're not really rules, but procedures, yes.
4 Q. Procedures. Yes.
5 And I see in the -- the appraisal that there's
6 the location and similar lots and a -- and a copy of
7 the master plan in it. Did you -- Did you -- With
8 your calculations, did you arrive at a -- an as-is
9 A. Under prospective value upon completion of
10 construction, of eleven million eight fifty.
11 MR. POWERS: Objection, your Honor;
12 nonresponsive. The question was as-is.
13 THE COURT: All right. Can you -- Can
. __,
14 you Sustained.
15 Q. (By Mr. Kahn) What is the as-is value of that
16 property?
17 A. We didn't do an as-is value of that property. We
18 did a prospective value upon completion of
19 construction.
20 Q. Well, it says here a prospective value of --
21 THE COURT: When you say "here," what page
22 are you referring to?
23 Do you have an objection, sir
24 MR. POWERS: I was just -- I was waiting for
25 him to finish his question.
"-__;'
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
Mowrey - Direct
86
1 THE COURT: All right.
2 THE WITNESS: It's on the third page,
3 prospective value, market value opinion, September 1.
4 We did the appraisal as -- in April. We assumed a six
5 month construction period, and a completion date in
6 September to start the construction -- or to finish
7 the construction of Phase One, and each phase would
8 roll after that.
9 THE COURT: All right. So, Phase One is how
10 many lots, roughly?
11 THE WITNESS: I don't remember.
12 THE COURT: All right. That's fine, if you
13 don't.
14 Q. (By Mr. Kahn) I show you this --
15 THE COURT: Okay. You can't go to -- Can
16 you put it right there, sir?
17 MR. KAHN: Yes, sir.
18 THE COURT: can you see it from there,
19 Mr. Mowrey?
20 THE WITNESS: I've got an exhibit of that in
21 my appraisal.
22 THE COURT: All right. Go ahead, sir.
23 Q. (By Mr. Kahn) Yeah. The phase one,
24 A. Yes.
25 Q. -- it says how many lots -- Well, does the phase
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
Mowrev - Direct
87
1 that -- Pardon me. The phase that we did was not
" ._,
2 Phase Three. We did Phase Three first.
3 A. That's 49 lots in Phase Three.
4 MR. POWERS: Objection; leading.
5 THE COURT: All right. I ' l l overrule that.
6 That's fine. Please continue.
7 Q. (By Mr. Kahn) Now, when you -- I'm -- I'm a
8 little confused on the point of -- If the -- If you
9 sold the property -- If -- If the market value that
10 you -- What is the market value of that property to
11 sell right now?
12 A. Prospective value upon completion of construction
13 is eleven million eight fifty.
14 MR. POWERS: Objection; nonresponsive.
15 THE COURT: Sustained.
16 May -- If I may intervene.
17 Mr. Mowrey, is it accurate to say that you do not
18 have an opinion as to the present value of the
19 property as-is today?
20 THE WITNESS: The net present value upon
21 completion of construction is what I conclude. I
22 don't have an opinion of the as-is value today.
23 THE COURT: Right. And the reason that you
24 can't give an opinion as to the as-is value is why?
25 THE WITNESS: It was beyond the scope of my
·~~
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
Mowrey - Direct
88
1 appraisal.
2 THE COURT: Thank you.
3 THE WITNESS: I wasn't -- I wasn't asked to
4 do that.
5 THE COURT: All right. So, you can't ask
6 him -- He -- What -- Let me just intervene. I've
7 heard probably a couple hundred appraisals since I've
8 been on the Bench.
9 Which governs -- What set of standards governs,
10 sir, how you may conduct an appraisal?
11 THE WITNESS: The Uniform Standards of
12 Professional Practice.
13 THE COURT: Right. And USPAP is, I think,
14 how we refer to it?
15 THE WITNESS: USPAP.
16 THE COURT: USPAP, as I understand it in
17 listening to many appraisals, will not allow you to
18 testify as to an opinion on which you didn't base your
19 appraisal. Is that correct? I stated that wrong.
20 You can't give an opinion on value if you didn't
21 give an appraisal to that effect?
22 THE WITNESS: Correct.
23 THE COURT: Is that correct?
24 THE WITNESS: That's correct.
25 THE COURT: So, you can't ask him about what
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
Mowrey - Direct
89
1 the value is today. The only thing that Mr. Mowrey
2 can give an opinion on is what the value is of the
3 property fully developed. Is that correct, sir?
4 THE WITNESS: Yes, sir.
5 THE COURT: So, you have -- He's not -- It's
6 not he's not qualified, that he doesn't have the
7 requisite training or skill. But he -- he can't give
8 you an -- He can't give an opinion as to value as to
9 the property as it exists today. He's governed by
10 certain ethical I ' l l use --
11 May I use the word ethical? Would that be
12 correct, sir?
13 THE WITNESS: Standards.
14 THE COURT: standards. And he can't violate
15 those standards as an appraiser.
16 MR. KAHN: I -- I wouldn't -- I wouldn't ask
17 him to.
18 THE COURT: I know you wouldn't. But you --
19 you understand the point of why I've intervened. You
20 can't -- He can't give an opinion of value as it
21 exists today.
22 MR. KAHN: Well ...
23 Q. (By Mr. Kahn) Now, you -- you --
24 MR. KAHN: Well, that's all the questions I
25 have for him, your Honor.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
90
1 THE COURT: All right. Thank you.
2 One moment, sir.
3 Do you have any questions of the Witness?
4 MR. POWERS: Your Honor, just -- a lawyer
5 always has to ask a few questions, just for appearance
6 THE COURT: Think about that.
7 MR. POWERS: Okay.
8 THE COURT: Think carefully about that.
9 You -- You can ask questions.
10 MR. POWERS: I have no questions, your
11 Honor.
12 THE COURT: Mr. Thomas, do you have any
13 questions?
14 MR. THOMAS: No, Judge.
15 THE COURT: All right. Then -- With no
16 further questions, then you don't get a chance to
17 Redirect.
18 May I excuse Mr. Mowrey?
19 MR. POWERS: Yes, your Honor.
20 MR. THOMAS: Yes, your Honor.
21 THE COURT: Mr. Kahn?
22 MR. KAHN: (Inaudible.)
23 THE COURT: Mr. Mowrey, I appreciate your
24 patience, and thank you for being here.
25 THE WI'l'NESS: 'I'hank you.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
91
1 THE COURT: All right. So, Mr. Mowrey was
2 unable to give an opinion because he wasn't asked to
3 give an opinion of the as-is value of the property.
4 He can only give a prospective opinion.
5 As a result, Mr. Kahn, you have not established
6 what the value of Joabert is -- or -- or Royal Crest
7 is today. So, you do not have a pecuniary interest in
8 this case. And as a result, you don't have standing
9 to object to the motion to sell.
10 So, for purposes of the record, I'm going to make
11 the finding that, given that the Debtor has not
12 established that there is a value that exceeds the
13 debts in this case, let alone the debt against Royal
14 Crest property, that he does not have a pecuniary
15 interest in this motion to sell.
16 So, I'm going to overrule your objection and
17 grant the motion to sell.
18 MR. KAHN: Your Honor? Your Honor?
19 THE COURT: We're done. We're done. I gave
20 you your chance. You can't establish
21 MR. KAHN: (Indiscernible.)
22 THE COURT: Don't interrupt me. Do not
23 interrupt me. Let me Let me -- Let me help you out
24 and just tell you this.
25 I have been exceedingly patient this morning.
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
92
1 I've afforded you the opportunity to present your
2 case. Once you were unable to present that there was
3 any value that could be established as to the as-is
4 value of the Royal Crest property today, you don't
5 have standing to object to the motion to sell. So,
6 MR. KAHN: Do I -- Do I have an opportunity
7 to take the stand myself?
8 THE COURT: No. Because you -- you offered
9 expert opinion, and you can't establish the value.
10 I'm not going to let you testify as to what you think
11 the value is because, while a debtor can do that, the
12 reality is, I find that your testimony won't be
13 credible on that point because you have an inflated
14 opinion about what value is that's contradicted by the
15 fact that the appraiser couldn't give any value.
16 MR. KAHN: Well, in in -- in the
17 pleadings, 17012, that the it goes -- it is
18 outlined exactly what -- what the -- the cost -- the
19 value is, which was approximately $12 million.
20 THE COURT: I understand that. And -- And
21 let me -- let me be as precise as I can.
22 There were three categories of assets the
23 Trustee is seeking to sell this morning: Shares
24 in Helvetia,
25 Is it Joabert?
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
93
1 MR. KAHN: Joabert
2 THE COURT: -- Joabert; causes of action
3 that you have filed as the plaintiff, Mr. Kahn; and
4 then your interest in several business entities.
5 You acknowledged on the record that, as to
6 business entities, they've either closed, ceased
7 operations or have no value.
8 MR. KAHN: Right.
9 THE COURT: As As to the causes of
10 action, all those causes of action, you've lost, as
11 the plaintiff, several matters on appeal. There is
12 Fifth Circuit precedent that recites, notwithstanding
13 the pendency of an appeal, a ruling by a trial court
14 is a final judgment. So, I can ascribe a value to
15 those causes of action, and I ascribe a value of
16 zero.
17 That leaves only the shares of stock in Helvetia
18 and Joabert -- or Joabert. Forgive me. As to
19 Helvetia, accepting as true your listing of value of
20 your share -- a thousand shares of stock of $685,000,
21 you would still have to demonstrate to the Court that
22 your interest in the other entities, the Royal Crest
23 property, when added to that value, exceeds the amount
24 of debts in this case. It doesn't.
25 So, for purposes of the record, I'm first going
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
94
1 to find that you don't have standing based upon my
2 conclusion about value. And I'm also going to find
3 that your objections are not well taken.
4 So, Mr. Thomas, the motion is approved.
5 MR. THOMAS: Thank you, Judge.
6 THE COURT: All right. We're done.
7 COURTROOM DEPUTY: Order in the file?
8 THE COURT: Order -- May I sign the order in
9 the file?
10 (Sotto voce exchange.)
11 MR. KAHN: Your Honor, I --
12 (Sotto voce exchange.)
13 MR. THOMAS: I'll let them look at it first,
~
- --
14 your Honor, you know, and then ..
15 THE COURT: All right.
16 MR. KAHN: I -- I do object, and I will
17 appeal it.
18 THE COURT: Your appeal -- You may -- You
19 certainly, as a litigant, have the right to appeal.
20 And I've explained my reasoning on the record. You
21 can certainly, if you want, have the District Court
22 consider the Court's ruling. But for purposes of this
23 morning, I've made my decision.
24 MR. KAHN: Now, whether
"-.....,_.....
25 THE COURT; We're -- We're done. When I
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
95
1 make a ruling, we're done, sir. You're excused.
2 Ma'am?
3 COURTROOM DEPUTY: (Indiscernible?)
4 THE COURT: No. He didn't ask for them to
5 be admitted. You may return them to him.
6 All right. Thank you.
7 MR. POWERS: Thank you, your Honor.
8 COURTROOM DEPUTY: All rise.
9 MR. POWERS: Thank you for your time.
10 (Recess.)
11 ************
12
I, Court approved transcriber, certify that the
13 foregoing is a correct transcript from the official
~-
electronic sound recording of the proceedings in the
14 abo¥e-entitled matter.
L
15
/ /- .J-/5
16 ," Signatl:J,re of Approved Transcriber Date
'-._____./
17
18 Darla Messina
Typed or Printed Name
19
20
21
22
23
24
25
----
FEDERAL COURT REPORTERS OF SAN ANTONIO (210) 340-6464
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Subject: RE: Burt Kahn Bankruptcy
From: bob@rwwattorneys.com (bob@rwwattorneys.com)
To: glentrail@yahoo.com;
Date: Monday, August 31, 2015 0:00 PM
I had notseen this. Is the Trustee selling your cause of action against Robert on the Southside(?) development?
Robert W. Wachsmuth
Robert Wachsmuth & Associates
S\VBC Tower; Suite 707
9311 San Pedro Ave.
SanAntonio, Texas 78216
Telephone: (210) 342-2707
Facsimile: (210) 342-2701
Email: bob@rwwauomeys.com
CONFIDENTIALITY NOTICE: This e-mail and any attachments are for the exclusive and confidential use of the intended
recipient. If you are not the intended recipient, please do not read, distribute, or take action in reliance upon this message. If you
h:::i.ve: rf':~e:lve:d this in e:.rrnr, plP.~SP. notify 11s imme:di:::s.tP.ly hy rehirn f':-m~il ::lnd prnmptly rie:lP.tP. this mess~ge: :::i.nrf its ::ltt.::u:hmf':nt~ frnm
your computer system. We do not waive client-attorney or work product privilege by the transmission of this message.
From: Burt Kahn [mailto:glentrail@yahoo.com]
Sent: Monday, August 31, 2015 3:32 PM
To: bob@rwwattorneys.com
Subject: Burt Kahn Banlauptcy
Dear Bob:
Did you ever get notice of this sale.
Thanks for your prompt response.
I of 2 91112015 8:01 AM
Print https://us-mg204.mail. yahoo.com/neollaunch? .rand=cotaptl 2ekb8g
Burt
2 of2 9/112015 8:01 AN
EXHIBIT 6
Print https://Us-mg204.mail. yahoo.com/neo/launch?.rand~cotaptl 2ekb8g#424 ...
Subject: RE: case 14-50980 GAG
From: Johnny Thomas (1thomas@prodioY.net)
To: glentrail@yahoo.com;
Cc: peggyjmorris@prodigy.net;
Date: Thursday, March 19, 2015 1:54 PM
No money can be distributed until your appeal is finished.
Johnny W. Thomas
Johnny W. Thomas, Law Offices, P.C.
1153 East Commerce
San Antonio, Texas 78205
210/226-5888
210/226-608 5 facsimile
THOMAS LAW OFFICE E-MAIL NOTICE - This transmission may be: (I) subject to the Attorney-Client Privilege, (2) an
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210/226-5888
From: Burt Kahn [mailto:glentrail@yahoo.com]
Sent: Thursday, March 19, 20151:42PM
To: Johnny Thomas
Subject: case 14-50980 CAG
Dear Mr. Thomas:
Please send me a copy of the canceled checks you distributed to all my creditors due to the
$10,000 sale of all my worldly goods and life.
Thank you
Burton Kahn
1 of I 8/31/2015 3:02 AM
EXHIBIT 7
14-50980-cag Doc#47 Filed 04/29/14 Entered 04/29/14 16:01:59 Main Document Pg 1 of 2
IT IS HEREBY ADJUDGED and DECREED that the
below described is SO ORDERED.
Dated: April 29, 2014.
CRAIG A. GARGOTTA
UNITED STATES BANKRUPTCY JUDGE
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
INRE: § Chapter 7
§
BURTON M KAHN § Case No. 14-50980-cag
§
'~ Debtor. §
ORDER DENYING DEBTOR'S MOTION TO DISQUALIFY PUERTO VERDE LTD
TO MAINTAIN A LAWSUIT IN TEXAS
[relates to Dkt. No. 30)
Came on for hearing on April 24, 2014, the Motion To Disqualify Puerto Verde Ltd.
to Maintain a Lawsuit in Texas [Dkt, No. 30] (the "Motion") filed by Durton Kahn
("Debtor"). The Court heard evidence and considered the arguments of counsel for
Helvetia, the Chapter 7 trustee, and the Debtor, who appeared pro se. The Court finds that
good cause exists to deny the Motion; accordingly, it is hereby
ORDERED that the Motion is DENIED.
###
S-227467