Marla J. Rabin

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MEMORANDUM DECISION
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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
MARLA J. RABIN,
fdba Nosh Productions, Inc.,
Debtor.
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Case No. 05-32572 TEC 7
(administratively consolidated
with In re Nanoshka Johnson,
Case No. 05-32573)
Chapter 7
MEMORANDUM RE TRUSTEE’S OBJECTION TO CLAIMS
OF PARAGON REAL ESTATE GROUP OF SAN FRANCISCO, INC.
The court held a hearing on April 16, 2007, on the trustee’s
objection to the two proofs of claim filed by Paragon Real Estate
Group of San Francisco, Inc. (Paragon) against the Debtors in the
above-captioned administratively consolidated bankruptcy estates.
Reidun Strømsheim appeared for the trustee. 	Michael A. Gevertz
appeared for Paragon.
Upon due consideration, and for the reasons stated below, I
overrule the trustee’s objection, and allow both of Paragon’s
claims as filed. 	Paragon shall not, however, be entitled to
recover more than a total of $38,500 on account of its two claims.
Signed and Filed: June 07, 2007
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
June 08, 2007
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 05-32572 Doc# 73 Filed: 06/07/07 Entered: 06/08/07 10:19:59 Page 1 of 8

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MEMORANDUM DECISION
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FACTS
On May 9, 2005, Marla J. Rabin (Debtor) and Nanoshka Johnson,
equal co-owners of real property located at 158 Everson Street, San
Francisco (Property), signed a Residential Listing Agreement
(Agreement) with Paragon, granting it the exclusive right to sell
the Property. 	(Agreement, ¶ 1). 	The Agreement defines “Seller” as
Debtor and Nanoshka Johnson, and provides in relevant part as
follows regarding Pargaon’s compensation: “Seller agrees to pay to
Broker as compensation for service irrespective of agency
relationship(s) . . . 5 percent of the . . . purchase price . . .
.” 	Agreement, ¶4A.
On May 20, 2005, Paragon listed the Property for sale. 	On
August 11, 2005, Ms. Rabin and Ms. Johnson each filed chapter 7
bankruptcy petitions. 	On August 29, 2005, this court signed an
order in each of the two bankruptcy cases granting the trustee’s
motion to approve sale of the Property in the amount of $770,000,
and requiring the trustee to pay from the sales proceeds the
mortgage and regular closing costs, except for Paragon’s $38,500
sales commission (Commission).
On September 7, 2005, the trustee filed an adversary
proceeding (No. 05-3401) against the title company holding the
proceeds from the sale of the Property, due to the title company’s
alleged refusal to turn over the Commission to the trustee.
On September 21, 2005, the court signed an order granting the
trustee’s motion to administratively consolidate the cases of
Debtor and Ms. Johnson, and requiring all future pleadings to be
Case: 05-32572 Doc# 73 Filed: 06/07/07 Entered: 06/08/07 10:19:59 Page 2 of 8

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MEMORANDUM DECISION
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filed in Debtor’s bankruptcy case. 	The order did not substantively
consolidate the two cases.
On December 1, 2005, the parties to Adv. Proc. No. 05-3401
filed a stipulation (Stipulation) requiring the title company to
turn over to the trustee the Commission, and providing as follows
regarding the Commission: “Paragon Real Estate Group is entitled to
file a Proof of Claim in the bankruptcy case of In re Marla J.
Rabin and Nanoshka C. Johnson, and it has a valid general unsecured
claim in the amount of $38,500 in that case.”
On December 9, 2005, Paragon filed a general unsecured claim
in the amount of $38,500 in each of the two bankruptcy cases.
Other than the case name and number, the claim filed in each case
is identical, and attaches a copy of the Agreement.
On April 6, 2006, the trustee filed and served on counsel for
Paragon an objection to Paragon’s claim filed in the Nanoshka
Johnson case, seeking disallowance of such claim as a duplicate of
the claim filed in Debtor’s bankruptcy case. 	Paragon did not file
a request for hearing on the trustee’s objection.
Nearly one year later, on March 1, 2007, Trustee filed an
application seeking to reduce by 50% the claims filed by Paragon in
Ms. Johnson’s and Debtor’s bankruptcy cases, and allowing in each
case an unsecured claim in the sum of $19,250. 	The application
provides as follows:
The Trustee has previously filed an objection to the
claim filed in the Johnson case, and asked that it be
disallowed. 	However, this was based on the erroneous
assertion that the two cases were substantively
consolidated. 	The cases have simply been
Administratively Consolidated, where the only asset of
the estate, the proceeds of the sale of a piece of real
Case: 05-32572 Doc# 73 Filed: 06/07/07 Entered: 06/08/07 10:19:59 Page 3 of 8

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MEMORANDUM DECISION
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property, will be divided and paid one half each to the
creditors of each estate. . . .
On March 7, 2007, Paragon filed opposition to the trustee’s
application, arguing that Ms. Johnson and Debtor are co-obligors
under the Agreement, and are jointly and severally liable
thereunder to pay Paragon the Commission. 	Paragon further argued
that the trustee’s objection was inconsistent with the Stipulation,
and asked this court to allow its two claims in the amount of
$38,500 each. 	On April 16, 2007, Paragon filed a supplemental
response to the trustee’s claim objection, clarifying that it did
not seek to recover more than a total of $38,500 from the two
bankruptcy estates.
On April 16, 2007, the court held a hearing on the trustee’s
objection to Paragon’s two proofs of claim. 	At the hearing,
counsel for the trustee stated that it appeared there were
insufficient funds to pay the claims of the two bankruptcy estates
in full, and argued that the Stipulation limited Paragon’s claim to
one claim in the amount of $38,500, that allowing the claim in each
case would be to allow Paragon a $77,000 claim, and that such a
result would be unfair to other creditors.
Paragon argued that the obligation is joint and several in the
amount of $38,500 against each Debtor under Cole v. Lowe, 81 Cal.
App. 633 (1927) and California Civil Code section 1659. 	Paragon
contended that the trustee should file in one of the bankruptcy
cases a contingent proof of claim for equitable contribution or
indemnity in the event she ended up paying Paragon more than a full
recovery.
Case: 05-32572 Doc# 73 Filed: 06/07/07 Entered: 06/08/07 10:19:59 Page 4 of 8

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MEMORANDUM DECISION
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LAW
Property rights in the assets of a bankruptcy estate are
determined by state law. 	Butner v. U.S., 440 U.S. 48, 53 (1979).
In California, when “all parties who unite in a promise receive
some benefit from the consideration, whether past or present, their
promise is presumed to be joint and several.” 	Cal. Civ. Code
§ 1659. 	Furthermore, “[a] promise, made in the singular number,
but executed by several persons, is presumed to be joint and
several.” 	Id. § 1660.
Both Debtor and Ms. Johnson signed the Agreement and
benefitted from Paragon’s listing of the Property for sale and
procurement of a buyer for the Property. 	Based on the services
provided by Paragon, the trustee sold the Property for $770,000.
Because both Debtor and Ms. Johnson united in the promise to pay
Paragon for its services, they are presumed to be jointly and
severally liable to Paragon for the commission, absent express or
implied language in the Agreement to the contrary. 	Cal. Code Civ.
Proc. §§ 1659, 1660 (statutory presumptions); Cole v. Lowe, 81 Cal.
App. at 638 (section 1659 presumption applies absent express or
implied language in agreement to the contrary).
There is no language in the Agreement that undermines the
statutory presumption of joint-and-several liability, and the
Trustee has not introduced any evidence other than the Stipulation
to rebut the presumption.
The Stipulation provides as follows regarding Paragon’s claims
based on the Commission: “Paragon Real Estate Group is entitled to
file a Proof of Claim in the bankruptcy case of In re Marla J.
Case: 05-32572 Doc# 73 Filed: 06/07/07 Entered: 06/08/07 10:19:59 Page 5 of 8

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MEMORANDUM DECISION
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Rabin and Nanoshka C. Johnson, and it has a valid general unsecured
claim in the amount of $38,500 in that case.” (emphasis added).
Eight days after the Stipulation was filed, Paragon filed a proof
of claim on account of the Commission in each of the two bankruptcy
cases. 	Four months after the Stipulation was filed, Trustee filed
an objection to one of the Paragon claims, based on what she later
admitted was a mistaken assumption that the two cases has been
substantively consolidated. 	The objection did not assert that the
filing of the two claims violated the Stipulation.
“A contract must be so interpreted as to give effect to the
mutual intention of the parties as it existed at the time of
contracting, so far as the same is ascertainable and lawful.” 	Cal.
Civ. Code § 1636. 	Mutual intent is determined by the objective
manifestations of the parties’ intent, including the words used in
the agreement, and the subsequent acts and conduct of the parties.
City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
68 Cal.App. 4th 445 (1998).
Paragon’s prompt filing of two proofs of claim after execution
of the Stipulation objectively suggests that Paragon did not
believe the Stipulation altered its substantive legal rights. 	The
trustee’s claim objection did not seek to disallow one of Paragon’s
claims as contrary to the Stipulation, but rather as a duplicate
claim. 	This history suggests that the trustee also did not believe
that the Stipulation altered Paragon’s substantive legal rights.
Because the Stipulation does not alter the substantive rights
of Paragon, and in light of the post-Stipulation conduct of the
Case: 05-32572 Doc# 73 Filed: 06/07/07 Entered: 06/08/07 10:19:59 Page 6 of 8

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MEMORANDUM DECISION
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parties noted above, the court finds that the Stipulation does not
rebut the state-law presumption of joint and several liability.
Trustee cites to no Bankruptcy Code provision that alters
Paragon’s state-law rights.
Although it does not appear likely that creditors of Debtor
and Ms. Johnson’s bankruptcy estates will be paid more than a small
portion of their claims, it would be improper for Paragon to
receive more than a total of $38,500 from both bankruptcy estates.
Accordingly, the court instructs the trustee not to pay Paragon
more than $38,500 total on account of its claims against Debtor and
Ms. Johnson, as provided in the accompanying order.
**END OF MEMORANDUM DECISION**
Case: 05-32572 Doc# 73 Filed: 06/07/07 Entered: 06/08/07 10:19:59 Page 7 of 8

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Court Service List
Reidun Stromsheim, Esq.
Law Offices of Stromsheim and Assoc.
201 California St. #350
San Francisco, CA 94111
E. Lynn Schoenmann
800 Powell Street
San Francisco, CA 94108
Michael A. Gevertz, Esq.
Steefel, Levitt & Weiss, PC
One Embarcadero Center, 30th Fl.
San Francisco, CA 94111-3719
Case: 05-32572 Doc# 73 Filed: 06/07/07 Entered: 06/08/07 10:19:59 Page 8 of 8