2:10-bk-41251•John M. Woodburn
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION In re JOHN M. WOODBURN, Debtor. Case No. 2:10-bk-41251-RK Chapter 7 SEPARATE STATEMENT OF DECISION IN SUPPORT OF GRANTING TRUSTEE’S MOTION TO COMPEL DEBTOR TO TURN OVER HOMESTEAD PROCEEDS The motion of the Chapter 7 trustee to compel debtor to turn over homestead proceeds came on for hearing on September 17, 2013 and October 22, 2013 before the undersigned United States Bankruptcy Judge. For the reasons stated in the papers filed by the trustee in support of his motion, the court grants the trustee's motion for turnover of $50,000, including relief that to the extent that debtor no longer has the funds, judgment should be entered in favor of trustee for such amount. The previously exempt funds were either spent by the debtor or applied for his benefit, such as the funds used to pay debtor's bill to his bankruptcy attorney, and were not reinvested within the six month time period provided for under California Code of Civil Procedure, § 704.720. Debtor's argument that he is excused from entry of judgment is foreclosed by England v. Golden (In re Golden), 789 F.2d 698, 701 (9th Cir. 1986), which rejected the same argument now FILED & ENTERED OCT 30 2013 CLERK U.S. BANKRUPTCY COURT Central District of California BY DEPUTY CLERK tatum Case 2:10-bk-41251-RK Doc 136 Filed 10/30/13 Entered 10/30/13 11:25:29 Desc Main Document Page 1 of 4
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being made by the debtor ("The award of a judgment for the amount claimed exempt at
filing, however, furthers the purpose of the California exemption to preserve the proceeds
of the sale for reinvestment in another home, and to prevent expenditures for nonexempt
purposes.").
After reviewing the supplemental briefing of the parties, the court further
concludes that the trustee's motion should be granted because the trustee's position is
correct on grounds that the uncontroverted evidence before the court, including the
exhibits and statements in the moving and opposing papers, and the statements of the
debtor at the hearings, is that debtor had effective possession and control of the funds
because the homestead exemption funds were paid by the trustee to debtor's attorney,
debtor's agent, on debtor's behalf, who in turn disbursed some of the exempt funds to the
debtor, who has admitted to spending the funds disbursed to him, and the attorney is
holding some of the funds in his client trust account to be applied to payment of debtor's
legal fee obligations to the attorney if the debtor so authorizes (debtor stated during a
hearing that he has not so authorized this despite his attorney’s letter requesting such
authorization). The court concludes that the receipt of the exempt funds by debtor’s
attorney disbursed by the trustee on debtor’s behalf constitutes actual receipt by debtor
for purposes of California Code of Civil Procedure, § 704.720. While debtor does not
dispute that he actually received the exempt funds in part from his attorney, he disputes
that the funds disbursed by the trustee to the attorney on his behalf not distributed to him
constitutes actual receipt by him for purposes of § 704.720 (including the funds now held
in the attorney’s client trust account, awaiting debtor’s authorization to be applied to his
legal fee bill), and this court does not agree with this argument. When the attorney
received debtor’s exempt funds from the trustee on debtor’s behalf, that is the date of
actual receipt, and it is not disputed that six months has passed since this date.
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Case 2:10-bk-41251-RK Doc 136 Filed 10/30/13 Entered 10/30/13 11:25:29 Desc
Main Document Page 2 of 41 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 This separate statement of decision adopts and incorporates the tentative rulings issued by the court before the hearings as well as supplements the court’s reasons for decision stated at the hearings. IT IS SO ORDERED. ### Date: October 30, 2013 Case 2:10-bk-41251-RK Doc 136 Filed 10/30/13 Entered 10/30/13 11:25:29 Desc Main Document Page 3 of 4
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF ENTERED ORDER AND SERVICE LIST Notice is given by the court that a judgment or order entitled (specify) SEPARATE STATEMENT OF DECISION IN SUPPORT OF GRANTING TRUSTEE’S MOTION TO COMPEL DEBTOR TO TURN OVER HOMESTEAD PROCEEDS was entered on the date indicated as “Entered” on the first page of this judgment or order and will be served in the manner indicated below: I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (“NEF”) – Pursuant to controlling General Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on the following person(s) by the court via NEF and hyperlink to the judgment or order. As of October 30, 2013, the following person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or adversary proceeding to receive NEF transmission at the email address(es) indicated below: Helen R Frazer hfrazer@aalrr.com David A Gill (TR) mlr@dgdk.com, dgill@ecf.epiqsystems.com;DanningGill@Gmail.com Barry S Glaser bglaser@swesq.com Sylvia Lew Sylvialew@tilemlaw.com, malissamurguia@tilemlaw.com;dianachau@tilemlaw.com;joanfidelson@tilemlaw.com Alvin Mar alvin.mar@usdoj.gov Ron Maroko ron.maroko@usdoj.gov Anthony J Rothman anthony@arothmanlaw.com David A Tilem davidtilem@tilemlaw.com, malissamurguia@tilemlaw.com;dianachau@tilemlaw.com;joanfidelson@tilemlaw.com United States Trustee (LA) ustpregion16.la.ecf@usdoj.gov Barry R Wegman barrywegman@tilemlaw.com, malissamurguia@tilemlaw.com;dianachau@tilemlaw.com;joanfidelson@tilemlaw.com II. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this judgment or order was sent by U.S. Mail, first class, postage prepaid, to the following person(s) and/or entity(ies) at the address(es) indicated below: Debtor John M. Woodburn 272 South Los Robles Avenue Pasadena, CA 91101-2872 JOHN J MENCHACA 835 Wilshire Boulevard, Suite 300 Los Angeles, CA 90017 Menchaca & Company LLP 835 Wilshire Blvd Suite 300 Los Angeles, CA 90017 Najila K Brent Najila K Brent APLC 3424 Carson St Ste 500 Torrance, CA 90503 III. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or order which bears an “Entered” stamp, the party lodging the judgment or order will serve a complete copy bearing an “Entered” stamp by U.S. Mail, overnight mail, facsimile transmission or email and file a proof of service of the entered order on the following person(s) and/or entity(ies) at the address(es), facsimile transmission number(s) and/or email address(es) indicated below: Case 2:10-bk-41251-RK Doc 136 Filed 10/30/13 Entered 10/30/13 11:25:29 Desc Main Document Page 4 of 4
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