REJ Properties, Inc.

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 1 The Office of the United States Trustee (“UST”) did not file pleadings with respect to this
matter. At the hearing, however, counsel for the UST indicated that the UST supported the relief
requested by the Transfer Motion.
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
* * * * * *
In re:
REJ PROPERTIES, INC.,
Debtor.
______________________________________
)
)
)
)
)
)
)
)
BK-S-07-11280-MKN
Chapter 11
Date: 	April 16, 2007
Time: 9:30 a.m.
MEMORANDUM DECISION ON EXPEDITED MOTION TO TRANSFER
VENUE TO THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
The Expedited Motion to Transfer Venue to the United States Bankruptcy Court for the
Northern District of California (“Transfer Motion”) brought by John Sramek and Bernadette
Sramek, individually and as Trustees of the John S. Sramek, Jr. and Bernadette D. Sramek
Revocable Living Trust (“Sramek”) was heard on April 16, 2007, pursuant to an Order Shortening
Time (“OST”) entered on March 29, 2007. The appearances of counsel were noted on the record.
After the Court heard oral argument, the matter was taken under submission based on the pleadings
on file as well as the record in the case 1 .
BACKGROUND
Debtor filed a voluntary Chapter 11 petition for reorganization on March 13, 2007.
Debtor’s assets consist of “Petan Jungle Guatemala Hardwood Trees, 4 Barges, and Rights to
__________________________________
Hon. Mike K. Nakagawa
United States Bankruptcy Judge
___________________________________________________________
Entered on Docket
April 18, 2007
Entered on Docket
April 27, 2007
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 07-41274 Doc# 30 Filed: 04/18/07 Entered: 04/27/07 12:51:07 Page 1 of 6

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
2
coconuts from land”, according to its real property Schedule “A”, and one or more accounts at
“Wells Fargo Bank” having “0" value and insurance policies at “Fidelity Title” and “North
American Title”, both having “?” value, according to its personal property Schedule “B”. Debtor’s
creditors are “Vantage Investments” located in Guatemala City, Guatemala, having an unsecured
priority claim of $3,900,000, according to Debtor’s Schedule “E”, and “John Sramek” located in
San Ramon, California, having an unsecured nonpriority claim of $1,400,000, according to its
Schedule “F”. 	The same creditors, and no more, also appear on the List of Creditors Holding 20
Largest Unsecured Claims that was filed with the Chapter 11 petition. Debtor’s Statement of
Financial Affairs indicates “None” for income from the Debtor’s business operations in 2005 and
2006 as well as the year to date. That Statement also indicates that 100% of the stock ownership is
held by a John Brosnan. The Debtor’s Schedules and Statement of Financial Affairs were signed
under penalty of perjury on March 11, 2007, by Mr. Brosnan as president of the Debtor.
According to the Chapter 11 petition, the street address of the Debtor is 3156 East Patrick Lane,
Suite 1, Las Vegas, Nevada. The petition and related documents were signed by the law firm of
Hayes, Davis, Bonino, Ellingson McLay & Scott, located in Redwood City, California, as counsel
for the Debtor.
THE TRANSFER MOTION
Sremak seeks to transfer this Chapter 11 proceeding to the Oakland division of the
United States Bankruptcy Court for the Northern District of California pursuant to 28 U.S.C. section
1412 which provides for a case to be transferred to another district “in the interest of justice or for
the convenience of the parties.” 	The party requesting the transfer has the burden of proving by a
preponderance of the evidence that a transfer of venue is warranted. See generally B. Russell,
Bankruptcy Evidence Manual, § 301.33 at 859-60 (2007 Ed.) In addition to the language of the
statute itself, a variety of factors may be considered, including the proximity of creditors, the debtor
and any witnesses, the location of assets, the economic administration of the estate, and the
necessity of ancillary administration if liquidation should result. See In re B.L. of Miami, Inc., 294
Case: 07-41274 Doc# 30 Filed: 04/18/07 Entered: 04/27/07 12:51:07 Page 2 of 6

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
3
B.R. 325, 329 (Bkrtcy.D.Nev. 2003)(Zive, J.). See also, B. Russell, supra, § 301.33 at 861-62,
citing In re Geauga Trenching Corp., 110 B.R. 638, 654 (Bkrtcy.E.D.N.Y. 1990)(including other
factors such as filing party’s choice of forum, the enforceability of judgment, the ability to receive a
fair and speedy trial, the availability of process to compel the attendance of witnesses, and the
applicability of state law to resolution of controversies).
In seeking the instant relief, Sramek argues first that venue is improper under 28 U.S.C.
section 1408(2), and second that transfer is appropriate under 28 U.S.C. section 1412. The Court
rejects the first argument inasmuch as the Debtor apparently has been incorporated in Nevada since
May 10, 1999. See Declaration of Harold M. Jaffe in Support of Expedited Motion to Transfer
Venue, etc., (“Jaffe Declaration”) at ¶ 3 and Exhibit “A” thereto. Thus, this is not a situation where
venue was “manufactured” immediately prior to the bankruptcy filing like the cases cited in
Sramek’s motion. See Transfer Motion at 6:6-22. Likewise, there is no indication that the Debtor
was incorporated in Nevada in 1999 strictly for the purpose of creating a possible venue in the
future. Id. at 6:23 to 7:2, citing In re Handel, 242 B.R. 789, 793 n.7 (Bkrtcy.D.Mass. 1999). Under
these circumstances, the Court will not disregard Debtor’s incorporation in the State of Nevada as
establishing venue under 28 U.S.C. section 1408(1).
As to the transfer of venue, the record indicates that the Debtor’s existing assets have
little or no relationship to Nevada. Debtor’s so-called “real property” assets - “Petan Jungle
Guatemala Hardwood Trees, 4 Barges, and Rights to coconuts from land” according to its Schedule
“A” - appear to be located in South America, rather than in Nevada. Debtor’s “personal property’
assets - one or more accounts at “Wells Fargo Bank” having “0" value and insurance policies at
“Fidelity Title” and “North American Title”, both having “?” value, according to its Schedule “B” -
apparently have no particular location and either zero or unknown value. The Wells Fargo Bank
account appears to be located in California. See Jaffe Declaration at ¶¶ 6 and 7 and Exhibit “E”
thereto.
Debtor’s principal, John Brosnan, apparently resides or has an address at 3321 Vincent
Case: 07-41274 Doc# 30 Filed: 04/18/07 Entered: 04/27/07 12:51:07 Page 3 of 6

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
2 Pursuant to the OST, written opposition was due on April 10, 2007. Although untimely,
the Court has considered the written opposition filed by the Debtor.
3 At oral argument, Sramek’s counsel represented that trial of the California Action is
scheduled to commence on May 14, 2007, which is consistent with the docket. See Exhibit “1" to
RJN. 	Relief from the automatic stay under 11 U.S.C. section 362(d) would be required if Sramek
intends to proceed with the California Action as to the Debtor.
4 One of those claims allegedly would be against an entity identified as the “Jacobsen Trust”,
see Exhibit 4 to RJN, which bears the same name as the former owner of the Debtor, Robert Jacobsen,
and who apparently has a post office box in Alamo, California. 	See Jaffe Declaration at ¶ 6 and
Exhibit “D” thereto.
4
Road in Pleasant Hill, California. See Jaffe Declaration at ¶ 3 and Exhibit “A” and ¶ 6 and Exhibit
“D”. Sramek, the only scheduled creditor other than Vantage Investments, resides in San Ramon,
California. In its opposition to the Transfer Motion, Debtor represented that it now has four
additional unsecured creditors, all located in Las Vegas, Nevada, all of whom will be included in
amendments to the Debtor’s schedules. See Debtor’s Opposition to Expedited Motion to Transfer
Venue, etc. (“Opposition”), filed April 15, 2007, at 3:13 to 4:32 .
Prior to the commencement of the Chapter 11 proceeding, Sramek sued the Debtor and
its previous owner (Robert E. Jacobson) in Contra Costa County Superior Court in California
(“California Action”), on a complaint alleging breach of contract, fraud and a variety of other legal
theories in connection with a transaction involving real property located in Walnut Creek,
California “Walnut Creek Property”). See Exhibits “1" and “2" to Smrek Request for Judicial
Notice (“RJN”). It appears that the Debtor also is a cross-complainant in that proceeding with
claims against certain individuals and title insurance companies, id. at Exhibit “3", even though
such cross-claims are not listed in the Debtor’s personal property Schedule “B”.3 It further appears
that the Debtor also may have numerous claims under 11 U.S.C. section 544 and the California
version of the Uniform Fraudulent Transfer Act, see Cal. Civ. Code § 3429 et seq., see Exhibit “4"
to RJN, even though such claims also are not listed in the Debtor’s personal property schedule.4
These currently unscheduled claims are most closely related to the Debtor’s activities in California,
Case: 07-41274 Doc# 30 Filed: 04/18/07 Entered: 04/27/07 12:51:07 Page 4 of 6

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
5
rather than in Nevada.
Prior to the commencement of the instant Chapter 11 proceeding, Debtor filed a
voluntary Chapter 11 petition in the United States Bankruptcy Court for the Northern District of
California on September 7, 2005, denominated Case No. 05-4505-J. See Exhibit “5" to RJN. That
petition was filed in pro se and showed the Debtor’s street address as 3321 Vincent Road, Pleasant
Hill, California 94523. See Exhibit “6" to RJN. 	That address is the same as that shown for Mr.
Brosnan. See Jaffe Declaration at ¶ 3. The Office of the United States Trustee in the Northern
District of California filed a motion to convert or dismiss the Chapter 11 proceeding which alleged a
variety of reasons, including that the Debtor’s principal was or had been involved in at least eight
other bankruptcy cases before the court, that the Debtor failed to appear that the initial debtor
interview with the United States Trustee’s Office, that no schedules or statements had been filed,
and that the Debtor was unrepresented by counsel. See Exhibit “7" to RJN. The court granted the
motion and issued an order dismissing the case on October 14, 2005. 	See Exhibit “8" to RJN.
In its written opposition, Debtor explains that venue was proper in the Northern District
of California in 2005 because the Debtor owned the Walnut Creek Property and the bankruptcy
petition stayed its foreclosure by a senior liehholder. See Opposition at 3:5-7. Debtor blames
Sramek for not curing the Debtor’s default to the first lienholder and letting the property be
foreclosed after the bankruptcy was dismissed, and then commencing the California Action. Id. at
6-8. 	As noted above, however, the Debtor appears to still have claims arising from its ownership
of the Walnut Creek Property and its business activities in California.
Debtor’s contention that it does business in Nevada or is considering various business
activities in Nevada is unsupported. Debtor’s current Chapter 11 petition reflects a street address of
3156 East Patrick Lane, Suite 1, Las Vegas, Nevada which appears to be the address only of its
resident agent, see Jaffe Declaration at ¶ 3 and Exhibit “A”, rather than a place of operations. As
previously noted, Debtor’s current Statement of Financial Affairs shows no income from operations
whatsoever for the year 2007 to date nor for the previous two years. In its written opposition,
Case: 07-41274 Doc# 30 Filed: 04/18/07 Entered: 04/27/07 12:51:07 Page 5 of 6

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
5 The Court would reach this conclusion even if the Schedules were amended to include the
four unsecured creditors that allegedly were omitted at the time the Chapter 11 petition was filed. See
Opposition at 3:13 to 4:3. 	No such amendments have been filed as of the date of this Memorandum
Decision and Debtor’s Schedule “F” can be amended after the case is transferred.
6
Debtor suggests that its Nevada operations “would focus on certain environmentally sensitive
businesses”, see Opposition at 4:8, but points to no current operations at all. Moreover, the written
opposition is unaccompanied by even the simplest declaration or other evidence establishing any
business activity at all in Nevada.
In light of the foregoing, the Court concludes that the proximity of creditors, witnesses,
assets, and even the Debtor’s principal, favors transfer to the Northern District of California. 5 The
applicability of California law to the resolution of the claims, including possible avoidance claims
and enforcement of judgment, as well as the availability of process to compel attendance of
witnesses, also favor such transfer. Consideration of ancillary administration in the event of
liquidation appears to be premature. Cf., In re B.L. of Miami, Inc., supra, 294 B.R. at 333. 	While
the Debtor’s choice of forum is entitled to some weight, Sremak has established by a preponderance
of the evidence that the case should be transferred in the interests of justice and for the convenience
of the parties.
CONCLUSION
Sremak’s Transfer Motion shall be granted for the reasons stated herein. A separate
order has been entered concurrently herewith.
Case: 07-41274 Doc# 30 Filed: 04/18/07 Entered: 04/27/07 12:51:07 Page 6 of 6