James W. Moore

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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Memorandum Decision
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 11-41988
Chapter 11
JAMES W. MOORE,
Debtor./
MEMORANDUM DECISION
Paul Zinchik and Leonid Zinchik, individually and as Trustee of
the Irina and Leonid Zinchik Trust (“the Zinchiks”) have moved for
relief from the automatic stay provided by Bankruptcy Code
§ 362(a)(1) to permit them to continue prosecution of a fraudulent
conveyance action against certain transferees to which the above
debtor, James Moore (“Moore”), conveyed interests in two parcels of
real property prior to the filing of the petition herein. 	The
Zinchiks also request relief to continue prosecution of a similar
action as to a third parcel, as to which the Zinchiks contend that
Moore was never on title, but as to which he may have a claim for
some net proceeds, if there be any, in the event of a sale following
the rehabilitation of that parcel.
/////
Signed: May 13, 2011

EDWARD D. JELLEN
U.S. Bankruptcy Judge

Entered on Docket
May 16, 2011
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 11-41988 Doc# 79 Filed: 05/13/11 Entered: 05/16/11 21:43:28 Page 1 of 6

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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1Under Cal. Civ. Pro. Code § 697.340, recordation of an
Abstract of Judgment creates a lien on “all interests in real
property in the county where the lien is created (whether present
or future, vested or contingent, legal or equitable) . . . ”
2	Memorandum Decision
The Zinchiks are judgment creditors of Moore. 	On August 23,
2010, they recorded an Abstract of Judgment in Alameda County,
California, where the parcels at issue are located. 1 	As to two of
the parcels at issue, Moore quitclaimed his interest for no
consideration to the fraudulent conveyance defendants prior to the
Zinchiks’ recordation of the abstract of judgment.
The Zinchiks contend that, because the transfers were
fraudulent, Moore retained a resulting trust or other equitable
interest in the properties transferred, to which their judgment lien
attached notwithstanding the fact that such lien came into existence
after the transfer.
Moore opposes relief, and contends that the Zinchiks’ judgment
against him is on appeal, and thus, that they may end up not being
his creditors. 	And in any event, Moore contends that the fraudulent
conveyance claims are property of his bankruptcy estate, and that
any recovery thereon should be for the benefit of all the creditors
of the estate, not just the Zinchiks.
For the reasons hereinafter set forth, the court will deny the
Zinchiks’ motion.
Generally, under California law, an Abstract of Judgment does
not attach to any property that had been transferred prior to
recordation of the Abstract of Judgment. 	Casey v. Gray, 13
Case: 11-41988 Doc# 79 Filed: 05/13/11 Entered: 05/16/11 21:43:28 Page 2 of 6

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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3	Memorandum Decision
Cal.App.4th 611, 614, 16 Cal.Rptr.2d 538 (1993). 	Thus, under this
general rule, the Zinchiks would have no interest in the parcels at
issue, or any claims to recover same.
However, in Fidelity National Title Ins. Co. v. Schroeder, 179
Cal.App.4th 834, 101 Cal.Rptr.3d 854 (2009), the court held that
when a conveyance gives rise to a resulting trust under
circumstances showing that the transferee was not intended to take a
beneficial interest, then it would follow that the transferor
retained equitable, if not legal, title. 	And, held the court, it
would also follow that such retained equitable title can be subject
to the claims of judgment creditors of the transferor.
Here, the Zinchiks assert their lien claims on a theory similar
to that discussed in Schroeder. 	There are two problems, however,
with application of that theory here. 	First, there has been no
finding that Moore did not intend to pass full legal and equitable
title to his transferees. 	Thus, whether California law would impose
a resulting trust on the properties is presently an unknown.
Secondly, and perhaps more significantly, Schroder was not a
bankruptcy case, in which the rules of the road regarding debtor-
creditor relations are quite different than those outside of
bankruptcy. 	In In re North American Coin & Currency Ltd., 767 F.2d
1573 (9th Cir. 1985), the Ninth Circuit had occasion to discuss the
interplay between equitable remedies such as constructive trusts and
bankruptcy laws. 	In that case, the plaintiffs, customers of the
debtor, had sought to impose a constructive trust on certain funds
they had paid to the debtor on the eve of bankruptcy, claiming that
Case: 11-41988 Doc# 79 Filed: 05/13/11 Entered: 05/16/11 21:43:28 Page 3 of 6

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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4	Memorandum Decision
the debtor had acquired such funds by fraud. 	Id. at 1574. 	The
bankruptcy court had declined to impose the trust, and the district
court affirmed the ruling. 	An appeal to the Ninth Circuit followed.
In affirming the rulings below, the Ninth Circuit noted that it
is a relevant consideration whether, at the time of a bankruptcy, an
equitable trust had actually been imposed by a court on the property
at issue, or whether, rather, it remained merely an inchoate
equitable remedy, as is the case here. 	Id. at 1575.
With reference to the circumstance where the equitable remedy
was inchoate at the time of bankruptcy, the court stated:
We necessarily act very cautiously in exercising such a
relatively undefined equitable power in favor of one group
of potential creditors at the expense of other creditors,
for a ratable distribution of among all creditors is one
of the strongest policies behind the bankruptcy laws.
Id. 	The court concluded:
We fail to discern the equitable principle that requires
us to protect the plaintiffs’ investments fully, at the
expense of these other creditors. 	Indeed, the equities,
as well as the principles underlying the bankruptcy laws,
point in the other direction.
Id. at 1578.
Here, the fraudulent conveyance claims against the transferees
are property of Moore’s bankruptcy estate. 	Bankruptcy Code
§§ 544(a)(3)(fraudulent conveyance and other avoidance claims
arising under state law) and 548(a) (fraudulent conveyances). 	No
court has imposed a resulting trust thereon, and it is uncertain
whether any grounds exist for any court to do so.
And even if there might be such grounds, the court sees no
equities that would dictate that the Zinchiks, rather than the
Case: 11-41988 Doc# 79 Filed: 05/13/11 Entered: 05/16/11 21:43:28 Page 4 of 6

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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5	Memorandum Decision
general creditor body, exclusively enjoy the value of the parcels at
issue at the expense of the other creditors, should the transfers
thereof be avoidable.
Consequently, the court will issue its order denying the
Zinchiks’ motion for relief from the automatic stay.
END OF ORDER
Case: 11-41988 Doc# 79 Filed: 05/13/11 Entered: 05/16/11 21:43:28 Page 5 of 6

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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6	Memorandum Decision
COURT SERVICE LIST
Eric D. Miller, Esq.
Millerhauser Law Group, LLP
4 Embarcadero Center, 39 th Floor
San Francisco, CA 94111
David M. Sternberg, Esq.
David M. Sternberg & Associates
540 Lennon Lane
Walnut Creek, CA 94598
Office of the U.S. Trustee
1301 Clay Street, Suite 690-N
Oakland, CA 94612
Case: 11-41988 Doc# 79 Filed: 05/13/11 Entered: 05/16/11 21:43:28 Page 6 of 6