Pasian v. Leonetti

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
-1-	MEMORANDUM
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
OTTORINO PASIAN and
DANILA PASIAN,
Debtors.
OTTORINO PASIAN,
Plaintiff,
vs.
SAM LEONETTI,
Defendant.
____________________________________
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Case No. 94-31563 TEC
Chapter 7
Adv. Proc. No. 09-3182 TC
MEMORANDUM RE PLAINTIFF’S COMPLAINT FOR INJUNCTIVE RELIEF
On January 15, 2010, the court held a continued hearing on
Plaintiff’s application for temporary restraining order. 	Dennis D.
Davis and Joseph M. Patane appeared for Ottorino Pasian (Debtor).
Iain A. Macdonald and Michele L. McGill appeared for Sam Leonetti
(Leonetti). 	Upon due consideration, and for the reasons stated
below, the court denies Debtor’s request for declaratory and
injunctive relief re Leonetti’s second amended state-court
complaint, except that Leonetti may not prosecute any prepetition
Signed and Filed: March 12, 2010
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
March 15, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-03182 Doc# 17 Filed: 03/12/10 Entered: 03/15/10 14:38:10 Page 1 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
-2-	MEMORANDUM
fraudulent transfer claim against Defendant. 	Nor may Leonetti
collect on the Judgment (as defined below) or take action to
collect on the Judgment, unless this court enters a new judgment
providing that the Judgment is excepted from discharge under
11 U.S.C. § 523(a). 	This memorandum constitutes the court’s
findings of fact and conclusions of law.
FACTS
On February 8, 1999, Leonetti obtained a judgment (the
Judgment) against Debtor in San Francisco Superior Court Case no.
990679 for prepetition debts arising from promissory notes dated in
1989. 	The Judgment awarded Leonetti $125,000 for unpaid principal,
$122,224 for unpaid interest, and $500,000 in punitive damages.
On April 15, 1994, Debtor filed a chapter 11 bankruptcy
petition. 	On September 12, 1994, Debtor’s case was converted to
chapter 7. 	On February 27, 1995, the chapter 7 trustee filed a no-
asset report. 	No claims bar date was ever set. 	Debtor received
his discharge by order entered on May 12, 1995. 	Debtor did not
list Leonetti as a creditor in his bankruptcy schedules. 	It is
alleged that Debtor did not disclose in his bankruptcy case the
existence of any prepetition fraudulent transfers. 	Trustee did not
file a fraudulent action against any creditor. 	On January 17,
1996, Debtor’s bankruptcy case was closed.
In November 2007, Leonetti filed a new action, which is
currently pending in San Francisco County Superior Court, Case No.
CGC-07-469421 (the Second State Court Action). 	In the Second State
Court Action, Leonetti alleges that Debtor and others conspired to
acquire Leonetti’s real property, and that Debtor made
misrepresentations regarding payment of the discharged Judgment.
Case: 09-03182 Doc# 17 Filed: 03/12/10 Entered: 03/15/10 14:38:10 Page 2 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
-3-	MEMORANDUM
On October 26, 2009, Debtor filed the above-captioned
adversary proceeding. 	The complaint alleges three claims for
relief. 	The first claim seeks to permanently enjoin Leonetti from:
(1) collecting or taking any action to collect the Judgment; and
(2) from pursuing the Second State Court Action. 	The second claim
seeks a declaration that Leonetti’s claims in the Second State
Court Action arise from prepetition activities, and that any debts
owed by Leonetti to Debtor have been discharged. 	The third claim
seeks a preliminary and permanent injunction to enjoin Leonetti
from taking any against Debtor or his property in any legal or
administrative proceedings based in any way on the Judgment, the
claims upon which the Judgment was based, and the claims alleged in
the Second State Court Action.
At the request of this court, on December 23, 2009, Leonetti
lodged a copy of a proposed second amended complaint (the SAC) to
be filed in the Second State Court Action. 	The proposed SAC
alleges eight claims for relief. 	Seven of the claims are based on
events that occurred on or after 2001. 	The eighth claim for relief
is a claim for fraudulent transfer against Debtor and non-debtor
Tarcisio Pasian. 	The SAC alleges that Debtor, on an unspecified
date or dates, transferred substantial assets to Ida and Tarcisio
Pasian and/or to the Ida & Tarcisio Pasian Trust, without
consideration, and to hinder, delay, or defraud his creditors.
(SAC, ¶ 91). 	The assets allegedly transferred are real property
located in Daly City, including 2665 Geneva Avenue, six lots on
Calgary Street, and two lots on Rio Verde Street, collectively
referred to as the “El Rancho Property.” 	The SAC alleges that
Debtor has “at all pertinent times” funneled and continues to
funnel his assets and income through the El Rancho Property, and
Case: 09-03182 Doc# 17 Filed: 03/12/10 Entered: 03/15/10 14:38:10 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
-4-
that Debtor has exercised complete and exclusive control over the
trust assets. 	(SAC, ¶¶ 92, 94). 	The SAC further alleges that
since the initial transfers (which occurred at an unspecified
time), Debtor has continued to hide his income and assets by using
the trust, and has moved assets into and out of the trust through
fraud and forgery, including income and assets associated with the
El Rancho Property, with the knowledge and consent of Tarcisio
Pasian. 	(SAC, ¶ 95).
LAW
The bankruptcy discharge bars Leonetti from suing Debtor for
monetary relief for acts engaged in by Debtor prepetition,
including any prepetition fraudulent transfer, and for debts
incurred by Debtor prepetition, such as the Judgment. 	11 U.S.C.
§ 524(a). 	The bankruptcy discharge does not, however, enjoin
Leonetti from suing Debtor for claims arising out of postpetition
conduct. 	Id. 	Nor does the bankruptcy discharge enjoin Leonetti
from suing the transferee of a prepetition fraudulent transfer made
by Debtor, even if Debtor’s pre-transfer liability to Leonetti was
discharged. 	Sanwa Bank Cal. v. Chang, 87 Cal. App. 4th 1314, 1319
(2001); Cal. Civ. Code §§ 3439.04, 3439.07; see 11 U.S.C. § 524(e)
(discharge injunction does not extend to non-debtors).
**END OF MEMORANDUM**
Case: 09-03182 Doc# 17 Filed: 03/12/10 Entered: 03/15/10 14:38:10 Page 4 of 4