Quast et al v. Ryan et al

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
THOMAS and BERYL RYAN, 	No. 08-11346
Debtor(s).
______________________________________/
MICHAEL QUAST,
Plaintiff(s),
v. 	A.P. No. 08-1110
THOMAS and BERYL RYAN,
Defendant(s).
_______________________________________/
Memorandum on Objection to Discharge
_________________
Chapter 7 debtors and defendants Thomas and Beryl Ryan operated a business known as
Calistoga Oasis Spa from 1995 to 2008 on premises leased from Max Quast, who is now deceased.
Plaintiff Michael Quast, as trustee of the Max Quast and Genoveva Quast 1993 Revokable Trust, seeks
denial of the Ryans’ discharge based on their transfers of funds from their bank accounts on or about
June 6, 2008.
Entered on Docket
May 04, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 08-01110 Doc# 13 Filed: 05/04/09 Entered: 05/04/09 15:02:01 Page 1 of 3

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On April 15, 2008, Quast filed an unlawful detainer complaint against the Ryans seeking
possession of the premises and $87,000.00 in back rent. At the same time, they applied for a right to
attach order and a writ of attachment. On June 4, 2008, the state court granted the application in the
amount of $31,800.00, specifically attaching “[a]ll accounts Thomas R. Ryan maintains and/or in
which [he] has an interest with West Amercia Bank, including Account No. 0313009136.” The order
also forbade Ryan from transferring, concealing disbursing or converting the attached assets.
On June 6, 2008, the Ryans withdrew $41,000.00 from three bank accounts at Westamerica
Bank, including the account specified in the order, and deposited the funds three days later into a new
account at Bank of the West. They freely admitted why they did this at their 341 hearing, their
depositions, their testimony at trial and in their proposed findings and conclusions: “When notified of
the possibility of [our] bank accounts possibly being frozen for years if litigation should continue, [we]
opened another account for the purpose of fulfilling [our] employee payroll obligations.”
The undisputed facts in this case could not be more damning to the Ryans. Bankruptcy Code §
727(a)(2) provides that the court shall grant the debtor a discharge unless the debtor, with intent to
hinder, delay, or defraud a creditor has transferred, removed, or concealed his property. 	Transfers
such as those admitted by the Ryans result in denial of discharge even when attachment is merely
threatened or feared. In re Hicks, 71 B.R. 508 (Bkrtcy.D.N.H. 1987). Here, the bank accounts were
transferred after issuance of the attachment which specifically named the bank accounts.
Moreover, the Ryans’ defense, that they made the transfers out of necessity to pay their payroll,
is no defense at all. The law requires only the intent to hinder a single creditor; it is no defense that the
transfer was to pay others or for any sort of noble purpose. In re Adeeb, 787 F.2d 1339 (9th Cir.1986);
In re Schafer 294 B.R. 126, 131 (N.D.Cal.,2003). The Ryans transferred funds with the admitted
intent to hinder Quast. That is all anyone needs to prove to deny the Ryans a discharge.
For the foregoing reasons, the Ryans will be denied a discharge. Quast shall recover his costs
Case: 08-01110 Doc# 13 Filed: 05/04/09 Entered: 05/04/09 15:02:01 Page 2 of 3

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1Quast reads Travelers v. PG&E, 549 U.S. 443 (2007) and In re Qmect, Inc., 368 B.R. 882, 886
(Bkrtcy.N.D.Cal. 2007)[erroneously identified by Quast as an appellate decision] as allowing for an
award of attorneys’ fees in this case. Both of those cases dealt with the amount of a claim, not an
objection to discharge. 	This not an action on a debt or claim, and has nothing to do with rights arising
out of the lease containing an attorneys’ fee clause. Accordingly, the court declines to award
attorneys’ fees.
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of suit.1
This memorandum constitutes the court’s findings and conclusions pursuant to FRCP 52(a) and
FRBP 7052. Counsel for Quast shall submit an appropriate form of judgment forthwith.
Dated: May 4, 2009
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 08-01110 Doc# 13 Filed: 05/04/09 Entered: 05/04/09 15:02:01 Page 3 of 3