Opinion
Case No. 2:15-bk-20200-RK Adv. Case No.: 2:15-ap-01577-RK
03-21-2016
In re SCHAFA DAVID MASSAJI, Debtor. MARK ROFEH, Plaintiff, v. SCHAFA DAVID MASSAJI, DEBTOR HEREIN AND BRAD KRASNOFF, CHAPTER 7 TRUSTEE, Defendants.
CAROLYN A. DYE (SBN 97527) 3435 Wilshire Blvd. Suite 990 Los Angeles, CA 90010 213/368-5000 - Telephone 213/368-5009 - Facsimile Email: trustee@cadye.com Attorney for Plaintiff Mark Rofeh
CAROLYN A. DYE (SBN 97527)
3435 Wilshire Blvd.
Suite 990
Los Angeles, CA 90010
213/368-5000 - Telephone
213/368-5009 - Facsimile
Email: trustee@cadye.com Attorney for Plaintiff Mark Rofeh [Chapter 7] PLAINTIFF'S AMENDED STATEMENT OF UNDISPUTED FACTS AND CONCLUSIONS OF LAW; ORDER THEREON Date: March 22, 2016
Time: 3:00 p.m.
Place: Courtroom 1675 255 E. Temple Street Los Angeles CA 90012
Plaintiff, Mark Rofeh ("Rofeh"), by and through his counsel, hereby presents his Amended Statement of Undisputed Facts and Conclusions of Law, as set forth below. / / / / / / / / /
I
UNDISPUTED FACTS AND EVIDENTIARY SUPPORT
(FIRST CAUSE OF ACTION - DECLARATORY RELIEF)
| Undisputed Facts | Evidence |
|---|---|
| 1. Defendant admits that this Court hasjurisdiction over this adversary proceedingpursuant to 28 U.S.C. §1334, 28 U.S.C.§157, 11 U.S.C. 553(a), Rule 7001(a) and(g) of the Federal Rules of BankruptcyProcedure and Local Rules and Orders ofthe United States District Court for theCentral District of California governing thereference and conduct of proceedingsarising under or related to cases underTitle 11 of the United States Code. | 1. Complaint, ¶ 1; Answer of Massaji, ¶ 1,Exhibit A to Motion for Summary Judgment. |
| 2. Defendant admits that this adversaryproceeding is brought pursuant to Rule7001 (a) and (g) of the Federal Rules ofBankruptcy Procedure. This adversaryproceeding is a core proceeding pursuantto 28 U.S.C. § 157(b)(2)(A), (K) and (O)and the Plaintiff otherwise consents to thisCourt entering final orders with respect toany matter concerning this adversaryproceeding. | 2. Complaint, ¶ 2; Answer of Massaji, ¶ 2,Exhibit A to Motion for Summary Judgment. |
| 3. Defendant admits the venue is proper inthis judicial district pursuant to 28 U.S.C. §1409(a). | 3. Complaint, ¶ 3; Answer of Massaji, ¶ 3,Exhibit A to Motion for Summary Judgment. |
| 4. Defendant admits that he filed aChapter 7 Petition on June 25, 2015, CaseNo. 2:15-bk-20200-RK. Defendant, BradKrasnoff, was thereafter appointed as theChapter 7 Trustee in this case and servesin that capacity. Defendant Krasnoff wassued in that capacity but has beendismissed by Stipulation. | 4. Complaint, ¶ 4; Answer of Massaji, ¶ 4,Exhibit A to Motion for Summary Judgment;Declaration of Carolyn A. Dye, ¶ 6. |
| 5. Rofeh is the uncle of the Defendant.As described herein, they each holdjudgments against the other that were finaljudgments for liquidated amounts prior tothe commencement of the Debtor's case. | 5. Complaint, ¶ 5; Answer of Massaji, ¶ 5,Exhibit A to Motion for Summary Judgment. |
| 6. On February 17, 2015, the CaliforniaCourt of Appeals, in Case No. B250315,affirmed the lower court's Judgment(entered on March 9, 2013 in Los AngelesCounty Superior Court Case No.BC405445 ("Case 2")), entering ajudgment in favor of Rofeh against Debtor.The Judgment entered in Case 2 is a finaljudgment for a liquidated amount. | 6. Complaint, ¶ 6; Answer of Massaji, ¶ 6,Exhibit A to Motion for Summary Judgment;Judgment, Case 2, Exhibit B to Motion forSummary Judgment. |
| 7. Defendant admits that he holds aJudgment against Rofeh arising from anearlier case, Los Angeles County SuperiorCourt Case No. BS107044 ("Case 1")entered on May 16, 2013. The judgmentobtained in Case 1 is a final judgment for aliquidated amount. | 7. Complaint, ¶ 7; Answer of Massaji, ¶ 7,Exhibit A to Motion for Summary Judgment;Judgment, Case 1, Exhibit C to Motion forSummary Judgment. |
| 8. Defendant admits that on his ScheduleB he listed the Judgment he held againstRofeh (obtained in Case 1) as an assetvalued at $1,900,000. Debtor listed Rofehand his wife (erroneously named "MaryRofeh, Esq.") as creditors stating he owedeach of them $2,000,000 arising from theJudgment entered in Case 2. (AlthoughRohef and his wife are each listedindividually as creditors, there is only onedebt for the Judgment amount from Case2.) | 8. Complaint, ¶ 8; Answer of Massaji, ¶ 8,Exhibit A to Motion for Summary Judgment;Schedule B to Petition, Exhibit D to Motionfor Summary Judgment. |
| 9. The judgment in favor of Rofeh havingbeen entered than 90 days prior to thecommencement of the Debtor's case was afinal unavoidable judgment. | 9. Declaration of Carolyn A. Dye, ¶ 5;Judgment, Case 2, Exhibit B to Motion forSummary Judgment; see also, Complaint, ¶9 (the "see also" references to theComplaint herein are for reference purposesonly since it is not evidence absent Debtor'sadmissions). |
|---|
| 10. The amounts owed under the twojudgments are mutual obligations betweenRofeh and Debtor, arising between them inthe same right and in the same capacity. | 10. Amended Statement of UndisputedFacts herein, ¶¶ 6-9; Declaration of CarolynA. Dye, ¶ 6, Judgments, Case 2 and Case1, Exhibits B and C to Motion for SummaryJudgment; see also, Complaint, ¶ 10. |
|---|---|
| 11. As of the Petition date in this case,Rofeh owed Debtor $1,694,786.78, andDebtor owed Rofeh $2,197,537.60. Thus,the amount owed by Debtor exceeds theamount owed to Rofeh. | 11. Amended Statement of UndisputedFacts herein, ¶¶ 6-10; Declaration of MarkRofeh, ¶ 6; Exhibit E to Motion for SummaryJudgment; see also, Complaint, ¶ 11. |
| 12. The judgment against Rofeh is nolonger property of the estate. | 12. Amended Statement of UndisputedFacts herein, ¶¶ 6-10; Declaration ofCarolyn A. Dye, ¶ 6; Notice ofAbandonment; Exhibit F to Motion forSummary Judgment; see also, Complaint, ¶12. |
| 13. Once the setoff is allowed, there willbe no amount collectible by the Defendantfrom Rofeh. | 13. Amended Statement of UndisputedFacts herein, ¶¶ 6-10; Complaint, ¶ 13;Answer of Massaji, ¶ 13; Declaration ofCarolyn A. Dye, ¶¶ 1-6. |
| 14. Rofeh was permitted to file thisComplaint as the Court has grantedRofeh's Motion for Relief from theAutomatic Stay, permitting Rofeh the right | 14. Declaration of Carolyn A. Dye, ¶ 7; StayRelief Order, Exhibit G to Motion forSummary Judgment; see also, Complaint, ¶14. |
| to seek setoff under 11 U.S.C. Section553(a). |
All references to "Complaint, Paragraph ___" refer to the Complaint filed by Plaintiff, a true and correct copy of which is filed as Exhibit A to Plaintiff's Request for Judicial Notice. --------
II
CONCLUSIONS OF LAW
NO GENUINE ISSUE OF FINAL MATERIAL FACT
(FIRST CAUSE OF ACTION - DECLARATORY RELIEF)
Plaintiff incorporates by this reference as of set forth herein the Undisputed Facts and Supporting Evidentiary Support set forth in I above, paragraphs 1-14.
Establishing the absence of a genuine issue of material fact regarding Defendant's liability is shown by the following undisputed evidence:
(i) there is no genuine issue of material fact that each of Plaintiff and Defendant hold judgments against each other;
(ii) each judgment was a "final" judgment entered prior to 90 days before the Debtor's bankruptcy case was filed; and
(iii) Movant is entitled to a Declaratory Judgment that he is entitled to setoff.
III
PLAINTIFF IS ENTITLED TO SETOFF
(SECOND CAUSE OF ACTION - SETOFF)
Plaintiff incorporates by this reference as if set forth in full herein the Undisputed Facts and Supporting Evidentiary Support set forth in I above, paragraphs 1-14.
The cause of action for setoff is established, as follows:
(i) the judgments are subject to setoff pursuant to 11 U.S.C. Section 553 in that:
(a) Rofeh, the creditor, holds a claim that arose before the commencement of the case;
(b) Rofeh, the creditor, owes a debt that also arose before the commencement of the case;
(c) the claim and debt are mutual; and
(d) the claim and debt are each valid and enforceable.
(ii) the debt owed to Rofeh exceeds the amount owed to Defendant by Rofeh; and
(iii) Rofeh is entitled to a judgment of setoff and a judgment that he owes nothing to Debtor.
LAW OFFICE OF CAROLYN A. DYE Dated: February 8, 2016
By: /s/ Carolyn A. Dye
Carolyn A. Dye, Attorneys for
Plaintiff, Mark Rofeh
ORDER
Having considered and revised Plaintiff's Amended Statement of Undisputed Facts and Conclusions of Law recited above and having conducted an independent review of the evidence in the record before the court on Plaintiff's Motion for Summary Judgment, the court adopts Plaintiff's Amended Statement of Undisputed Facts and Conclusions of Law as its Statement of Uncontroverted Facts and Conclusions of Law within the meaning of Local Bankruptcy Rule 7056-1(b). In doing so, the court has considered and rejects Defendant's Statement of Disputed Facts, and Conclusions of Law in Support of Opposition to Motion for Summary Judgment. (The court disregards Defendant's Amended Statement of Disputed Facts, lodged on March 18, 2016, as untimely in violation of the court's scheduling order filed on February 1, 2016, and would otherwise consider the Amended Statement of Disputed Facts as lacking of merit for the same reasons as the initial Statement of Disputed Facts, and would moreover consider the objections of Defendant to Plaintiff's Statement of Undisputed Facts and Conclusions of Law as lacking foundation or otherwise lacking merit.)
Defendant's Statement of Disputed Facts relying upon the Declaration of David Massaji asserts that the two judgments in Cases 1 and 2 "derive from two separate and distinct lawsuits and facts," and thus, Defendant in his Conclusions of Law argues that setoff is inappropriate here because mutuality of claims is lacking, and therefore, Defendant urges that the Motion should be denied. The court disagrees with Defendant. The so-called Disputed Facts, even if true, are immaterial because they purport to show that the debts are not mutual because they do not arise out of the same transaction, and the case law is contrary to this proposition because under 11 U.S.C. § 553, "[t]he mutual debt need not, however, have arisen out of the same transaction in order for setoff to be available under the statute." In re Davidovich, 901 F.2d 1533, 1537 (10th Cir. 1990) (citation omitted); accord, 3 March, Ahart and Shapiro, California Practice Guide: Bankruptcy, ¶ 17:212 at 17-28 (2015); see also, 5 Resnick and Sommer, Collier on Bankruptcy, ¶ 553.03[3][a] at 553-27 - 533-28 (16th ed. 2015) (citations omitted). The right of offset under 11 U.S.C. § 553 "applies only to mutual claims arising prepetition." 3 March, Ahart and Shapiro, California Practice Guide: Bankruptcy, ¶ 17:210 at 17-27 (emphasis in original), citing, 11 U.S.C. § 553(a); In re Wade Cook Financial Corp., 375 B.R. 580, 594 (9th Cir. BAP 2007); and In re Davidovich, 901 F.2d at 1538. "Mutuality means that the debts involved must be between the same parties standing in the same capacity, and that each debt must be valid and enforceable." 3 March, Ahart and Shapiro, California Practice Guide: Bankruptcy, ¶ 17:211 at 17-28 (emphasis in original), citing, 11 U.S.C. § 553(a); In re Wade Cook Financial Corp., 375 B.R. 580, 594 (9th Cir. BAP 2007); and In re Davidovich, 901 F.2d at 1537; Matter of O.P.M. Leasing Services, Inc., 68 B.R. 979, 986 (Bankr. S.D.N.Y. 1987); and In re Commercial Reprographics, Inc., 95 B.R. 174, 179 (Bankr. E.D. Cal. 1988); see also, England v. Industrial Commission of Utah (In re Visiting Home Services, Inc.), 643 F.2d 1356, 1360 (9th Cir. 1981)(interpreting case under the Bankruptcy Act of 1898)("Mutuality requires that the debts and credits must be in the same right, between the same individual, and in the same capacities."), citing, former 11 U.S.C. § 108 and Collier on Bankruptcy, ¶ 68.04[2.1] at 860 (14th ed. 1976). (With respect to the "same right" requirement, Collier on Bankruptcy comments: "The precise meaning of the term is often obscured in the case law, and in many instances, it is used synonymously with the concept of 'capacity. The distinguishing feature of the concept is that it subsumes the separate question of whether any of the obligations sought to be offset are owed jointly with some other entity." 5 Resnick and Sommer, Collier on Bankruptcy, ¶ 553.03[3][] at 553-37 - 533-38, citing inter alia, Gray v. Rollo, 85 U.S. 629, 632 (1873) (footnotes omitted). This case does not involve joint obligations which raise any issue of whether the "same right" was involved.)
The requirements of mutuality as described herein are met because the debts involved, the judgment debts in Cases 1 and 2, are between Plaintiff and Defendant, who are the same parties in the same capacity as individuals (as opposed to being in different capacities, i.e., not in a representative or fiduciary capacity, see, 5 Resnick and Sommer, Collier on Bankruptcy, ¶ 553.03[3][c] at 553-32 - 533-38; 3 March, Ahart and Shapiro, California Practice Guide: Bankruptcy, ¶¶ 17:219 - 17-231 at 17-29 - 17-32 (citations omitted), and the debts are valid and enforceable as based on final judgments of the California state courts, which are courts of competent jurisdiction. Thus, the court disagrees with Defendant's arguments and determines that such arguments are not supported by applicable legal authority. In this regard, the court agrees with Plaintiff's arguments in his Reply to Debtor's Response to Motion for Summary Judgment, which completely refute Defendant's arguments. .
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Based on this Statement of Uncontroverted Facts and Conclusions of Law and Order thereon, the court will grant Plaintiff's Motion for Summary Judgment and will enter a separate order and judgment concurrently herewith.
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Date: March 21, 2016
/s/_________
Robert Kwan
United States Bankruptcy Judge