Discussion of new developments in Asset Protection and related debtor-creditor issues, primarily from the viewpoint of planning for those who are concerned about unforeseen contingent liabilities, but also some news from the creditors' side as well. Hosted by Jay Adkisson and Chris Riser, authors of "Asset Protection: Concepts and Strategies" with supporting website at http://www.assetprotectionbook.com
Have you been sold a "Loss of Income Policy" from an offshore captive, with the promise that you could save taxes? Did you cut the check? Did you take the deduction? Did you know that the policy wasn't really real and that you would get most if not all of your money back? If so, you had better talk with an attorney who represents people in criminal tax evasion cases, soon. Very soon.
Press Release
Contact: DONALD A. DAVIS, ASSISTANT U.S. ATTORNEY, PHONE: (616) 456-2404
MICHIGAN ATTORNEY AND CLIENT CHARGED WITH TAX CRIMES ALONGWITH FOUR PROMOTERS OF FRAUDULENT INSURANCE TAX SHELTER
THURSDAY, MARCH 6, 2008- Grand Rapids, Mich. – A federal grand jury sitting in Grand Rapids, Michigan, returned a six-count superseding indictment yesterday, charging a Kalamazoo, Michigan attorney, his client, and four alleged tax shelter promoters with tax crimes. John A. Campbell, 63, of Portage, Michigan, a former partner with the law firm of Miller, Canfield, Paddock & Stone, P.L.C., was charged with one count of conspiracy to defraud the United States for his alleged conduct in helping four shelter promoters sell fraudulent tax shelters over a ten-year period. Campbell’s client, Oskar René Poch, 56, of Hickory Corners, Michigan, who owned and operated Trillium Staffing, an employee-leasing company in Kalamazoo, Michigan, was charged with one count of corruptly endeavoring to obstruct the administration of the Internal Revenue Laws. Finally, two of the four promoters were also charged with the attempted income tax evasion of Poch’s income tax liability for 1999 and 2000, because he purchased the fraudulent tax shelter in those years and deducted the premiums on his tax returns, and the promoters allegedly misled the IRS about those transactions. Poch was not charged in the conspiracy or with tax evasion. Poch has entered into a plea agreement with the government, which was also filed today.
Nathan J. Hochman, Assistant Attorney General for the Tax Division, United States Department of Justice, Charles R. Gross, United States Attorney for the Western District of Michigan, and Maurice M. Aouate, Special Agent in Charge, Criminal Investigation, IRS, Detroit Field Office, announced the superseding indictment today.
The four shelter promoters charged along with Campbell in the conspiracy are from all over the country. The superseding indictment charged that beginning in 1995, Peter J. Peggs, age 73, of Prides Crossing, Massachusetts, Robert Duane Larsen, age 63, of Winter Park, Colorado, and Anthony G. Merlo, age 55, of Fort Worth, Texas and the United States Virgin Islands, were involved in a criminal conspiracy, along with their tax attorney John A.Campbell, and Craig M. Stone, age 63, of Fort Pierce, Florida, that the indictment states joined the conspiracy in 1999, allegedly to defraud the United States by promoting, marketing, selling, and administering fraudulent tax shelters called loss-of-income (“LOI”) insurance policies. These policies were issued through Security Trust Insurance Company, a now-defunct company that was located in the U.S.V.I. which was formerly known as Caduceus Life Insurance Company.
According to the superseding indictment, Peggs, Larsen, and Merlo, who were officers, directors, and owners of Security Trust, and Campbell and Stone, promoted and sold LOI policies to wealthy clients in order to generate false tax deductions, and subsequently returned nearly all of the premiums to the U.S. taxpayer clients in a manner concealed from the IRS. During the duration of the conspiracy, more than $12,000,000 in premiums was collected.
According to the superseding indictment, Poch improperly deducted approximately $3,900,000 in insurance premiums paid by his companies to Security Trust in the years 1999, 2000, and 2001. The false deductions had the effect of reducing Poch’s individual income taxes in each of these years. The superseding indictment further alleges that as part of this scheme, the coconspirators improperly disguised the return of over $3 million to Poch as offshore funds available to Poch in the form of loans. The superseding indictment also charges Peggs and Larsen for their role in the attempted income tax evasion of the taxes owed by Poch for the years 1999 and 2000.
In furtherance of this scheme, the superseding indictment alleges that Peggs, Larsen, and Campbell lied to the IRS during its audit of Poch’s tax returns in 2002 and 2003. In addition, Peggs, Larsen, and Campbell also allegedly made material misrepresentations about the facts underlying this scheme to Poch’s tax court representative who was preparing to contest the IRS audit determination in United States Tax Court. Moreover, Poch was charged separately with providing false, misleading, and incomplete answers to the IRS in a June 2002 interview with the IRS during the audit of his tax returns. The superseding indictment alleges that Peggs and Larsen engaged in similar conduct with other clients and individuals in Massachusetts and Kentucky. One of the named unindicted co-conspirators, Bruce M. Cohen, of Louisville, Kentucky, pleaded guilty in 2007 to conspiracy charges in federal courts in both Ohio and Kentucky for his role in this scheme. Cohen is presently serving a 30 month prison sentence for his Kentucky conduct, and is awaiting sentencing in Ohio.
Conspiracy to impede the IRS and tax evasion each carry maximum punishments of five years’ in prison and a fine of up to $250,000. Corruptly endeavoring to impede the administration of the Internal Revenue Laws carries a maximum punishment of three years’ in prison and a similar fine. Assistant Attorney General Nathan J. Hochman and U.S. Attorney Charles Gross commended the investigative efforts of the IRS agents in the case, as well as Department of Justice Tax Attorneys Richard M. Rolwing and Patrick J. Murray, and Assistant U. S. Attorney Donald A. Davis, who are prosecuting the case.
The charges in the pending indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty in a court of law.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
This case features an interesting discussion of charging orders. Keeler v. Academy of American Franciscan History, Inc.
Md.App.,2008.
--- A.2D ----Only the Westlaw citation is currently available.
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
Court of Special Appeals of Maryland. Robert H. KEELER v. ACADEMY OF AMERICAN FRANCISCAN HISTORY, INC. No. 2433, Sept. Term, 2006.
March 4, 2008.
KRAUSER, C.J., ADKINS, WOODWARD, JJ.
KRAUSER, C.J. *1 Cross motions for summary judgment filed in the Circuit Court for Montgomery County presented the question whether the charging order of appellee Academy of American Franciscan History, Inc. ("AAFH") against appellant Robert H. Keeler's interest in the Gaither Road Partnership ("GRP") remained enforceable even though the underlying money judgment had expired under Maryland Rule 2-625. The circuit court held that it did and granted summary judgment in favor of AAFH. We affirm.
Background
In 1989, Saratoga Development Corporation ("Saratoga") purchased 14 acres of residential real estate in Montgomery County, Maryland from AAFH for approximately $7.75 million. Saratoga paid $3.75 million in cash and executed, along with its President, appellant Robert H. Keeler, a confessed judgment note in the amount of $4 million. When Saratoga and Keeler failed to pay the interest due on the note, AAFH filed a complaint to confess judgment and assent to entry of judgment against both in the Circuit Court for Montgomery County.
On October 17, 1989, the circuit court entered a money judgment against Saratoga and Keeler and in favor of the AAFH in the amount of $4 million plus attorneys' fees,FN1 interest, and costs. A month later, on December 20, 1989, an order enforcing the money judgment was obtained by AAFH charging Keeler's partnership interest in GRP. The charging order stated in pertinent part:
FN1. The award of attorneys' fees was later vacated by agreement of the parties.
ORDERED, that the Gaither Road Partnership shall sequester and pay over to the Judgment Creditor all distributions of any kind whatsoever otherwise payable to the Judgment Debtor, Robert H. Keeler, and to account for said payments to this Court and to the Judgment Creditor, until such time as the judgment entered against the Judgment Debtor has been paid in full and satisfied....
A decade later, on December 20, 1999, Keeler filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland. On May 11, 2000, the bankruptcy court issued a discharge order. That order barred "the commencement or continuation of [ ] action[s] to recover or collect the debt [owed AAFH] as a personal liability of [Keeler] and void[ed] any judgment to the extent that the judgment [wa]s a determination of personal liability of [Keeler]."Keeler v. Acad. of Am. Franciscan History, Inc., 257 B.R. 442, 445 (D.Md.2001). The bankruptcy court entered a final decree on July 20, 2000, and the case was administratively closed.
On August 17, 2000, Keeler filed a motion to re-open the bankruptcy case to determine whether a violation of the discharge order had occurred when AAFH attempted to collect income from Keeler's interest in GRP. Keeler also filed a "Motion for Declaratory Relief and Summary Judgment" asserting, among other things, that the charging order that had been entered by the circuit court against his interest in GRP and in favor of AAFH had been terminated by the bankruptcy court's order of discharge. After re-opening the bankruptcy case, the bankruptcy court held that "although any action to collect upon the lien was stayed during the bankruptcy case, the lien itself ‘rode through’ the bankruptcy case and remain[ed] viable upon property captured before the case commenced."Keeler v. Acad. of Am. Franciscan History, Inc., 257 B.R. 442, 448 (D.Md.2001). Consequently, the rights of AAFH remained unaffected after the bankruptcy case, including the right to collect income due Keeler from his interest in GRP. See id.The decision of the bankruptcy court was affirmed by the United States District Court for the District of Maryland. See In re Keeler, 273 B.R. 416, 422 (D.Md.2002).
*2 Six years later, on September 29, 2006, Keeler filed a declaratory judgment action against AAFH and GRP in the Circuit Court for Montgomery County, claiming that AAFH's charging order was extinguished when AAFH failed to renew its judgment pursuant to Maryland Rule 2-625 ("Rule 2-625"), and thus that GRP was no longer required to pay money to AAFH. The complaint precipitated cross-motions for summary judgment. On November 30, 2006, the circuit court denied Keeler's summary judgment motion but granted AAFH's motion, ruling that the charging order "did not expire with the money judgment" and was therefore "still in place." This appeal followed.
Discussion
Keeler contends that the circuit court erred in granting summary judgment in favor of AAFH. He reasons that the money judgment entered against him in 1989 expired twelve years later when AAFH failed to renew it under Rule 2-625 and, consequently, that the charging order enforcing that judgment also lapsed at that time. AAFH contends otherwise. Claiming that the charging order is itself an enforceable judgment that exists independently of the underlying money judgment, AAFH maintains that the charging order survived the expiration of the money judgment.
Because there are no genuine issues of material fact, our review of the decision below is confined to the question of "whether the trial court was legally correct."Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591 (1990). We conclude that it was. The charging order against Keeler's partnership interest in GRP constitutes, we hold, a separate final judgment that remains enforceable even after the underlying money judgment expired.
"A judgment generally is considered ‘final’ if it determines or concludes the rights involved, or denies the appellant the means of further prosecuting his rights and interest in the subject matter of the proceeding."Seat Pleasant Baptist Church Bd. of Trs. v. Long, 114 Md.App. 660, 669 (1997); see also Smith v. Taylor, 285 Md. 143, 146-47 (1979)). In short, "[t]he judgment must settle the rights of the parties, thereby concluding the cause of action."Estep v. Georgetown Leather Design, 320 Md. 277, 282 (1990).
A "money judgment" is such a judgment. Specifically, it is a "judgment determining that a specified amount of money is immediately payable to [a] judgment creditor."Maryland Rule 1-202(p). "It does not," however, "include a judgment mandating the payment of money."Id. In other words, it is not an "injunctive type of judgment." Paul V. Niemeyer & Linda M. Schuett, Maryland Rules Commentary 17 (3d ed.2003). Indeed, "[a]n order directing a party to pay is not a money judgment precisely because it is injunctive in character."Id.
But, unlike other judgments, a money judgment is subject to Rule 2-625. That rule states that "[a] money judgment expires 12 years from the date of entry or most recent renewal."To avoid that outcome, however, the rule further provides that "[a]t any time before expiration of the judgment, the judgment holder may file a notice of renewal and the clerk shall enter the judgment renewed."Rule 2-625.
*3 On the other hand, a charging order is not a money judgment but "the statutory means by which a judgment creditor may reach the partnership interest of a judgment debtor."91st Street Joint Venture v. Goldstein, 114 Md.App. 561, 567 (1997) (citing Bank of Bethesda v. Koch, 44 Md.App. 350, 354 (1979)). The purpose of the charging order is "to protect the partnership business and prevent the disruption that would result if creditors of a partner executed directly on partnership assets."FN2Lauer Constr., Inc. v. Schrift, 123 Md.App. 112, 115 (1998).See also Bank of Bethesda, 44 Md.App. at 354 ("[A charging order] serves only the precise purpose statutorily indicated, i.e., to ‘charge’ an interest with a debt.").
FN2. Prior to [the] availability [of charging orders], the courts would resort to common law procedures for collection that were ill-suited for reaching partnership interests. Typically, despite the fact that individual partners do not have title in partnership property, partnership property would be seized under writs of execution; the debtor partner's interest in the partnership would be sold, often to the judgment creditor, subject to the payment of partnership debts and prior claims of the partnership against the debtor partner; and the sale of the debtor partner's interest would result in compulsory dissolution and winding up of the partnership. As noted by at least one jurist, "a more clumsy method of proceeding could hardly have grown up." 91st Street Joint Venture, 114 Md.App. at 567 (citations omitted).
The scope and operation of a charging order is defined by Title 9A of the Corporations and Associations Article. "On application by a judgment creditor of a partner or of a partner's transferee, a court having jurisdiction may charge the transferrable interest of the judgment debtor to satisfy the judgment." § 9A-504(a). "A charging order," therefore, "constitutes a lien on the judgment debtor's transferrable interest in the partnership," § 9A-504(b), and is "the exclusive remedy by which a judgment creditor of a partner or partner's transferee may satisfy a judgment out of the judgment debtor's transferrable interest in the partnership." § 9A-504(e). The "transferable interest of a partner in [a] partnership is the partner's share of the profits and losses of the partnership and the partner's right to receive distributions." § 9A-502.
Although not a money judgment, a charging order may constitute a final judgment where the elements of finality are met. See 91st Street Joint Venture v. Goldstein, 114 Md.App. 561 (1997). In 91st Street Joint Venture, we considered whether the charging order at issue was enforceable as a final judgment. There, the charging order appointed a receiver for the purpose of effectuating a "transfer, assignment and/or conveyance" of the judgment debtor's interest in a joint venture. FN3 114 Md.App. at 565. After noting that the transfer in question had to "take place pursuant to the rules governing judicial sales,"FN4id. at 577, we observed that the interest at issue was not only "subject to redemption" by the judgment debtor, FN5 but that any transfer of the interest was "subject to ratification by the trial court,"id. at 575, and, furthermore, that the transfer "could [also] be challenged by [the judgment debtor] through the filing of exception s."FN6Id. at 575-76.
FN3. We noted in 91st Street Joint Venture that "[a] joint venture and a partnership are indistinguishable for all purposes relevant to the case...."114 Md.App. at 567 n. 1.
FN4."The court may order a foreclosure of the interest subject to the charging order at any time. The purchaser at the foreclosure sale has the rights of a transferee." § 9A-504(b).
FN5."At any time before foreclosure, an interest charged may be redeemed: (1) By the judgment debtor; (2) With property other than partnership property, by one or more of the other partners; or (3) With partnership property, by one or more of the other partners with the consent of all of the partners whose interests are not so charged." § 9A-504(c).
FN6."This title [Title 9A of the Corporations and Associations Article] does not deprive a partner of a right under exemption laws with respect to the partner's interest in the partnership." § 9A-504 (d).
Because the transfer in 91st Street Joint Venture was "subject to challenge and review and was not final until ratified by the trial court,"id. at 580, the charging order authorizing the transfer remained, we observed, "subject to revision at any time prior to the entry of a final judgment."Id. Consequently, the charging order "was not a final order which concluded the matter between the parties at the time it was issued by the court."Id. at 576 (citing Maryland Rule 2-602(a)(3); Montgomery County v. Revere Nat'l Corp., 341 Md. 366, 377-78 (1996)). In so ruling, our decision clearly implied the converse, that is, had the charging order settled the rights of the parties at the time it was issued and thereby concluded the matter between the parties, it would have been a final judgment.
*4 And that is precisely what occurred here. The charging order settled the rights of the litigants at the time it was entered and concluded the matter between the parties. Therefore, in accordance with 91st Street Joint Venture, it was a final judgment.
To be more precise, AAFH's charging order states that GRP "shall sequester and pay over to the Judgment Creditor all distributions of any kind whatsoever otherwise payable to the Judgment Debtor, Robert H. Keeler ... until such time as the judgment entered against the Judgment Debtor has been paid in full and satisfied...." Unlike the charging order in 91st Street Joint Venture, AAFH's order does not direct the transfer of Keeler's interest in the partnership; it simply requires that any distributions owed Keeler be paid directly to AAFH until the debt is satisfied. Because there is no interest to be redeemed or transfer to be challenged by exception or to be ratified by the circuit court, the rights of the parties are settled and thus AAFH's order constitutes a final judgment.
Moreover, Keeler's reliance on such extraterritorial cases as Monroe v. Berger, 297 B.R. 97, 101-02 (S.D.Ohio 2003), for the contrary proposition is misplaced. In Monroe, a charging order against the judgment debtor's interest in a partnership was obtained prior to the judgment debtor's bankruptcy. 297 B.R. at 98-99. While "determined to be valueless in [the] bankruptcy," the interest later increased in value and the holders of the charging order took steps to collect the balance of the original debt. Id. at 99.
Arguing that the charging order existed independently of the underlying judgment, the holders of the order, in fact, cited Keeler v. Academy of American Franciscan History, Inc., 257 B.R. 442 (D.Md.2001), for the proposition that "a charging order is a pre-petition lien that passes through bankruptcy unscathed."Monroe, 297 B.R. at 101. But the United States District Court for the Southern District of Ohio disagreed with Keeler, 257 B.R. 442 (D.Md.2001), stating that "it is not established in Ohio statutory or case law that a charging order constitutes a lien or creates a lien."Monroe, 297 B.R. at 101. It therefore concluded that "[r]egardless of arguable differences in other jurisdictions, Ohio law simply does not provide that a charging order passes through a bankruptcy unscathed."Id. But, in contrast to Ohio law, Maryland law declares that "[a] charging order constitutes a lien on the judgment debtor's transferable interest in the partnership,"Corporations and Associations Article § 9A-504(b), and thus we reach a decidedly different result here than the Ohio district court did in Monroe.
Finally, Keeler claims that "[a]lthough Maryland appellate courts apparently have not ruled on the issue, substantial and persuasive authority exists from other jurisdictions holding that a judgment lien is of no further force or effect after the underlying judgment expires."But "[a] judgment lien," it has been observed, "is entirely dependent for its existence on the statutory provision that created it.... Accordingly, the terms and legal effect of the statute are controlling with respect to the existence of a judgment lien and with respect to the rights of the judgment creditor under such a lien."50 C.J.S. Judgments § 551 (1997). While Keeler cites numerous cases in support of his contention that a judgment lien is of no further force or effect after the underlying judgment expires, none are persuasive because the liens described in each are controlled by statutes materially different from the statute governing charging orders in Maryland. See Mousel Law Firm v. Townhouse, Inc., 259 Neb. 113, 116-17 (2000) (addressing the question of whether an expired judgment and its associated judicial lien on a homestead could be revived pursuant to Nebraska Revised Statutes § 25-1515); Bulmash v. Davis, 24 Cal.3d 691, 696 (1979) (examining the status of a lien whose underlying judgment was vacated pursuant to California Code of Civil Procedure § 674); Rosenzweig v. Ferguson, 348 Mo. 1144, 1148 (1941) (addressing the question of whether mechanics' liens were superior to appellants' deed of trust); Nutt v. Cuming, 49 N.E. 880, 880 (1898) (holding that judgments over 10 years old cease to be liens upon real estate under New York law, and consequently are not payable from the surplus of a foreclosure sale); Bagley v. Ward, 37 Cal. 121, 131 (1869) (discussing the relationship between an attachment lien, whose purpose is to secure payment prior to the determination of liability, and the underlying judgment, under California law).
*5JUDGMENT AFFIRMED. COSTS TO BE PAID BY APPELLANT.
In 2002, a computer technician working at a bank in Liechtenstein downloaded the names of 1,250 wealthy customers from around the globe and later sold the data for several million Euros to the German tax authorities. The Germans quickly shared the information with other fiscal agencies such as the IRS and Revenue Canada, which have started prosecutions for tax evasion against the offenders.
But more importantly, this case highlights the truth about offshore planning: Somebody knows. And with the technician receiving several hundred Euros, and the tax authorities having learned how valuable the information is, the idea of "offshore" information remaining confidential from the tax authorities seems less certain than ever.
Plus, this will doubtless again spur the industrialized nations to take further action against countries whose main business is to facilitate tax evaders. Those who participate in offshore tax evasion are taking greater risks than ever, and their past activities are now much more likely to become known.
This is a very interesting fraudulent transfer and successor company liability case arising out of California.
American Express Travel Related Services Co., Inc. v. D & A Corp., 2007 WL 3217565 (E.D.Cal., Slip Copy, Oct. 29, 2007)
United States District Court, E.D. California.
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., Plaintiff,
v.
D & A CORPORATION dba Bakersfield Wholesale Foods, et al., Defendants.
No. CV-F-04-6737 OWW/TAG.
Oct. 29, 2007.
Mark S. Moore, PHV, Ira N. Glauber, Jaffe & Asher, LLP, New York, NY, Steven Koch, Edward Warren Gubler, Gubler & Koch LLP, Visalia, CA, for Plaintiff.
Heather S. Cohen, PHV, Marderosian Runyon Cercone Lehman and Armo, Seattle, WA, Michael G. Marderosian, Marderosian, Runyon, Cercone, Lehman & Armo, Russell Gene Vanrozeboom, Caswell Bell & Hillison LLP, Fresno, CA, Gary L. Huss, Wild Carter and Tipton, Fresno, CA, Curtis E. Floyd, Floyd & Horrigan, Bakersfield, CA, for Defendants.
MEMORANDUM DECISION GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Doc. 362)
OLIVER W. WANGER, United States District Judge.
*1 American Express Travel Related Services Company, Inc. (hereinafter referred to as American Express) has sued Defendants D & A Corporation dba Bakersfield Wholesale Foods ("Bakersfield Wholesale"), Abdo Aezah ("Abdo"), Malaka M. Aezah, David Aezah ("David"), Bakersfield Grocery Wholesale ("Bakersfield Grocery"), David Aezah Investment, Inc. ("DAI"), and Does 1-100, inclusive, by the Third Amended Complaint (TAC) filed on February 23, 2007 (Doc. 158). David, Bakersfield Grocery and DAI are sometimes referred to collectively as the "David Defendants."
American Express moves for an order (1) granting summary judgment against David, Bakersfield Grocery, and DAI on its claims for fraudulent transfer, conspiracy to commit fraudulent transfer, alter ego and successor liability; (2) directing the payment of $1.4 million, representing the proceeds of David's sale of certain property in Mississippi maintained in escrow pending the outcome of this lawsuit; and (3) dismissing all the David Defendants' affirmative defenses alleged in their Answer as a matter of law.
A. GOVERNING STANDARDS.
Summary judgment is proper when it is shown that there exists "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. A fact is "material" if it is relevant to an element of a claim or a defense, the existence of which may affect the outcome of the suit. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987). Materiality is determined by the substantive law governing a claim or a defense. Id. The evidence and all inferences drawn from it must be construed in the light most favorable to the nonmoving party. Id.
The initial burden in a motion for summary judgment is on the moving party. The moving party satisfies this initial burden by identifying the parts of the materials on file it believes demonstrate an "absence of evidence to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden then shifts to the nonmoving party to defeat summary judgment. T.W. Elec., 809 F.2d at 630. The nonmoving party "may not rely on the mere allegations in the pleadings in order to preclude summary judgment," but must set forth by affidavit or other appropriate evidence "specific facts showing there is a genuine issue for trial." Id. The nonmoving party may not simply state that it will discredit the moving party's evidence at trial; it must produce at least some "significant probative evidence tending to support the complaint." Id. The question to be resolved is not whether the "evidence unmistakably favors one side or the other, but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented." United States ex rel. Anderson v. N. Telecom, Inc., 52 F.3d 810, 815 (9th Cir.1995). This requires more than the "mere existence of a scintilla of evidence in support of the plaintiff's position"; there must be "evidence on which the jury could reasonably find for the plaintiff." Id. The more implausible the claim or defense asserted by the nonmoving party, the more persuasive its evidence must be to avoid summary judgment." Id. As explained in Nissan Fire & Marine Ins. Co. v. Fritz Companies, 210 F.3d 1099, 1102-1103 (9th Cir.2000):
*2 The vocabulary used for discussing summary judgments is somewhat abstract. Because either a plaintiff or a defendant can move for summary judgment, we customarily refer to the moving and nonmoving party rather than to plaintiff and defendant. Further, because either plaintiff or defendant can have the ultimate burden of persuasion at trial, we refer to the party with and without the ultimate burden of persuasion at trial rather than to plaintiff and defendant. Finally, we distinguish among the initial burden of production and two kinds of ultimate burdens of persuasion: The initial burden of production refers to the burden of producing evidence, or showing the absence of evidence, on the motion for summary judgment; the ultimate burden of persuasion can refer either to the burden of persuasion on the motion or to the burden of persuasion at trial.
A moving party without the ultimate burden of persuasion at trial-usually, but not always, a defendant-has both the initial burden of production and the ultimate burden of persuasion on a motion for summary judgment ... In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial ... In order to carry its ultimate burden of persuasion on the motion, the moving party must persuade the court that there is no genuine issue of material fact ....
If a moving party fails to carry its initial burden of production, the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial ... In such a case, the nonmoving party may defeat the motion for summary judgment without producing anything ... If, however, a moving party carries its burden of production, the nonmoving party must produce evidence to support its claim or defense ... If the nonmoving party fails to produce enough evidence to create a genuine issue of material fact, the moving party wins the motion for summary judgment ... But if the nonmoving party produces enough evidence to create a genuine issue of material fact, the nonmoving party defeats the motion.
B. FACTUAL BACKGROUND.
1. American Express's Statement of Undisputed Facts.
In moving for summary judgment, American Express proffered the following facts as undisputed. The David Defendants accept these facts as undisputed except where noted and discussed in this Memorandum Decision.
AE UMF 1: American Express Travel Related Services, Inc. is a corporation organized and existing under the laws of the State of New York, having its principal place of business at American Express Tower, World Financial Center, New York, New York 10285.FN1
FN1. The David Defendants contend that the evidence supporting this fact is inadmissible hearsay but, without waiving the objection, assert that the fact is undisputed. There are a number of undisputed facts with respect to which the David Defendants make the same objection: UMF Nos. 3, 5, 6, 7, 8, 13, 15, 17, 19, 21, 22, 23, 27, 28, 30, 31, 33, 34, 35, 36, 38, 39, 40, 42, 43, 44, 45, 47, 48, 49, 50, 51, 52, 53, 56, 57, 58, and 59. Because these facts are otherwise undisputed, the evidentiary objections do not suffice to raise a genuine issue of material fact.
This fact is undisputed.
AE UMF 2: Defendant David Aezah is a natural person who lives at 9008 Limoges Way, Bakersfield, California 93311.
*3 This fact is undisputed.
AE UMF 3: Defendant Abdo Aezah is a natural person who lives at 2516 El Portal Drive, Bakersfield, California 93309.
This fact is undisputed.
AE UMF 4: David and Abdo are brothers.
This fact is undisputed.
AE UMF 5: Defendant D & A Corporation dba Bakersfield Wholesale was a corporation organized and existing under the laws of the State of California with its principal place of business located at 402 California Avenue, Bakersfield, California 93304. Bakersfield Wholesale was operated as a wholesale grocery company that sold candy, soda, cigarettes, and other products to mini marts and other retail grocery outlets.
This fact is undisputed.
AE UMF 6: Bakersfield Wholesale began operations on or about January 3, 2005.
The David Defendants object to the supporting evidence as inadmissible hearsay and assert: "Without waiving said objections, DISPUTED. See Decl. of Marderosian, Ex. A."
The evidentiary support for this fact is the Admitted Facts section of the Scheduling Conference Order filed on March 7, 2007 (Doc. 243). The Admitted Facts section of this Order states that the facts set forth "are deemed proven without further proceedings." Exhibit A to Mr. Marderosian's declaration are copies of corporate documents indicating that Bakersfield Wholesale was incorporated and may have been doing business in late 2003.
The David Defendants retained new counsel after the Scheduling Conference Order was filed. The David Defendants have not moved under Rule 16, Federal Rules of Civil Procedure, to be relieved from the Admitted Facts set forth in the Scheduling Conference Order. Therefore, this fact is admitted.
AE UMF 7: Defendant Dave Aezah Investment, Inc. (DAS) is a corporation organized and existing under the laws of the State of California with its principal place of business located at 402 California Avenue, Bakersfield, California 93304. DAI is owned and controlled by David.
This fact is undisputed.
AE UMF 8: Bakersfield Grocery Wholesale is an unincorporated business entity which is owned and operated by David and began operations on or about January 3, 2005.
This fact is undisputed.
AE UMF 9: Bakersfield Wholesale's original owner was Abdo.
The David Defendants dispute this fact to the extent that Abdo is described as the "original owner", referring to Paragraphs 2-3 of David's declaration in opposition to the motion for summary judgment:
2. When Abdo and I executed the Declaration in regard to my forgiveness of the loan, the term ‘business' did not refer to Bakersfield Wholesale Foods. It was an expression we use that was meant to mean Abdo should no longer be concerned about the property and that it was now my business, not his. I have never owned any interest in Bakersfield Wholesale Foods. I did not become an owner of Bakersfield Wholesale Foods at any point. That business belonged exclusively to Abdo. I did help out on occasion when Abdo needed it but was neither an owner, officer, or employee.
*4 3. I was added as a signatory on one of Bakersfield Wholesale bank accounts; however, this was done for convenience purposes only. Abdo wanted me to be able to help him if he was busy or out of town. For some unknown reason, after I was added as a signatory, the bank would occasionally send me the bank statements. This was a mistake on their part and was not done at my request. I did not tell the bank that I was the owner of Bakersfield Wholesale and I was not the primary signatory on the account. Abdo told the bank that he was the owner of Bakersfield Wholesale Foods so I don't know why the bank would send me the bank statements. Nevertheless, when I did receive them, I gave them to Abdo as they pertained to his business, not mine.
The David Defendants also refer to Abdo's deposition transcript but do not provide page and line references.FN2 David's deposition transcript of September 13, 2006 at pages 21-22 and 26 is also referenced but the testimony does not provide evidentiary support for the disputed fact.
FN2. In Carmen v. San Francisco Unified School District, 237 F.3d 1026, 1031 (9th Cir.2001), the Ninth Circuit held:
[T]he district court may determine whether there is a genuine issue of material fact, on summary judgment, based on the papers submitted on the motion and such other papers as may be on file and specifically referred to and facts therein set forth in the motion papers. Though the court has discretion in appropriate circumstances to consider other materials, it need not do so. The district court need not examine the entire file for evidence establishing a genuine issue of material fact, where the evidence is not set forth in the opposing papers with adequate references to that it could conveniently be found.
AE UMF 10: Bakersfield Wholesale purchased approximately $3.6 million worth of Costco Cigarettes in November and December, 2004.
The David Defendants object that the evidentiary support for this fact is inadmissible hearsay.
The evidentiary support is the Admitted Fact section of the Scheduling Conference Order:
8. Bakersfield Wholesale purchased approximately $3.6 million worth of Costco Cigarettes in November and December, 2004, using American Express corporate accounts. Abdo has admitted to making all such purchases on behalf of Bakersfield Wholesale.
The hearsay objection is without merit.
The David Defendants dispute UMF 10 "to the extent that the credit card debt was incurred by Bakersfield Wholesale and Abdo Aezah, Malaka Aezah, and Fahd Aezah." The David Defendants refer to Exhibit B to Mr. Marderosian's declaration. Exhibit B is described as "true and correct copies of the credit applications, the Guarantee of Payment Agreement for Individual Accounts and the American Express credit card statements which show that Abdo Aezah, Malaka Aezah, D & A Corporation, and Fahd Aezah incurred the credit card debt at issue in this matter."
It is not reasonably disputed whether Bakersfield Wholesale made the credit card purchases of the Costco Cigarettes. The Scheduling Conference Order admits this fact from which the David Defendants have not sought relief. The credit cards were issued to Bakersfield Wholesale (actually D & A Corporation dba Bakersfield Wholesale). Based on Exhibit B, Abdo, Malaka and Fahd made charges on the Bakersfield Wholesale credit cards.
AE UMF 11, 12 and 13:
Abdo regularly collects rent from apartment buildings owned by David, then deposits monies into Abdo's own account, with David's approval.
Tenants owing monies to David made checks payable directly to Abdo.
Abdo pays taxes and other expenses for David's buildings out of his own personal checking account.
*5 The David Defendants object that the supporting evidence, which are references to David's deposition and deposition exhibits, are inadmissible hearsay.
Defendants dispute Facts 11, 12 and 13, referring to Paragraph 9(a) of David's declaration:
... Abdo ... has collected rent on my behalf when I was unavailable to do so. As a result, many of the tenants know Abdo. Sometimes, they will make their rent checks out to Abdo. When Abdo collects the rent, if the tenant makes the check payable to Abdo, Abdo may deposit the money in his account and give me the cash. This only happens occasionally. However, may [sic] times, even if the check is made out to Abdo, the check is deposited into my account because it is rental income to me alone. I am the only owner of these rental properties. Abdo and I do not have any rental properties together. Sometimes I ask Abdo to make repairs or pay various bills from the rent that he collects on my behalf. The money for the repairs or the other bills still comes directly from money that is owed to me exclusively.
David's testimony, under oath, is unambiguous. Defendants also refer to various parts of David's deposition transcript in disputing these facts.
AE UMFS 11, 12 and 13 are disputed.
AE UMF 14: Bakersfield Grocery Wholesale operates from the same address and operates exactly the same business as Bakersfield Wholesale.
The David Defendants object that the supporting evidence is inadmissible hearsay. The supporting evidence is David's response to Interrogatory No. 6 and Paragraphs 66 and 68 of the David Defendants' Answer filed on August 7, 2007 (Doc. 351). The David Defendants hearsay objections are without merit.
This evidence establishes that Bakersfield Grocery Wholesale operates from the same address as Bakersfield Wholesale but does not establish that the two businesses are exactly the same.
The David Defendants dispute this fact, referring to Paragraph 9(b) of David's declaration:
... I do not have knowledge of who all of Bakersfield Wholesale's customers and suppliers were. Based on some of the documentation I have seen in this case, it would appear that some of my customers and suppliers also were customers or suppliers of Bakersfield Wholesale. However, I believe that there are many customers and suppliers of Bakersfield Grocery Wholesale that there not mentioned in relation to Bakersfield Wholesale. I am attaching a list of some of my customers and suppliers as Exhibit ‘A.’ The majority of these customers and suppliers have never been mentioned or confirmed as customers or suppliers of Bakersfield Wholesale during my deposition. I do not know if they were also customers and suppliers of Bakersfield Wholesale. Many people on the list were people that I came across in my long career n[sic] this industry. Bakersfield is a small town and many convenience store operators know one another.
Defendants also refer to portions of David's deposition in disputing Fact 14.
*6 AE UMF 14 is disputed.
AE UMF 15: On August 27, 2004, Abdo delivered a grant deed to David, transferring title to the Warehouse to David. The transfer was recorded with the Clerk of Kern County, California on September 14, 2004.
This fact is undisputed.
AE UMF 16: On August 13, 2004, David was made a signatory on the accounts of Bakersfield Wholesale.
Defendants object that the supporting evidence is inadmissible hearsay. The supporting evidence is David's deposition testimony and deposition exhibit 28.
Defendants dispute Fact 16, referring to Paragraph 9(c) of David's declaration:
... It is my understanding from the documents that have been produced that Bakersfield Wholesale had more than one bank account with Wells Fargo. I was only added as a signatory on one of them.
The evidence is undisputed as to one Bakersfield Wholesale bank account with Wells Fargo, but disputed as to other accounts Bakersfield Wholesale may have had with Well Fargo.
AE UMF 17: As of August or September 2004, account statements were sent to David's mailing address, rather than to Abdo's mailing address.
This fact is undisputed.
AE UMF 18: In August or September 2004, David began placing orders for Bakersfield Wholesale and signing checks on its behalf.
Defendants object that the supporting evidence is inadmissible hearsay. The supporting evidence is David's deposition testimony and copies of checks signed by David attached to Mr. Glauber's affidavit filed previously in this action.
Defendants dispute Fact 18 to the extent that David "was not the only individual that placed orders or signed checks."
The David Defendants do not dispute that David began placing orders for Bakersfield Wholesale and signing checks, among others who signed, on behalf of Bakersfield Wholesale in August and September 2004.
AE UMF 19: David and Abdo executed a written "Declaration" dated September 19, 2004, which stated (1) that in exchange for the satisfaction of an alleged $150,000 loan from David to Abdo, Abdo was transferring the Warehouse building located at 402 California Avenue to David, and (2) that "[t]he borrower [Abdo] no longer has an interest of any king [kind] in this property or any business within it."
AE UMF 20: In November and December 2004, David wrote checks drawn on the Bakersfield Wholesale account in order to make mortgage payments on the Warehouse (which he admits owning as of those dates).
Defendants object that the supporting evidence, which are copies of checks signed by David attached to Mr. Glauber's affidavit filed previously in this action, David's deposition testimony, and Paragraph 50 of the Answer, are inadmissible hearsay and "vague and ambiguous." Fact 20 is disputed "to the extent that David only admits to owning the Warehouse and vehemently denies ever owning Bakersfield Wholesale."
It is undisputed that David wrote checks drawn on the Bakersfield Wholesale account to make mortgage payments on the Warehouse and it is disputed whether David owned Bakersfield Wholesale.
*7 AE UMF 21: On December 4, 2004, Bakersfield Wholesale made three payments to American Express which were returned for lack of funds.
This fact is undisputed.
AE UMF 22: American Express terminated Bakersfield Wholesale's American Express accounts and demanded payment in full of the total outstanding balance that was owed thereon.
This fact is undisputed.
AE UMF 23: Despite due demand, no payments on the account were made.
This fact is undisputed.
AE UMF 24: Abdo borrowed $150,000 from David, which Abdo has never repaid.
Defendants object that the supporting evidence, the Answer and David's interrogatory responses, are inadmissible hearsay.
Defendants dispute Fact 24 "to the extent that the note for $150,000 was forgiven in exchange for the conveyance of the Warehouse and assumption of the mortgage on the Warehouse."
AE UMF 24 is disputed.
AE UMF 25: Bakersfield Grocery Wholesale services the same customers that Bakersfield Wholesale did and makes purchases from the same suppliers.
This fact is disputed.
AE UMF 26: David runs Bakersfield Grocery Wholesale with the substantial assistance of his brother Abdo.
Defendants object that the supporting evidence, David's deposition testimony, is inadmissible hearsay.
Defendants dispute Fact 26 on the ground that the term "substantial is vague and ambiguous", referring to other portions of David's deposition testimony.
This fact is disputed.
AE UMF 27: In early 2005, David deposited checks from Bakersfield Wholesale's customers into Bakersfield Grocery Wholesale's account.
This fact is undisputed.
AE UMF 28: On January 15, 2005, David canceled a proposed bulk sale because of the TRO obtained by American Express in this lawsuit on January 4, 2005, which forbade transfers of assets from Bakersfield Wholesale to third parties.
This fact is undisputed.
AE UMF 29: David did not cancel the proposed bulk sale of the inventory until January 15, 2005.
Defendants dispute this fact "to the extent that the sale may have been cancelled prior to January 15, 2005 but notification was not provided until that day." Defendants cite no evidentiary support for this assertion.
AE UMF 29 is undisputed.
AE UMF 30: On December 6, 2004, David rented a large unit at a storage facility in Bakersfield, California, called Fortress Self-Storage.
This fact is undisputed.
AE UMF 31: David filled out a ‘Customer Identification" form required by Fortress Self-Storage, writing in "Bakersfield Wholesale" as his place of employment.
Defendants do not dispute that the Customer Identification Form lists Bakersfield Wholesale as David's place of employment. Defendants dispute that David was employed by Bakersfield Wholesale. In so disputing, David refers to his deposition testimony on July 9, 2007 at page 544:
Q. You list as your place of employment Bakersfield Wholesale. Why did you list Bakersfield Wholesale there?
*8 A. They were asking for employment so I just list that. It doesn't mean I was working there.
AE UMF 31 is undisputed.
AE UMF 32: Abdo moved at least $3 million in Costco Cigarettes from Bakersfield Wholesale to Fortress Self-Storage.
The evidentiary basis for this fact is the Admitted Facts in the Scheduling Conference Order:
16. A fire broke out on July 4, 2005, at the Fortress Self-Storage which damaged several units, including David's rental unit. As part of an insurance claim, David Aezah submitted receipts showing the cost of the cigarettes. The receipts submitted include November-December 2004 receipts for the purchase of cigarettes by Bakersfield Wholesale at Costco, using the American Express credit card. Based on these receipts, the insurance carrier (Travelers) issued a check to David, in his individual capacity, in the amount of $341,197.28. On or about January 11, 2006, David deposited the check into Bakersfield Grocery Wholesale's account at Citibank.
Defendants dispute AE UMF 32 claiming the cited evidentiary support does not prove these facts. Defendants assert that "[i]t is unknown by responding defendant as to how many cigarettes were transferred by Abdo to Fortress." Defendants refer to David's deposition testimony of July 9, 2007 at page 555 where David testified that he never learned that Abdo was storing cigarettes at Fortress Self-Storage. Defendants also refer to Abdo's deposition testimony of January 15, 2007 at pages 257-260.
Although David may not have known the number of cigarettes, he knew that he had cigarettes stored at Fortress and that the quantity there was in excess of David's cigarettes.
AE UMF 33: The records at Fortress show that the unit that David was renting had been accessed at least fifteen times between December 6, 2004, and July 4, 2005, the date of a fire at Fortress Self-Storage.
This fact is undisputed.
AE UMF 34: A fire at Fortress Self-Storage on or about July 4, 2005, damaged several storage units, including the unit rented by David. The renter deemed responsible for the fire was insured by Travelers, which engaged an insurance adjuster, Cunningham Lindsey U .S., Inc., to handle the claims. The representative of Cunningham Lindsey was Robert Bycott, an experienced adjuster who had investigated hundreds of fires, and at least ninety fires in commercial buildings.
This fact is undisputed.
AE UMF 35: After the fire, David arranged to have the remaining cigarettes removed to a container unit near the Warehouse at 402 California Avenue.
This fact is undisputed.
AE UMF 36: In order to establish the value of the cigarettes destroyed at Fortress, David submitted the November-December 2004 receipts for the purchase of cigarettes by Bakersfield Wholesale, at Costco, using the American Express credit card, which showed the cost of the cigarettes.
This fact is undisputed.
AE UMF 37: Following the fire at Fortress Self-Storage, David transferred insurance proceeds belonging to Bakersfield Wholesale to Bakersfield Grocery Wholesale.
*9 The evidentiary basis for this is Admitted Facts, Paragraph 16, of the Scheduling Conference Order.
Defendants dispute this fact, referring to Paragraph 9(f) of David's declaration in opposition to this motion:
As to plaintiff's undisputed material fact no. 37: Travelers Insurance Company issued a check to me for $341,197.28. I deposited the check in my account. I then gave the money to Abdo because the insurance money was to compensate him for the lost cigarettes.
Defendants also refer to David's July 9, 2007 deposition testimony at pages 612, 619-620, and 623-625.
This fact is undisputed.
AE UMF 38: David executed a release of Travelers in the United States and personally delivered it to Bycott on December 27, 2006. Travelers issued a check to David personally in the amount of $341,197.28.
This fact is undisputed.
AE UMF 39: On or about January 11, 2006, David deposited the check into Bakersfield Grocery Wholesale's account at Citibank.
This fact is undisputed.
AE UMF 40: David subsequently transferred such insurance proceeds from Bakersfield Grocery Wholesale to Abdo.
This fact is undisputed.
AE UMF 41: On January 4, 2005, this Court signed a temporary restraining order preventing the defendants (which at that time did not include David) from transferring any real property that might be available to satisfy the debt.
Defendants do not dispute this fact. However, referring to Paragraph 9(j) of David's declaration, Defendants assert: "in that David was not a defendant in the matter, he was not aware of the temporary restraining order." However, there is no paragraph 9(j) in David's declaration.
This fact is undisputed.
AE UMF 42: In early January 2005, following the filing of the California Action, Abdo deeded title to his residence to David for no consideration.
This fact is undisputed.
AE UMF 43: After American Express moved to hold Abdo in contempt for this fraudulent conveyance, the house was deeded back to Abdo by David.
This fact is undisputed.
AE UMF 44: In January 2005, David took checks which had been made payable to "Bakersfield Wholesale Foods," for goods purchased in 2004-many of which were issued in 2004, before Bakersfield Grocery Wholesale was formed or licensed-and deposited them directly into the bank account of the new entity, Bakersfield Grocery Wholesale.
Defendants do not dispute this fact. However, they assert: "[T]he monies for each and every check were given back to Bakersfield Wholesale." Defendant cite Paragraph 9(k) of David's Declaration as support. However, there is no Paragraph 9(k).
This fact is undisputed.
AE UMF 45: David wrote approximately $350,000.00 in checks on his personal account and on the account of Bakersfield Grocery Wholesale in the fall of 2005 through the spring of 2006 to various individuals who cashed checks in Yemen.
This fact is undisputed.
AE UMF 46: In or about April 2006, the Aezahs began negotiations for the purchase of the "Carver Village Apartments," a large apartment complex located at 1912 Live Oak Street, Pascagoula, Mississippi (the "Mississippi Property").
*10 Defendants dispute Fact 46, relying on Paragraph 9(g) of David's Declaration:
In April 2006, I began negotiations to purchase Carver Village Apartments for my acquisition of these apartments. Any participation by Abdo was at my request and did not result in or reflect any ownership interest for Abdo.
AE UMF 46 is disputed.
AE UMF 47: In 2006, the property was listed for sale through the real estate firm of Cumbest Realty, Inc. ("Cumbest Realty"). Although the investment was made in David's name, Abdo was personally involved in negotiations for the transaction (including price negotiations) and Abdo traveled to Mississippi in order to inspect the property before David purchased it.
This fact is undisputed.
AE UMF 48: In order to pay for the property, on May 9, 2006, Abdo and an employee of Bakersfield Grocery took 6,000 $100 bills, for a total of $600,000, from a safe at 402 California and deposited the cash into the bank account of Bakersfield Grocery Wholesale at Citibank. Citibank's records confirm the deposit of 6,000 $100 bills on May 9, 2006. On May 10, 2006, Abdo and the employee deposited another $707,500 in $100 bills into the bank account.
This fact is undisputed.
AE UMF 49: Citibank records show the deposit of more than 13,000 $100 bills by defendants, for a total of more than $1.3 million.
This fact is undisputed.
AE UMF 50: Citibank records show checks written by David Aezah with this money to the real estate firm in Mississippi to purchase the Mississippi Property.
This fact is undisputed.
AE UMF 51: On or about May 17, 2006, David closed on the purchase of the Mississippi Property, using the cash Abdo had deposited into the Bakersfield Grocery Wholesale account.
This fact is undisputed.
AE UMF 52: In August 2006, David learned that it would be difficult to develop the Mississippi Property because the buildings in question had been condemned or were in the process of being condemned for violations of building codes.
This fact is undisputed.
AE UMF 53: Abdo and a handyman then traveled to Mississippi for seven to eight days and consulted with local contractors to determine whether the apartments could be brought into compliance with building codes.
This fact is undisputed.
AE UMF 54: David and Abdo decided not to develop the property, and began investigating the possibility of reselling it.
Defendants dispute this fact, relying on Paragraph 9(h) of David's Declaration:
I made all decisions about the property in Mississippi as I was the sole owner of the property. Abdo did as I instructed. He was helping me out as I was busy and/or otherwise unavailable. He did not contribute financially to the acquisition of the property. I was the sole owner of the property.
AE UMF 54 is disputed.
AE UMF 55: Abdo began to make arrangements to list the property for sale through Cumbest Realty.
Defendants dispute Fact 55, relying on Paragraph 9(h) of David's Declaration quoted above re Fact 54.
*11 AE UMF 55 is disputed.
AE UMF 56: Ultimately, however, David began negotiations to sell the Mississippi Property to the Low Income Family Enrichment Foundation (the "Life Foundation") which had previously been interested in the property. The parties negotiated a sale price of $1,450,000 and entered into a contract of sale dated July 17, 2006.
This fact is undisputed.
AE UMF 57: On September 19, 2006, American Express, having learned about the proposed transaction from bank records produced by Citibank, brought an action in the United States District Court for the Southern District of Mississippi (the "Mississippi Action") in order to enjoin its sale and prevent the loss of proceeds of the proposed sale.
This fact is undisputed.
AE UMF 58: On November 13, 2006, American Express agreed to lift a lis pendens it had obtained and permit the sale of the Mississippi Property to proceed, subject to execution by David, American Express, and the Life Foundation of an Agreement and Escrow Instructions dated November 13, 2006, which was executed by all parties.
This fact is undisputed.
AE UMF 59: On February 21, 2007, American Express dismissed the Mississippi Action without prejudice, pursuant to a stipulation signed by counsel for David and American Express, and so ordered by the Court in this action, which provides that the disposition of the proceeds of the sale of the Carver Village Apartments may be determined by this Court.
This fact is undisputed.
2. David Defendants' Supplemental Statement of Undisputed and Disputed Facts.
The David Defendants set forth the following as undisputed material facts:
DD UMF 1: In or about May 2004, Abdo Aezah applied for and was granted a corporate credit card on behalf of Bakersfield Wholesale.
This fact is undisputed.
DD UMF 2: In or about September 2004, Abdo Aezah applied for and was granted a corporate credit card on behalf of D & A Corporation.
This fact is undisputed.
DD UMF 3: Abdo requested three additional American Express credit cards in the name of Abdo Aezah/Bakersfield Wholesale, Malaka Aezah/Bakersfield Wholesale, Fahd Aezah/Bakersfield Wholesale.
This fact is undisputed.
DD UMF 4: American Express issued another credit card to D & A Corporation.
