In Re Point Center Financial, Inc.
OPINION by Judge Dale S. Fischer. The decision of the Bankruptcy Court is AFFIRMED. (Made JS-6. Case Terminated.) See Order for specifics. (jp)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
In re POINT CENTER
SACV 20-663 DSF
RICHARD M. KIPPERMAN,
HOWARD B. GROBSTEIN,
The parties are again before this Court on appeal of the Bankruptcy
Court’s decision that Appellant did not establish, by a preponderance of
the evidence, that a certain transfer of rights occurred after Appellant’s
lien attached to those rights. For the reasons stated below, the decision
of the Bankruptcy Court is AFFIRMED.
I. Background and Decision Below
Appellant Richard Kipperman is a court-appointed post-judgment
receiver attempting to enforce a state court judgment in favor of certain
creditors (“Brewer judgment” and “Brewer creditors” respectively)
against Debtor Point Center Financial, Inc. The funds in question are
certain management and servicing fees paid to Point Center for prepetition services by a related entity (the “Jack Rabbit fees”). The right
to collect those fees was assigned by Point Center’s principal, Dan
Harkey, pre-petition from Point Center to a different entity also
controlled by Harkey, but the money was eventually recovered by the
bankruptcy estate through an action to avoid the transfer. The central
question before the Bankruptcy Court was whether the liens held by
the Brewer creditors attached to the Jack Rabbit fees prior to the right
to collect the fees being assigned to the other entity.
The Bankruptcy Court had previously found against Appellant on
this issue, and this Court affirmed. The Ninth Circuit affirmed much
of the decisions but reversed in part, finding that the Bankruptcy Court
did not adequately explain why it believed that the evidence was too
“murky” to allow it to fix an assignment date later than the date the
liens attached. However, the Ninth Circuit’s mandate establishes two
important points: that the earliest liens became effective on March 16,
2012, and that Appellant has the burden of showing when the
assignment became effective.
After reviewing the evidence again on remand and issuing an
extensive written discussion of the evidence, the Bankruptcy Court
again found that Appellant had not met his burden of showing that the
assignment took place after March 16, 2012. The Bankruptcy Court
freely acknowledged that there was evidence that the assignment took
place sometime after March 16, but it also pointed to substantial
evidence that Harkey had manifested an intention to make the
assignment at least a month prior to March 16. Finding the evidence
“in equipoise,” the Bankruptcy Court found that it was not convinced
that the assignment was after March 16, 2012, and therefore ruled
II. Standard of Review
The timing of the assignment in this case involves resolution of
questions of fact. The bankruptcy court’s factual findings are reviewed
for clear error. Lundell v. Anchor Const. Specialists, Inc., 223 F.3d
1035, 1039 (9th Cir. 2000). “Clear error exists when, although there is
evidence to support the lower court’s conclusion, the reviewing court is
left with the definite and firm conviction that a mistake has been
made.” In re Adamson Apparel, Inc., 785 F.3d 1285, 1291 (9th Cir.
The Bankruptcy Court Did Not Clearly Err in Finding that
Appellant Did Not Meet His Burden of Proof
Appellant focuses his argument on when a formal written
assignment was executed. But the Bankruptcy Court found, as a
matter of California law, that a written document was not required
and, instead, “it is enough if the assignor has, in some fashion,
manifested an intention to make a present transfer of his rights to the
assignee.” AR 34 (emphasis in original) (quoting Hearn Pac. Corp. v.
Second Generation Roofing, Inc., 247 Cal. App. 4th 117, 149 (2016)).
Appellant does not directly challenge this legal conclusion. 1
The Bankruptcy Court found that the crux of the problem was that,
while there was fairly clear evidence that Harkey had manifested an
intention to make the assignment prior to March 16, 2012, it was not
clear if that was a “present intention” rather than something he wanted
to do at some point in the future. See id. The only hard evidence of the
timing of the assignment is that Harkey’s attorney, Dale Martin, emailed a draft written assignment to Harkey on March 15, 2012, and
Martin testified that Harkey had asked him to prepare the assignment
within a month prior to that e-mail. The Bankruptcy Court found that
there was also metadata from Microsoft Word files showing that draft
assignments may have been started as early as December 2011. AR 36.
Martin testified that the written assignments were executed sometime
after March 2012 but admitted that he was unaware of the exact date.
Appellant’s argument largely proceeds from an implicit assumption that the
date of the execution of the written assignment controls, but Appellant never
makes that position explicit or provides any legal argument in support of it.
Appellant also does not raise the presence of any issues of law in his
recitation of the standard of review.
As with its first attempt at resolving this dispute, it is clear from the
record that the Bankruptcy Court was frustrated with the
inconclusiveness of the evidence. The Bankruptcy Court was satisfied
that Harkey was at least seriously considering the assignment prior to
March 16, 2012, but the record was hopelessly unclear if he had
established a “present intention” to make the assignment at that point.
Left with that record, the Bankruptcy Court concluded that because
Appellant bore the burden of proof, Appellant lost.
The Court cannot say that the Bankruptcy Court clearly erred in
finding that Appellant had not met his burden of proving, by a
preponderance of the evidence, that the assignment became effective
under California law prior to March 16, 2012. There is little question
that the Bankruptcy Court could have found that the assignment took
place after that date. Perhaps most courts would have found that the
weight of the evidence supported that conclusion. But the evidence is
not so strongly in favor of Appellant’s position to leave this Court “with
the definite and firm conviction” that the Bankruptcy Court erred in
finding the record inconclusive. And if the finder of fact believes that
the record is inconclusive, the party with the burden of persuasion
loses. See Medtronic, Inc. v. Mirowski Family Ventures, LLC, 571 U.S.
191, 199–200 (2014). In this case, that party is Appellant.
The Bankruptcy Court’s Decision is Not Foreclosed by the
Estoppel Doctrines Raised by Appellant
Appellant raises several legal doctrines that he claims foreclose the
Bankruptcy Court’s ruling. None of these arguments are persuasive.
Issue preclusion was not raised in the Bankruptcy Court, and the
Court declines to consider it for the first time on appeal. Community
House, Inc. v. City of Boise, Idaho, 623 F.3d 945, 968 (9th Cir. 2010).
Judicial estoppel does not apply either. “Judicial estoppel is an
equitable doctrine that precludes a party from gaining an advantage by
asserting one position, and then later seeking an advantage by taking a
clearly inconsistent position.” Hamilton v. State Farm Fire & Cas. Co.,
270 F.3d 778, 782 (9th Cir. 2001) (citation omitted). The doctrine
protects “the integrity of the judicial process by preventing a litigant
from ‘playing fast and loose with the courts.’” Wagner v. Prof’l Eng’rs,
354 F.3d 1036, 1044 (9th Cir. 2004) (quoting Russell v. Rolfs, 893 F.2d
1033, 1037 (9th Cir. 1990), cert. denied 501 U.S. 1260 (1991)).
The Ninth Circuit has applied a three-prong test to determine
whether the application of judicial estoppel is warranted. Hamilton,
270 F.3d 782, quoting from New Hampshire v. Maine, 532 U.S. 742
(2001). First, a party’s subsequent position must be “clearly
inconsistent” with its earlier position. Second, the party must have
succeeded in persuading a court to accept its earlier position so that
judicial acceptance of an inconsistent position in a later proceeding
would create “the perception that either the first or the second court
was misled.” Finally, the party seeking to assert an inconsistent
position would derive an unfair advantage or impose an unfair
detriment on the opposing party if not estopped. Id. (additional
Appellant’s judicial estoppel argument involves arguments made by
Appellee during the proceedings to avoid the transfer of the Jack
Rabbit fees to the other Harkey-controlled entity. The relevant issue in
that avoidance proceeding was whether the assignment took place
within two years prior to the bankruptcy petition that was filed on
February 19, 2013. Appellee argued – and the Bankruptcy Court found
– that the assignment took place in “March 2012,” well within two
years of the petition date. 2 AR 2326-27.
None of the parts of the judicial estoppel test favors estoppel in this
case. An argument that the assignment took place in “March 2012” is
The primary issue concerning the assignment date in the avoidance action
was whether a backdated August 1, 2010 transfer date applied or the date
that the assignment actually occurred, which was around March 2012. AR
not clearly inconsistent with Appellant’s position in this case.
Appellant’s position is basically that the assignment took place for the
purposes of California law at some time prior to the drafting of the
written assignment in mid-March 2012. A vague “March 2012”
assignment date is not “clearly inconsistent” with Appellant’s present
There is also no perception that the Bankruptcy Court was misled.
The precise date of the assignment was simply not important in the
avoidance action. All Appellee needed to do was demonstrate that the
assignment happened sometime after February 19, 2011. Whether that
was March 2012, February 2012, or even December 2011 was
immaterial to the outcome of the avoidance action. Similarly, Appellee
would derive no unfair advantage if not estopped because the argument
in this case is only trying to fix a more precise date to the assignment –
an issue that was not presented in the avoidance action and was not
particularly relevant there.
Law of the Case
The law of the case doctrine also does not foreclose the Bankruptcy
Court’s decision. “The law-of-the-case doctrine generally provides that
‘when a court decides upon a rule of law, that decision should continue
to govern the same issues in subsequent stages in the same case.”
Askins v. U.S. Dep’t of Homeland Sec., 899 F.3d 1035, 1042 (9th Cir.
2018). However, “[t]he law of the case doctrine does not preclude a
court from reassessing its own legal rulings in the same case” and
“[t]he doctrine applies most clearly where an issue has been decided by
a higher court.” Id. In fact, Federal Rule of Civil Procedure 54(b)
explicitly authorizes courts to revise “any order or other decision . . . at
any time before the entry of a judgment adjudicating all the claims and
all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b); see also
Fed. R. Bankr. P. 7054(a) (Rule 54(a)–(c) apply to adversarial
proceedings); id. at 1042-43.
Aside from the fact that the Bankruptcy Court would not bound by
the law of the case in any event, the law of the case argument fails for
several other reasons. First, it is not even clear that the avoidance
action and this case are the “same case” for the purposes of law of the
case. They both take place under the auspices of the same bankruptcy
proceeding, but they are separate disputes involving different parties
for different purposes. Second, as noted above, the two decisions are
not incompatible, so it is not obvious that the Bankruptcy Court
changed its position. Finally, even if it were a change in position, there
was a good reason to do so and there is no reason to find the
Bankruptcy Court abused its discretion in doing so. The precise date of
the assignment was not important to the avoidance action; it was
important to the determination of the status of the Brewer liens. When
faced with a more nuanced question about the assignment, the
Bankruptcy Court engaged in a more nuanced analysis and came to a
more indeterminate conclusion. There was no error in this approach.
The decision of the Bankruptcy Court is AFFIRMED.
IT IS SO ORDERED.
Date: September 8, 2020
Dale S. Fischer
United States District Judge
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