Free Motion to Stay - District Court of California - California

Case 3:08-cv-01446-BTM-BLM

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Geraldine A. Valdez (Bar No. 174305) Kendra J. Hall (Bar No. 166836) Farzeen Essa (Bar No. 246971) PROCOPIO, CORY, HARGREAVES & SAVITCH LLP 530 B Street, Suite 2100 San Diego, California 92101 Telephone: 619.238.1900 Attorneys for Appellants Alejandro Diaz-Barba and Martha Margarita Barba de la Torre Stephen B. Morris (SBN 126192) Mark C. Hinkley (SBN 138759) MORRIS & ASSOCIATES 444 West C Street, Suite 300 San Diego, California 92101 Telephone: 619.239-1900 Attorneys for Appellant Alejandro Diaz-Barba

D. Anthony Gaston (Bar No. 57074) Attorney At Law Corporate Center 550 West C Street, Suite 700 San Diego, California 92101 Telephone: 619.234.3103 Attorneys for Appellant Martha Margarita Barba de la Torre

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA In re: JERRY LEE ICENHOWER dba Seaview Properties, and DONNA LEE ICENHOWER, Debtors Adv. Proc. No.: 06-90369 Adv. Proc. No.: 04-90392 ALEJANDRO DIAZ-BARBA; MARTHA MARGARITA BARBA DE LA TORRE Appellants, v. KISMET ACQUISITION, LLC Appellee. Date: Time: Ctrm: Judge: August 28, 2008 4:00 p.m. 15 Honorable Barry Ted Moskowitz MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION OF DEFENDANTS MARTHA MARGARITA BARBA DE LA TORRE AND ALEJANDRO DIAZ-BARBA FOR STAY OF JUDGMENT PENDING APPEAL Case No. 3:08-CV-01446-BTM-BLM Appeal from Bankruptcy Court (S.D. Cal.) Bkr. Case No. 03-11155-LA7

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TABLE OF CONTENTS Page I. INTRODUCTION ....................................................................................................................... 1 II. FACTUAL BACKGROUND..................................................................................................... 2 A. The Villa Property........................................................................................................... 2 B. Icenhower Induces Diaz To Purchase The Villa Property.............................................. 3 C. The Diaz Family Purchases The Villa Property ............................................................. 5 D. The Avoidance Actions................................................................................................... 6 E. Kismet Enters The Picture .............................................................................................. 6 F. Pre-Trial Rulings And The Judgment ............................................................................. 7 III. THE DIAZ FAMILY IS ENTITLED TO A DISCRETIONARY STAY WITHOUT A BOND.................................................................................................................................... 9 A. Standard of Review....................................................................................................... 10 B. The Diaz Family Will Likely Succeed On The Merits ................................................. 10 (a) H&G is the alter ego of the Debtors, nunc pro tunc to the petition date. ........................................................................................ 12 (b) The assets of H&G are hereby substantively consolidated with the assets of the bankruptcy estate nunc pro tunc to the petition date. ..................................................................................................... 12 1. This Court Lacks Subject Matter Jurisdiction to Determine Real Property Rights in Mexico. ............................................................................. 12 (a) Title to Real Property Can only Be Decided by a Court in the Jurisdiction Where the Property is Located........................................ 12 (b) U.S. Courts Particularly Lack Jurisdiction to Determine Real Property Rights in Foreign Countries.................................................. 13 2. The Bankruptcy Code Avoidance Sections Do Not Apply Extraterritorially. ............................................................................................. 15 3. The Judgment Should Be Reversed In That It Disregards The International Comity Doctrine and Mexico's Calvo Doctrine. ....................... 16 (a) Mexico Has a Strong Policy Against Allowing Foreign Powers to Decide Issues Related to Mexican Real Property. .......................... 17 (b) Mexican Fraudulent Conveyance Laws Differ From those in the United States........................................................................................ 19 C. The Diaz Family Will Suffer Irreparable Harm............................................................ 19 D. Kismet Will Not Suffer Substantial Harm if the Stay is Granted ................................. 21 E. Public Interest Considerations Mandate the Issuance of a Stay ................................... 21 IV. THE COURT HAS DISCRETION TO REQUIRE A BOND................................................ 22 V. THE DIAZ FAMILY IS ENTITLED TO A STAY AS A MATTER OF RIGHT IF IT POSTS A BOND..................................................................................................................... 23 VI. EVEN IF THE COURT DETERMINES THE JUDGMENT IS SIMILAR TO AN INJUNCTION, THE DIAZ FAMILY IS ENTITLED TO A STAY UNDER RULE 62(C)........................................................................................................................................ 24 VII. CONCLUSION...................................................................................................................... 25

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TABLE OF AUTHORITIES Page(s) FEDERAL CASES ACC Bondholders v. Adelphia Communications Corp. (In re Adelphia Communications Corp.) 361 B.R. 337 (Bankr. S.D.N.Y. 2007) ........................................................................ 19, 20, 21 Argentine Republic v. Amerada Hess Shipping Corp. 488 U.S. 428, 102 L. Ed. 2d 818, 109 S. Ct. 683 (1989) ........................................................ 15 Asociacion De Reclamantes, v. United Mexican States 735 F.2d 1517 (DC Cir. 1984) .......................................................................................... 14, 18 Barclay v. Swiss Finance Corporation Limited (In re Midland Euro Exchange et al) 347 B.R. 708 (Bankr. C.D. Cal. 2006) .................................................................................... 15 Bermudez v. Reid 720 F.2d 748 (2d Cir. 1983) .................................................................................................... 21 Casey v. Adams 102 U.S. at 67-68..................................................................................................................... 13 Ellenwood v. Marietta Chair Co. 158 U.S. 105 (1895) ................................................................................................................ 13 Equal Employment Opportunity Comm. v. Arabian American Oil Co. 499 U.S. 244 (1991) ................................................................................................................ 15 Feller v. Brock 802 F.2d 722 (4th Cir.1986) .................................................................................................... 21 Foley Bros., Inc. v. Filardo 336 U.S. 281 (1949) ................................................................................................................ 15 Goldie's Bookstore, Inc. v. Superior Court of State of Cal. 739 F.2d 466 (9th Cir. 1984) ................................................................................................... 23 Hartford Fire Ins. Co. v. California 509 U.S. 764 (1993) ................................................................................................................ 17 Hebert v. Exxon Corp. 953 F.2d 936 (5th Cir. 1992) ................................................................................................... 23 Hilton v. Braunskill 481 U.S. 770, 107 S.Ct. 2113, 95 L.Ed.2d 724 (1987) ........................................................... 24 Hughes v. Arnod No. 2:08-00490 JAM, 2008 WL 2169511 (E.D. Cal. May 22, 2008)....................................... 9 ii
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In re Advanced Mining Sys. Inc. 173 B.R. 467 (Bankr. S.D.N.Y. 1994) .................................................................................... 20 In re Bridgeport 132 B.R. 81 (Bankr. D.Conn. 1991)........................................................................................ 19 In re Calphine Corp. No. 05-60200 (BRL), 2008 WL 207841 (Bankr. S.D.N.Y., January 24, 2008) ..................... 19 In re Capital West Investors 180 B.R. 240 (Bankr. N.D. Cal. 1995) .................................................................................... 23 In re Country Squire Associates of Carle Place, L.P. 203 B.R. 182 (2nd Cir. 1996) .................................................................................................. 20 In re Ernst Home Center 221 B.R. 243 (9th Cir. BAP 1998) .......................................................................................... 10 In re Forty Eight Insulations, Inc. 115 F.3d 1294 (7th Cir. 1997) ................................................................................................. 10 In re Issa Corp. 142 B.R. 75 (Bankr. S.D.N.Y. 1992) ...................................................................................... 19 In re Max Sugarman Funeral Home, Inc. 94 B.R. 16 (Bankr. D.R.I.1988) ........................................................................................ 22, 23 In re Maxwell 93 F.3d 1036 (2d Cir. 1996) .................................................................................................... 17 In re Maxwell Commc'n Corp. 170 B.R. 800 (S.D.N.Y. 1994) ................................................................................................ 15 In re Maxwell Communication Corporation 186 B.R. 807 (S.D.N.Y 1995) ................................................................................................. 15 In re Skinner 202 B.R. 867 (Bankr. W.D. VA. 1996)............................................................................. 19, 22 In re Slater 200 B.R. 491 (E.D.N.Y. 1996) ................................................................................................ 20 In re Sphere Holding Corp. 162 B.R. 639 (Bankr. E.D.N.Y.1994) ..................................................................................... 22 In re Suprema Specialties, Inc. 330 B.R. 93 (S.D.N.Y. 2005) .............................................................................................. 9, 22 In re Trans World Airlines, Inc. 18 F.3d 208 (3rd Cir. 1994)....................................................................................................... 9 iii
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Keller v. Malice 838 F.Supp. 1163 (D. S.D. Tex. 1993).................................................................................... 12 LaRouche v. Kezer 20 F.3d 68 (2d Cir. 1994) ........................................................................................................ 10 Livingston v. Jefferson 15 F. Cas. 660 (C.C.D. Va.1811) ............................................................................................ 12 Lopez v. Heckler 713 F.2d 1432 (9th Cir.1983) ............................................................................................ 10, 24 Louisville & N.R.R. v. Western Union Telegraph Co. 234 U.S. 369 (1914) ................................................................................................................ 12 Lynch v. California Public Utilities Com'n No. C-04-0580, 2004 U.S. Dist. LEXIS 6022 (N.D. Cal. April 9, 2004) ........................... 9, 10 Mohammed v. Reno 309 F.3d 95 (2d Cir. 2002) ................................................................................................ 10, 21 O'Hagan v. U.S. 86 F.3d 776,783 (8th Cir. 1996) .............................................................................................. 19 Oakey v. Bennett 52 U.S. 33 (1850) .............................................................................................................. 13, 14 S.E.C. v. Platforms Wireless Intern. Corp. No. 04cv2105JM(AJB), 2008 WL 281112 (S.D.Cal. Jan. 31, 2008)...................................... 24 Sarei v. Rio Tinto, PLC 456 F.3d 1069,1086 (9th Cir. 2006) ........................................................................................ 17 Southwest Voter Registration Education Project v. Shelley 344 F.3d 914 (9th Cir.2003) ...................................................................................................... 9 Thapa v. Gonzales 460 F.3d 323 (2d Cir. 2006) .................................................................................................... 24 Tucker Anthony Realty Corp. v. Schlesinger 888 F.2d 969 (2d Cir. 1989) .................................................................................................... 19 United States v. Mansion House Center Redevelopment Co. 682 F.Supp. 446 (E.D. Mo. 1988) ........................................................................................... 23

OTHER STATE CASES Clarke v. Clarke 178 U.S. 186 (1900) ............................................................................................................... 13 iv
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Holt v. Guerguin 163 S.W. 10 (1914) ........................................................................................................... 13, 14 In re County Squire Assocs. Of Carle Place, L.P. 203 B.R. 182 (B.A.P. 2d Cir. 1996) ........................................................................................ 22 FEDERAL STATUTES 11 U.S.C. § 544(A) .................................................................................................................................... 8 § 549 .......................................................................................................................................... 8 § 550(a)(1) and § 551 ................................................................................................................ 8 § 550(A)(2)................................................................................................................................ 8 Bankruptcy Code Chapter 7 ..................................................................................................................... 4, 5, 6, 15 § 502(h) ............................................................................................................................... 2, 21 § 547 ........................................................................................................................................ 15 § 548 .................................................................................................................................. 15, 16 § 7062(d) ................................................................................................................................. 24 Federal Rule of Civil Procedure Rule 62 ...................................................................................................................................... 9 Rule 62(c) ................................................................................................................................ 24 Rule 62(d)................................................................................................................................ 23 Rule 7062 ............................................................................................................................ 9, 23 Rule 8005 .......................................................................................................... 9, 10, 19, 22, 24 Federal Civil Code, Article 773 .............................................................................................. 17, 18 CALIFORNIA STATUES California Code of Civil Procedure § 917.4 ..................................................................................................................................... 23 OTHER AUTHORITIES Divxnetworks, Inc. v. Gericom AG No. 04cv2537 WQH................................................................................................................ 24 Mexican Law: a Treatise for Legal Practitioners and International Investors, § 41.29 ..................................................................................................................................... 18 Mexican Real Estate Company "Impulsora de Chamela" ("IC") ................................................... 6

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Appellants Martha Margarita Barba De La Torre and Alejandro Diaz-Barba (collectively, "the Diaz Family") respectfully submit their Memorandum Of Points And Authorities In Support Of Emergency Motion For Stay Of Judgment Pending Appeal, as follows: I. INTRODUCTION The purpose of this motion is to request a stay of the judgment in the above cases pending an appeal to be filed by the Diaz Family. The appeal is from the judgment of the Bankruptcy Court in two consolidated adversary proceedings avoiding an unauthorized post-petition real property transfer (the "Villa Property") from the Debtor in the underlying bankruptcy proceeding to the Diaz Family (the "Avoidance Actions"). As part of the judgment, the Bankruptcy Court directed Defendants Alejandro Diaz ("Alex") and his elderly mother Martha Margarita Barba De La Torre ("Martha"), two Mexican citizens, to transfer their beloved family vacation home in Mexico, the Villa Property, to Kismet Acquisition LLC, ("Kismet"), a Delaware LLC formed by two German citizens to gain access to the U.S courts. The Diaz Family paid $1.4 million for the Villa Property and satisfied all requirements to establish clear title under Mexican law. The Bankruptcy Court reasoned that, although the Diaz Family paid more than fair market value for the Villa Property, Alex had conducted insufficient due diligence in the United States with respect to the transferor to allow him to take advantage of the "good faith purchaser" defense. It did not find that Alex had colluded or conspired with the Debtors in any way. If Alex committed any crime, it was that of naivete for believing that the laws of his own country governed a transfer of real property located there. This Court has discretion to grant a stay pending appeal and it need not require the posting of a supersedeas bond. As addressed below, a discretionary stay is appropriate in this case. First, the Diaz Family is likely to prevail on the merits. The Diaz Family's appeal will raise important issues regarding the subject matter jurisdiction of the Bankruptcy Court, and whether the judgment can stand given its direct impact on real property owned by Mexican citizens in Mexico and Mexico's strong policy against allowing foreign powers to decide issues affecting ownership of real property in Mexico. The Court's determination on these issues at the 1
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trial level is reversible because it was premised on an entirely different theory of the case than that which the Court ultimately adopted in rendering its judgment. Second, absent a stay the Diaz Family will suffer irreparable harm. If Kismet demolishes the Villa Property, the appeal will become moot and the Diaz Family will never be able to recover what they have lost in the event the Court ultimately reverses the Bankruptcy Court. The two German property developers that formed Kismet did so solely for the purpose of purchasing the Avoidance Actions from the bankruptcy trustee. Kismet has made no secret of its intentions. The reason it went to such extraordinary lengths to wrest this property from its reluctant owner is because it obstructs Holes 2 and 5 of a golf course development it is building which will ultimately surround the Villa Property. Third, Kismet will suffer no harm if a stay is granted. The Villa Property is protected by an injunction issued by the Bankruptcy Court. Additionally, as consideration for its purchase of the Avoidance Actions from the bankruptcy trustee, Kismet agreed to pay all the unsecured claims against the bankruptcy estate in full. Under Bankruptcy Code section 502(h), once the Diaz Family turns over the Villa Property, it will have such an unsecured claim for the $1.4 million it paid for the property. Therefore, as a practical matter, Kismet will have to satisfy that claim before it obtains an interest in the Villa Property, Kismet is in no danger of going out of pocket while all rights are finally adjudicated. Finally, public policy is strongly against the potentially unnecessary forfeiture of homes and disturbance of the status quo. Accordingly, given the significant legal issues in this case, as well as the unique considerations involved when a judgment directly impacts real property located in a foreign country, a stay of the judgment herein is just and proper. II. FACTUAL BACKGROUND The Villa Property

In or about 1995, D. Donald Lonie and the D. Donald Lonie, Jr., Family Trust (the "Lonie Creditors") entered into an agreement with Debtors Jerry Icenhower ("Icenhower") and Donna Icenhower (collectively, the "Debtors") for the sale of their interest in the Villa Property, a 2
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beautiful coastal villa in Mexico called the Villa Vista Hermosa. The Villa Property is located in the village of Chamela in the Municipality of La Huerta, State of Jalisco, Mexico, overlooking the ocean. See, Request for Judicial Notice ("RJN"), Exh. 1, Consolidated Findings of Fact and Conclusions of Law ("FF&CL") entered on June 2, 2008 at ¶3.1 Under Mexican law, a foreign national may not directly hold title to coastal real property in Mexico, but may lease or acquire rights of use on such property by forming a fideicomiso bank trust to hold title to the real property. Therefore, the Lonie Creditors sold only a leasehold interest or right of use to the Villa Property to the Debtors who are U.S. citizens (the "Villa Property Interest"). Id. at ¶3, fn. 4. In return for their interest in the Villa Property, the Debtors executed two promissory notes in favor of the Lonie Creditors, who recorded a lien to secure the note. Subsequently, the Lonie Creditors agreed to release the lien to enable the Debtors to sell the Villa Property Interest to a third party. The sale fell through and a dispute arose between the Debtors and the Lonie Creditors. Id. at ¶4. On March 24, 2000, the Lonie Creditors commenced an action against the Debtors in the United States District Court for the Southern District of California (the "District Court Litigation"). Id. at ¶4. On March 4, 2002, the Debtors purchased a Nevada corporation, H&G, and transferred their Villa Property Interest to that entity. Id. at ¶8. B. Icenhower Induces Diaz To Purchase The Villa Property

Alex, a citizen of Mexico, first met Icenhower through a childhood friend, Eugene Kocherga ("Eugene"). Eugene's family formerly owned the Vista Property and Alex and Eugene had spent many happy summers there together. Id. at ¶27. In 2003, Eugene was planning his wedding and was determined to get married in his childhood home. He made some inquiries to determine the new owners of the Villa Property to see if they would agree to allow him to hold his wedding there. He was introduced to Icenhower who told him that he was the property manager for the Villa Property. Id. As Eugene was making preparations to rent the Villa Property, he had several meetings with Icenhower.
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During one of these meetings in San Diego, Eugene introduced Alex to

The references to the Appendix/docket refer to Adversary Proceeding #04-90392. The Diaz Family's appeal will also include Adversary Proceeding #06-90369-LA. 3
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Icenhower. Later Eugene and Alex visited the Villa Property together and Alex met Icenhower again. Alex remembered the Villa Property fondly and found it even nicer than he remembered. Icenhower mentioned that the house was possibly for sale at a selling price of $3 million dollars. Alex indicated that he was interested in the house, but not at that price. Id. at ¶¶27-28. After the wedding, Icenhower contacted Alex several times to ask him if he was still interested in purchasing the Villa Property. He told Alex that he was only managing the house for H&G which, he said, comprised of a group of investors from Nevada. Icenhower dropped the asking price a little each time he spoke with Alex. Finally, he advised Alex that the lowest price H&G would accept for the Villa Property Interest was $1.5 million. Alex informed his mother, Marth, of this opportunity to purchase the Villa Property. Martha agreed to become a co-owner with Alex. Alex told Icenhower that he was interested in purchasing the Villa Property for $1.5 million and made a check out to H&G for $25,000.00 as a sign of good faith. Id. at ¶¶29 & 39. Alex then requested his friend and attorney/notary, Mr. Eduardo Sanchez Acosta ("Sanchez") to start the legal process and necessary due diligence to purchase the Villa Property. While Alex and Sanchez were conducting their due diligence, Martha became very ill and had absolutely no involvement whatsoever in the transaction. On November 24, 2003, the Court entered judgment in favor of the Lonie Creditors in the District Court Litigation. On December 15, 2003, the Debtors filed for protection under chapter 7 of the Bankruptcy Code. Id. at ¶5. Gerald H. Davis was appointed as trustee (the "Trustee").

Shortly thereafter, Alex learned of the Icenhower bankruptcy. Id. at ¶31. Alarmed, Alex called Icenhower to inquire about the bankruptcy. Icenhower explained that he and the Lonie Creditors were in a dispute over a big land development project in Ensenada, Mexico. The Lonie Creditors wanted to collect on a note that Icenhower assured Alex was already liquidated. Alex asked if the Villa Property was involved in this dispute. Icenhower assured him that he had sold it long before the dispute had arisen and that it was not involved in the bankruptcy. Id. at ¶32. /// /// 4
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The Diaz Family Purchases The Villa Property

Sanchez had completed eight months of due diligence and then presented Alex with a report certifying his findings that there were no outstanding liens on the Villa Property. The report indicated that Icenhower had formerly owned the Villa Property but that he had transferred it to H&G, a corporation in good standing, two years earlier. Id. at ¶34. Alex received the additional assurances provided for under Mexican law that the Villa Property was free and clear of any liens and encumbrances. Under Mexican law, a seller or buyer of real property is required to obtain a certificate from the Public Registry of Property, stating who the owner of the property is and if the property is free of any lien or deed affecting the free disposition of the land. Only after the Public Registry of Property certifies that the seller is the actual owner and that the property is free of liens and claims, will a Public Notary attest and certify, through a deed, the sale/purchase of the property. Once the process is finished, the Notary Public sends the final deed to the Public Registry for registration, and a certified formal deed is delivered to the buyer. All liens or claims must be registered with the Mexican

government to have any effect, and a notary's certification of no liens is considered a final and conclusive finding of clear title. With respect to Alex's purchase of the Villa Property, both the Public Registry of Property and the Notary Public confirmed that the owner of the Villa Property Interest was H&G and had been so for two years. They also confirmed that H&G was current with its obligations. Accordingly, on or about June 7, 2004, Alex and H&G closed the sale of the Villa Property. Upon Icenhower's instruction, Alex transferred the purchase price for the property to the following third-party entities: (1) $675,000 to Buckeye International Funding, Inc.; (2) $398,663 to Western Financial Assets, Inc. and (3) $191,567 to Icenhower Investments, via a bank account controlled by Icenhower's brother, Hobart Icenhower. Id. at ¶¶37-39. Because Alex and Martha are Mexican citizens, they may hold legal title to the Villa Property, not merely a beneficial interest. Therefore, they did not merely obtain an assignment of the ficeicomiso trust from H&G. Rather, the Banco Nacional de Mexico, S.A. conveyed legal

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title to the Villa Property directly to the Diaz Family by way of an Escritura dated August 5, 2004 (the "Diaz Escritura"), and the fideicomiso trust was dissolved and terminated. The Diaz Family paid approximately $1.4 million for the Villa Property. According to an appraisal commissioned by the Bankruptcy Trustee in September 2004, the Villa Property was worth $1,284,209. D. The Avoidance Actions

On August 23, 2004, The Trustee commenced a fraudulent transfer action against H&G to avoid and recover the Debtors' transfer of their Villa Property Interest to H&G (the "Fraudulent Transfer Action"). The Trustee was unaware of the subsequent transfer of the Villa Property to the Diaz Family. Id. at ¶44. In February 2005, upon learning of the transfer, the Trustee amended the complaint to add the Diaz Family as defendants and also obtained injunctive relief restraining the Diaz Family from transferring or encumbering the Villa Property. Id. at ¶45. On August 3, 2006, the Trustee filed a second action against H&G and the Icenhowers seeking a determination that: (1) H&G was the alter ego of the Debtors; and (2) to substantively consolidate the Debtors and H&G nunc pro tunc to the date of filing of the bankruptcy petition (the "Alter Ego Action"). (The August 23, 2004 action and the August 3, 2006 actions are collectively referred to as the "Avoidance Actions"). Id. at ¶48. E. Kismet Enters The Picture

While the Icenhower bankruptcy was proceeding in the United States, two German property developers, Wolfgang and Dieter Hahn (the "Hahns"), purchased a majority shareholder interest in a Mexican Real Estate Company "Impulsora de Chamela" ("IC"). IC owns more than 350 hectares of land that completely surrounds the Villa Property. Through IC, the Hahns are developing a golf resort in Mexico called "Tambora". When completed, Tambora will surround the Villa Property, with Holes 2 through 5 of the golf course wrapping around the property. The Villa Property is of tremendous strategic value to the Hahn Brothers and they desperately want to obtain it. However, the Villa Property has great sentimental value to the Diaz Family and they were unwilling to sell it to the Hahns.

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The Hahns were not going to give up that easily. Then, by a stroke of luck, they found a way to out-maneuver Alex and seize the Villa Property. Ironically, Alex himself informed the Hahns of the Lonie Creditors' claims against the Icenhowers, the bankruptcy and the existence of the Avoidance Actions. By virtue of Alex's unwitting disclosures, these two German citizens came up with a scheme to use the United States Bankruptcy Court to accomplish their goal to wrest a home located in Mexico from its reluctant Mexican citizen owners. In July 2006, because the Hahns are not U.S. citizens, they set up two shell Delaware corporations, Kismet Acquisitions, LLC and Kismet Acquisitions II, LLC ("Kismet"), to gain access to the bankruptcy court. They convinced the Lonies to sell Kismet their $1,385,950.65 claim arising from the district court litigation. Next, they entered into an agreement with the Trustee on behalf of Kismet, to purchase the Avoidance Actions (the "Purchase Agreement"). In return for the Avoidance Actions, Kismet agreed to pay an amount sufficient to pay all creditors in full, except for Kismet's own claim, which it agreed to subordinate to those of the other creditors. On December 7, 2006, the Court entered an order approving the Purchase Agreement. (See, RJN Exh. 2, Order Approving Sale of Assets and Exh A thereto.) F. Pre-Trial Rulings And The Judgment

On November 29, 2006, the Diaz Family filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction and Failure to State a Claim or, in the Alternative, to Abstain. See Docket # 183-187. The basis for the motion was the Bankruptcy Court's lack of subject matter jurisdiction to determine real property rights in Mexico and the strong policy considerations involved in deciding issues related to Mexican real property which require abstention on the grounds of international comity. On February 13, 2007, the Bankruptcy Court issued its order denying the Diaz Family's jurisdictional challenge. On April 21, 2008, the Bankruptcy Court conducted a four-day bench trial of the Avoidance Actions. On June 2, 2008, the Bankruptcy Court entered judgment against the Diaz Family and its Findings of Fact and Conclusions of Law in support of the Judgment. (See RJN Exh. 1). Preliminarily, the Bankruptcy Court found that Kismet is entitled to Judgment on its claims in the Alter Ego Action. Therefore, according to the Bankruptcy Court's judgment, the 7
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Villa Property is property of the estate, permitting it to rule that the transfer to the Diaz Family is avoidable under 11 U.S.C. § 549 as an unauthorized post petition transfer. Id. at 80-83. The Bankruptcy Court went on to rule that alternatively, Kismet is entitled to judgment on the Fraudulent Transfer Action in that the Debtors' transfer of the Villa Property to H&G is avoidable under 11 U.S.C. § 544(A), pursuant to California law and that recovery of the Villa Property from the Diaz Family is permitted pursuant to 11 U.S.C. § 550(A)(2). Id. at 26-33. As indicated in the Bankruptcy Court's Amended Consolidated Judgment, the Bankruptcy Court provided Kismet at its sole option, the following remedies: *** (e) Plaintiff is entitled to recover and preserve pursuant to 11 U.S.C. § 550(a)(1) and § 551 the Villa Property from the Diaz Defendants as the initial transferees of the avoided postpetition transfer. Within ten days of entry of this judgment, Defendants are hereby ordered and directed to take all actions necessary to execute and deliver any and all documents needed to undo the avoided transfer, and to take all actions necessary to cause the property to be reconveyed to a fideicomiso trust naming Plaintiff as the sole beneficiary for the benefit of the bankruptcy estate; or (f) Alternatively, at Plaintiff's sole option made upon proper noticed motion, the Court reserves jurisdiction to enter a monetary judgment in favor of Kismet, and against Defendants, in an amount necessary to make the estate whole at the time of judgment. 2. Alternatively, even if the Villa Property is not property of the bankruptcy estate nunc pro tunc to the petition date, judgment is entered in favor of Plaintiff and against the Defendants on the remaining claims in the amended complaint in adversary proceeding 04-90392. It is hereby adjudged and decreed that ­ *** Plaintiff is entitled to recover and preserve pursuant to 11 U.S.C. §§ 550(a)(1) and (a)(2) and § 551 the avoided fraudulent transfer from H&G as the initial transferee of the avoided fraudulent transfer, and from the Diaz Defendants as the "immediate or mediate" transferees of the initial transferee. Within ten days of entry of this judgment, Defendants are hereby ordered and directed and execute and deliver any and all documents needed to undo the avoided transfer, and to take all actions necessary to cause the property to be reconveyed to a fideicomiso trust naming Plaintiff as the sole beneficiary for the benefit of the bankruptcy estate; (b) Alternatively, at Plaintiff's sole option made upon proper noticed motion, the Court retains jurisdiction to enter a monetary judgment in favor of Kismet, and against Defendants, in an amount necessary to make the estate whole at the time of judgment. 8
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3. The Court reserves for future determination made upon proper motion the issues of an award of fees and expenses, and it reserves jurisdiction to issue any and all orders necessary to carry out and enforce this judgment. (See RJN, Exh. 3, Amended Consolidated Judgment dated July 30, 2007, Exhibit A. III. THE DIAZ FAMILY IS ENTITLED TO A DISCRETIONARY STAY WITHOUT A BOND Federal Rules of Procedure 7062 and 8005 establish the procedure to be followed by an appellant seeking to stay a judgment of the bankruptcy court. Bankruptcy Rule 7062 provides that Federal Rule of Civil Procedure Rule 62 is applicable in adversary proceedings, and Bankruptcy Rule 8005 enables the bankruptcy court and the district court to tailor relief to the unique circumstances of the case, "[n]otwithstanding Rule 7062," by making any "appropriate order during the pendency of an appeal on such terms as will protect the rights of all parties in interest." In re Trans World Airlines, Inc., 18 F.3d 208, 212 (3rd Cir. 1994). The court has discretion to grant a stay pending appeal under Bankruptcy Rules 8005 and 7062 and it need not require the posting of a bond. In re Suprema Specialties, Inc., 330 B.R. 93, 96 (S.D.N.Y. 2005) A motion for a discretionary stay under Rule 8005 is evaluated under standards similar to that of a motion for preliminary injunction. Hughes v. Arnod, No. 2:08-00490 JAM, 2008 WL 2169511, at *1 (E.D. Cal. May 22, 2008); Lynch v. California Public Utilities Com'n, No. C-040580, 2004 U.S. Dist. LEXIS 6022, at *6 (N.D. Cal. April 9, 2004). Therefore, an appellant must show: "(1) a likelihood of probable success on the merits and the possibility of irreparable injury; or (2) that serious questions going to the merits are raised and the balance of hardships tips sharply in its favor." Id. at *6; Southwest Voter Registration Education Project v. Shelley, 344 F.3d 914, 917 (9th Cir.2003). Alternatively, "[s]ome courts employ a slightly modified version of this test when evaluating a Rule 8005 motion to stay, finding that appellants must show that: (1) appellants are likely to succeed on the merits of the appeal; (2) appellants will suffer irreparable injury; (3) no substantial harm will come to appellees; and (4) the stay will do no harm to the public interest." Lynch v. California Public Utilities Com'n, 2004 U.S. Dist. LEXIS 6022, at *6; In re Wymer, 5 B.R. 802, 806 (9th Cir. 1980). Under either method, "the relative 9
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hardship to the parties is a `critical element' in determining whether a stay is warranted." Id.; Lopez v. Heckler, 713 F.2d 1432, 1435 (9th Cir.1983). In this case, the Diaz Family can satisfy each of these elements. As dicussed below, the Diaz Family will likely succeed on the merits of the appeal. The Diaz Family will suffer irreparable injury if it is forced to relinquish its home. Kismet intends to demolish the Villa Property which could potentially deprive the Diaz Family of its appellate rights altogether by mooting the appeal. The issuance of the stay would not substantially injure Kismet and the stay would be in the public interest. Accordingly, the Court should issue a stay pending appeal of the Judgment. A. Standard of Review

This Court should apply a pure de novo determination of whether or not a stay is warranted. Rule 8005 allows a district court to issue a stay independently of any determination made by the Bankruptcy Court. In re Ernst Home Center, 221 B.R. 243, 248 (9th Cir. BAP 1998). Therefore, even though the Bankruptcy Court initially denied a stay to the Diaz Family, this Court may independently review such denial de novo. B. The Diaz Family Will Likely Succeed On The Merits

Likelihood of success is not certainty of success. In re Forty Eight Insulations, Inc., 115 F.3d 1294, 1301 (7th Cir. 1997) (citing Michigan Coalition of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir. 1991).) The necessary "level" or "degree" of

possibility of success will vary according to the court's assessment of the other stay factors. Mohammed v. Reno, 309 F.3d 95, 101 (2d Cir. 2002). The requisite showing of substantial possibility of success is inversely proportional to the amount of irreparable injury defendants will suffer absent the stay. Id. (quoting, Michigan Coalition of Radioactive Material Users, 945 F.3d at 153.) The movant need not always show a `probability of success' on the merits; instead, the movant need only present a substantial case on the merits when a serious legal question is involved and show that the balance of the equities weighs heavily in favor of granting the stay." LaRouche v. Kezer, 20 F.3d 68, 72-73 (2d Cir. 1994).

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The Diaz Family is likely to succeed on the merits. This Appeal will raise important issues regarding the subject matter jurisdiction of the bankruptcy court and whether the judgment can stand given its direct impact on real property owned by Mexican citizens in Mexico and Mexico's strong policy against allowing foreign powers to decide issues affecting ownership of real property in Mexico. The Diaz Family raised these issues before the Bankruptcy Court in its Motion to Dismiss in January 2007. On January 17, 2007, the Court posted its tentative decision denying the Motion. (RJN Exh. 4, Tentative Decision). For the purpose of its tentative ruling, the court adopted Kismet's theory of the case at that time--i.e. that there was an initial transfer of the Villa Property from Icenhower to H&G and a subsequent transfer from H&G to the Diaz Family. In so doing, the court was able to insulate itself from the issues raised in the Motion by focusing only on the initial transfer from Icenhower to H&G. The court found that the Diaz Family had "incorrectly focuse[d] on transfers that occurred after Debtor fraudulently conveyed his beneficial interest to H&G". With respect to the Diaz Family's claims of lack of subject matter jurisdiction, the court stated "we look to the initial transfer to determine whether we have jurisdiction, not the later transfers." There is no

jurisdictional challenge to the initial tranfers." Finally, with respect to the presumption of extraterritoriality vis a vis avoidance actions the court found that "the presumption against extraterritoriality is not implicated by this complaint. Once we re-focus our attention to the correct transfer (between debtor and H&G) . . ." At the hearing on the Motion the following day, the court conceded that the arguments set forth in the Motion may have had some merit if the court were to focus on the latter transfer--i.e. the transfer from H&G to the Diaz Family. The court stated: "You don't understand, Mr. Van Derhoff, . . . what the court is saying is the arguments that you made might have some currency, some purchase [sic.] [purpose?] in this case were the first transaction [with] your client [the Diaz Family] . . ." (RJN Exh. 5, Excerpt from Reporter's Transcript of Hearing dated 1/18/08). The court's emphasis on the initial transfer is significant because, for the purpose of the Judgment, the court determined that:

11
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H&G is the alter ego of the Debtors, nunc pro tunc to the petition date. The assets of H&G are hereby substantively consolidated with the assets of the bankruptcy estate nunc pro tunc to the petition date.

In other words, the judgment collapsed the Debtors and H&G into one entity. Therefore, for the purpose of the issues raised in the motion to dismiss, which the Diaz Family will now raise on appeal, there was no initial transfer from Icenhower to H&G. There was only one transfer--the one from H&G/Icenhower to the Diaz Family. Thus, this Court must focus on that transfer for the purpose of the appeal and, as the bankruptcy court conceded, the issues raised in the Motion to Dismiss--i.e. subject matter jurisdiction, extraterritoriality and international comity may well have merit in the context of that transfer. 1. This Court Lacks Subject Matter Jurisdiction to Determine Real Property Rights in Mexico. The judgment in this case strips Mexican citizens (the Diaz Family) of title to their real property in Mexico and orders them to execute the necessary conveyance documents to transfer it to someone else. The United States courts have long respected the sovereignty of foreign nations and have long held that courts in the United States lack the subject matter jurisdiction to effect change of ownership of real property located in foreign countries. (a) Title to Real Property Can only Be Decided by a Court in the Jurisdiction Where the Property is Located. For nearly two hundred years, the Supreme Court has firmly held that issues affecting title to real property are "local actions" and can be decided only by a court in the jurisdiction where the real property is located. This fundamental principle of law was first established in the United States in Livingston v. Jefferson, 15 F. Cas. 660 (C.C.D. Va.1811) (No. 8411).2 Following Livingston, the Supreme Court has consistently recognized that a local action must be brought within the state where the land is located. See, e.g., Louisville & N.R.R. v. Western Union

The local action doctrine is much older and dates back at least seven hundred years to the Court of Common Pleas in England in the thirteenth century. Keller v. Malice, 838 F.Supp. 1163, 1169 n. 1 (D. S.D. Tex. 1993). 12
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Telegraph Co., 234 U.S. 369 (1914); Ellenwood v. Marietta Chair Co., 158 U.S. 105, 107 (1895); Casey v. Adams, 102 U.S. (12 Otto) 66, 67-68 (1880). As the Supreme Court stated in Casey v. Adams," [t]he distinction between local and transitory actions is as old as actions themselves . . . Local actions are in the nature of suits in rem, and are to be prosecuted where the thing on which they are founded is situated." Casey v. Adams, 102 U.S. at 67-68. Indeed, the local action rule is so fundamental that state courts are not obligated to give full faith and credit to judgments from either federal or state courts sitting outside the local state's territorial boundaries. See Clarke v. Clarke, 178 U.S. 186, 190 (1900) (Connecticut courts are not required to give full faith and credit to a judgment of the South Carolina Supreme Court concerning the construction of a will which affected the passing of title to land situated in Connecticut). (b) U.S. Courts Particularly Lack Jurisdiction to Determine Real Property Rights in Foreign Countries. U.S. Courts in general, and bankruptcy courts in particular, do not have jurisdiction to determine property rights in foreign countries. In Oakey v. Bennett, 52 U.S. 33 (1850), the Supreme Court held that the bankruptcy court in the United States had no jurisdiction to convey real property located in another country, stating: A statutable conveyance of property cannot strictly operate beyond the local jurisdiction. Any effect which may be given to it beyond this does not depend upon international law, but the principle of comity; and national comity does not require any government to give effect to such assignment, when it shall impair the remedies or lessen the securities of its own citizens. Id. at 44-45. The Supreme Court emphasized that no country may determine property rights of real property located in other countries, stating: It is believed that no sovereignty has, at any time, assumed the power, by legislation or otherwise, to regulate the distribution or conveyance of real estate in a foreign government. There is no pretence that this government, through the agency of a bankruptcy law, could subject the real property in Texas, or in any other foreign government, to the payment of debts. This can only be done by the laws of the sovereignty where such property may be situated. Id. at 45. Other courts have likewise held that U.S. courts have no jurisdiction to determine property rights with regard to real property located in foreign countries. In Holt v. Guerguin, 163 13
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S.W. 10 (1914), the Supreme Court of Texas addressed the issue of whether a court in Texas had the power to annul deeds to property located in Mexico. The grantors, both deceased, had executed a deed to real property located in Mexico to their daughter. The lower court annulled the deed on the grounds of fraud and undue influence. The Supreme Court reversed on the grounds that the court lacked jurisdiction to affect title to land located in Mexico, stating: We are of opinion that so far as the decree in this case sets aside and annuls the deed to the land in the Republic of Mexico it is void, because the District Court had no jurisdiction of the subject matter; the court of Texas could not acquire jurisdiction of land beyond its borders. (Citations omitted.) The District Court at San Antonio also appointed commissioners and directed them to partition the land between the plaintiffs and defendants. That portion of the decree is likewise void because the courts of this State have no power or authority over land in Mexico. Id. at 12. The prohibition on the determination of property rights in foreign countries has as much vitality today as it did when the Oakey case was decided. In Asociacion De Reclamantes, v. United Mexican States, 735 F.2d 1517 (DC Cir. 1984), Justice Scalia, held that U.S.Courts lacked subject matter jurisdiction to determine property rights in Mexico. Justice Scalia wrote: The origin of the traditional exception limited to questions involving property interests or possession is self-evident. A territorial sovereign has a primeval interest in resolving all disputes over use or right to use of real property within its own domain. As romantically expressed in an early treatise: A sovereignty cannot safely permit the title to its land to be determined by a foreign power. Each state has its fundamental policy as to the tenure of land; a policy wrought up in its history, familiar to its population, incorporated with its institutions, suitable to its soil. Id. at 1521. Here, the Bankruptcy Court has reasoned that it is not determining real property rights in Mexico--it is merely using its in personam jurisdiction over the Diaz Family in conjunction with its contempt powers to coerce the Diaz Family to do what it would otherwise be prohibited from doing under Mexican law. This is form over substance. Whichever way it is characterized, the court has improperly exercised subject matter jurisdiction to affect title to the Villa Property.

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Sections

Extraterritorially. "Legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Equal Employment Opportunity Comm. v. Arabian American Oil Co., 499 U.S. 244, 248 (1991) ("Aramco"); Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285 (1949); In re Maxwell Commc'n Corp., 170 B.R. 800, 809 (S.D.N.Y. 1994). The presumption "serves to protect against unintended clashes between our laws and those of other nations which could result in international discord." Aramco, 499 U.S. at 248 (citing McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 20-22 (1963). Moreover, the presumption recognizes that Congress is primarily concerned with domestic conditions when it legislates. Aramco, 499 U.S. at 43 (citing Foley Bros., Inc., 336 U.S. at 285). Congress did not intend for the Bankruptcy Code avoidance sections to apply extraterritorially. In In re Maxwell Communication Corporation, 186 B.R. 807 (S.D.N.Y 1995), the court held that the preference avoidance statute set forth in Bankruptcy Code section 547 was inapplicable to a foreign transfer of funds because Congress did not intend the statute to apply to transfers occurring outside the United States. The court stated: The Supreme Court has stated that "when it desires to do so, Congress knows how to place the high seas within the jurisdictional reach of a statute." Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 440, 102 L. Ed. 2d 818, 109 S. Ct. 683 (1989). Because Congress has not "clearly expressed" its desire that § 547 govern extraterritorial conduct, see Aramco, 499 U.S. at 248, that section cannot apply to the foreign transfers at issue in this case. Id. at 821. In Barclay v. Swiss Finance Corporation Limited (In re Midland Euro Exchange et al), 347 B.R. 708 (Bankr. C.D. Cal. 2006), the court held that Congress did not intend Bankruptcy Code Section 548 governing fraudulent transfers to apply extraterritorially. In that case, a chapter 7 Trustee brought an action to set aside and recover allegedly fraudulent transfers paid by the debtor to a foreign exchange brokerage. The defendant filed a motion to dismiss the

complaint, arguing that Congress did not intend Bankruptcy Code section 548 to apply

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extraterritorially and that the Court should abstain from exercising jurisdiction on the grounds of international comity. The court found that nothing in the Bankruptcy Code indicated congressional intent to apply Section 548 extraterritorially. Id. at 717. It acknowledged that, while policy considerations may favor extraterritorial application of Section 548, such policy considerations are insufficient to overcome the presumption against extraterritorial application of U.S. statutes, stating. These policy considerations, however, must be balanced against the presumption against extraterritoriality, which serves to protect against unintended clashes between our laws and those of other nations which could result in international discord. See E.E.O.C. v. Arabian American Oil Co., 499 U.S. 244, 248, 111 S. Ct. 1227, 113 L. Ed. 2d 274 (1991). The Ninth Circuit has held that policy considerations alone are insufficient to overcome the presumption against extraterritoriality. See Subafilms, Ltd. v. MGM-Pathe Communications Co., 24 F.3d 1088, 1096 (9th Cir. 1994) (en banc). Id. at 718. Thus the court held that the trustee could not pursue his claims under that statute. Similarly, here, there is no evidence of congressional intent to extend the application of

13 the avoidance statutes extraterritorially. Moreover, the Mexican Ministry of Foreign Affairs 14 actually wrote a letter to the Bankruptcy Court on November 28, 2007, articulating its concerns 15 that the court was trampling on Mexican Constitutional Law. (See, RJN Exh. 6, Letter from the 16 Mexican Ministry of Foreign Affairs dated December 14, 2007). Therefore, not only was it 17 legally improper to apply U.S. Bankruptcy Code avoidance statutes to a transfer of real property 18 which occurred in Mexico and pursuant to Mexican law but there is irrefutable evidence that the 19 Bankruptcy Court's exercise of subject matter jurisdiction over the Villa Property has caused the 20 very international discord that the Supreme Court cautioned against. Bankruptcy Code avoidance 21 statutes simply should not apply to the transfer in this case because it occurred outside the 22 territorial limits of the United States. 23 3. 24 International Comity Doctrine and Mexico's Calvo Doctrine. 25 The decision in this case essentially strips Mexican citizens of their title to land in Mexico 26 which they legally acquired, in Mexico, pursuant to Mexican law. Mexico has a strong policy 27 against allowing foreign powers to decide issues affecting ownership of real property in Mexico, 28 and particularly involving Mexican residents. Moreover, Mexico's fraudulent conveyance law is 16
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different from U.S. law and would not have permitted the avoidance as ordered in this case. The bankruptcy court erred in refusing to abstain from entertaining the causes of action against them under the doctrine of international comity. Most particularly, the specific remedy requiring that the Villa Property be conveyed goes too far and impinges upon the exclusive jurisdiction of a foreign country. Under the International Comity Doctrine, courts defer to the laws or interests of a foreign country and decline to exercise jurisdiction that is otherwise properly asserted. Sarei v. Rio Tinto, PLC, 456 F.3d 1069,1086 (9th Cir. 2006). International comity is a canon of construction based on the principal that "An act of congress ought never to be construed to violate the law of nations if any other possible construction remains." Hartford Fire Ins. Co. v. California, 509 U.S. 764, 814-15 (1993)(Scalia, J., dissenting). It is also a discretionary act of deference by a national court to decline to exercise jurisdiction in a case properly adjudicated in a foreign state. In re Maxwell, 93 F.3d 1036 (2d Cir. 1996). Mexico has a strong policy against allowing foreign powers to decide issues affecting ownership of real property in Mexico. Moreover, Mexico's fraudulent conveyance law is

different from U.S. law and would not permit the avoidance ordered in this case. Accordingly, this Court should have abstained from entertaining the causes of action against the Diaz Family under the doctrine of international comity. (a) Mexico Has a Strong Policy Against Allowing Foreign Powers to Decide Issues Related to Mexican Real Property. Article 27 of the Mexican Constitution contains the Calvo doctrine, pursuant to which the Mexican State may grant to foreigners the same right conferred to Mexican nationals of acquiring real property: provided they agree before the Ministry of Foreign Relations to consider themselves as nationals in respect to such property, and bind themselves not to invoke the protection of their governments in matters relating thereto; under penalty, in case of noncompliance with this agreement, of forfeiture of the property acquired to the Nation. Mexican Constitution, Article 27.3 Article 773 of the Mexican Federal Civil Code provides:
3

An English translation of Article 27 is attached as Appendix "A" to RJN Exh. 7, Memorandum of Points and Authorities in Support of Motion to Dismiss for Lack of Subject Matter Jurisdiction 17
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All foreign individuals and corporations are required to observe the provisions of Article 27 of the Constitution of the United Mexican States and its organic laws and rules upon acquiring real property within the Mexican republic. Mexican Federal Civil Code, Article 773. Id. at Appendix "B" (Mexican Civil Code Annotated, Jorge A. Vargas, West Group Publishing 2005 ed.). Each of the escrituras (deeds under Mexican law) in the chain of title to the Diaz's real property that created the rights of the Debtors, H&G, and the Diaz Family contained that title to Mexican real estate be controlled only by Mexican law and Mexican courts. For example, the escritura for the transfer from the Debtor to H&G states: -- JURISDICTION AND COMPETENCE -- For everything relative to the Interpretation and compliance of this agreement, the parties expressly submit to the Laws and Tribunals of the City of Guadalajara, Jalisco or Mexico, Federal District at the option of the Trustee, waiving any other jurisdiction that due to their addresses they would currently have or in the future; they also accept to be considered as Mexicans, in regards to the rights derived from this agreement, and that they will not invoke therefore the protection of their Government, in case of breaching this agreement, they would forfeit in favor of Mexico, the rights acquired. See RJN, Exhibit 8, Declaration of Fletcher W. Paddison, dated November 29, 2006, at Exhibit "3" (emphasis added). The strong overriding policy under Mexican law, as embodied in Mexico's Constitution, that issues regarding Mexican real property be decided only under Mexican law and only by Mexican courts, should have guided the Judgment in this case. Instead, the Judgment awards coastal property located in Mexico and owned by Mexican citizens to Kismet, a shell corporation set up by German Citizens to gain access to the U.S. Court System, which was unsuccessful in otherwise purchasing the Villa Property. The use of the laws and the courts of the United States by foreign nationals to involuntarily strip their Mexican neighbors of their land in Mexico, something that they could never do under the Mexican Constitution, is improper. This use of the laws and courts of a foreign coun