Free Appellee's Brief - District Court of California - California

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Charles P. Maher, State Bar No. 124748 LUCE, FORWARD, HAMILTON & SCRIPPS LLP Rincon Center II, 121 Spear Street, Suite 200 San Francisco, California 94105-1582 Telephone No.: 415.356.4600 Fax No.: 415.356.4610 Attorneys for Appellee Andrea A. Wirum, Successor-in-Interest to Charles E. Sims, as Chapter 7 Trustee

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

In Re RAMIN YEGANEH, Debtor, RAMIN YEGANEH, Appellant, v. ANDREA A. WIRUM, TRUSTEE, Appellee.

Case No. 4:08-cv-01816 CW

APPELLEE'S BRIEF

Appellee Andrea A. Wirum, Chapter 7 Trustee in Bankruptcy (the "Trustee"), hereby submits her appellee's brief.

APPELLEE'S BRIEF

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. II. III. IV. V. VI.

TABLE OF CONTENTS

Page

BASIS OF APPELLATE JURISDICTION...................................................... 1 ISSUE PRESENTED ON APPEAL ................................................................. 1 STANDARD OF REVIEW............................................................................... 1 SUMMARY OF THE TRUSTEE'S OPENING BRIEF .................................. 1 STATEMENT OF FACTS................................................................................ 3 ARGUMENT .................................................................................................... 6 A. B. C. Probability of Success............................................................................. 6 Complexity, Expense, and Delay.......................................................... 11 Paramount Interest of Creditors ............................................................ 11

VII. CONCLUSION ............................................................................................... 11

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CASES

TABLE OF AUTHORITIES
Page(s) In re A&C Properties, 784 F. 2d 1377, 1380 (9th Cir. 1986) .......................................................... 1 In re A&C Properties, 784 F. 2d 1377, 1381 (9th Cir. 1986) ...................................................... 1, 6 Segura v. McBride, 5 Cal. App. 4th 1028, 1038 7 Cal. Rprt. 436 (First Dist. 1992) ...................... 9 Sigma Micro Corp. v. Healthcentral.com (In re Healthcentral.com), 504 F.3d 775 (9th Cir. 2007)...................................................................................................... 1 STATUTES 28 U.S.C. § 158 ............................................................................................................................... 1 Cal. Bus. & Prof. Code § 17200.................................................................................................. 4, 7 Cal. Civ. Code § 1695 ................................................................................................................. 4, 7 Cal. Civ. Code § 1695.3(a).......................................................................................................... 6, 8 Cal. Civ. Code § 1695.3(h) ............................................................................................................. 8 Cal. Civ. Code § 1695.6 .................................................................................................................. 8 Cal. Civ. Code § 1695.6(b)(3)....................................................................................................... 10 Cal. Civ. Code § 1695.7 ................................................................................................................ 10 Cal. Civ. Code § 1695.13 .............................................................................................................. 10 Cal. Civ. Code § 1695.14(d) ......................................................................................................... 10 Cal. Civ. Code § 2945.1 .............................................................................................................. 4, 7 Federal Rule of Bankruptcy Procedure 8001 .................................................................................. 1

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I.

BASIS OF APPELLATE JURISDICTION This Court has subject matter jurisdiction over this appeal pursuant to 28 U.S.C. § 158 and

Federal Rule of Bankruptcy Procedure 8001. II. ISSUE PRESENTED ON APPEAL The issue on appeal is whether the Bankruptcy Court abused its discretion when it authorized the Trustee to compromise the amount and priority of the claim of Robert and Alyssa Scott in the above case over the objection of the Debtor. In approving the compromise, the Bankruptcy Court considered the evidence presented by the Trustee and the Debtor and found that the Trustee had demonstrated that the compromise was fair and equitable under the standards set forth in In re A&C Properties, 784 F. 2d 1377, 1381 (9th Cir. 1986). III. STANDARD OF REVIEW The Bankruptcy Court's findings of fact are reviewed for clear error, and the Bankruptcy Court's conclusions of law are reviewed de novo. E.g., Sigma Micro Corp. v. Healthcentral.com (In re Healthcentral.com), 504 F. 3d 775, 783 (9th Cir. 2007). The Bankruptcy Court's order approving the Trustee's application to compromise a controversy is reviewed for an abuse of discretion. In re A&C Properties, 784 F. 2d 1377, 1380 (9th Cir. 1986). IV. SUMMARY OF THE TRUSTEE'S OPENING BRIEF Robert and Alyssa Scott filed a general unsecured claim in the amount of $500,000. The claim was timely filed. The Scotts' claim was based on the alleged violation by the Appellant (Debtor Ramin Yeganeh, the "Debtor") of California's Home Equity Sales Contract Act and other unconscionable conduct when the Debtor purchased from the Scotts the equity in their residence when it was under threat of foreclosure. The Debtor contended from the outset that the Scotts' claim had no legal or factual basis and provided the Trustee with information and documents to support his position. The Trustee concluded that the Scotts' claim was overstated and had certain other deficiencies but was likely valid in a smaller dollar amount. The Trustee's informal attempts to negotiate a reduction in the amount of the claim were unsuccessful. Similarly unsuccessful were the Trustee's attempts to negotiate with the Debtor a reasonable claim amount which the Debtor could accept and which, in the long run, would

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result in avoidance of attorney fee expense. The Trustee objected to the Scotts' claim. The proof of claim itself was a single piece of paper; under applicable law, the proof of claim did not have "prima facie validity" because the writing on which it was based was not attached. When the Trustee objected to the Scotts' claim on this and other grounds, the Scotts presented documentary evidence in support of their claim. The Debtor's argument in the Bankruptcy Court and on appeal that the claim still does not have prima facie validity is incorrect and was made moot by the Scotts' filing of documents in support of the claim. The Trustee filed pleadings in response to the evidence the Scotts provided in support of their claim, engaged in some discovery, and ultimately agreed to a January 2, 2008, trial date. Immediately before trial, a settlement was reached; the agreement was read into the record in the Bankruptcy Court on January 2, 2008, and was subject to subsequent order of the Bankruptcy Court on notice to creditors and the Debtor. The result of the compromise was a $275,000 reduction in the amount of the Scotts' claim and a division of the remaining claim into two components with different priorities for payment: (a) a $100,000 unsecured claim entitled to pro rata payment with all other unsecured claims and (b) a lower priority $125,000 claim that will receive payment only after all general unsecured claims are paid in full. Considering the risks inherent in litigating the claim dispute and the associated cost, the Trustee considered the compromise to be fair and reasonable and in the best interest of the estate. At a trial, the Trustee would have to deal with certain damaging facts that no rational person could dispute. Other facts were disputed and at trial the Trustee would be forced to rely in part on testimony of the Debtor whose credibility has been subject to serous question. The Trustee considered it likely that the Debtor had violated certain aspects of California's Home Equity Sales Contract Act and that an adverse ruling on the objection was likely; the Trustee considered the real question to be the extent of damages caused by the Debtor and the amount of the Scotts' allowed claim against the bankruptcy estate. The Trustee served on creditors a notice describing the compromise of the claim explaining her rationale for entering the compromise. No creditor objected. The Debtor did object and, in support of his objection, filed his own declaration and the declaration of his attorney. A hearing was

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held on the objection. The Bankruptcy Court clearly enunciated its findings of fact on the record, overruled the Debtor's objection, and approved the compromise. In the Debtor's opening brief, the Debtor fails to demonstrate any error by the Bankruptcy Court. He merely argues that his version of disputed facts is correct and reaches questionable conclusions based on that version of the facts. The Debtor does not demonstrate that the Bankruptcy Court made clear error in its findings of fact or abused its discretion in approving the compromise proposed by the Trustee. The Bankruptcy Court order should be affirmed. For the convenience of the Court, the Trustee has prepared and is filing with this opening brief an excerpt of record which contains excerpts of documents in the designated record. The references designated in this brief are to the excerpt of record and are identified as "ER" with corresponding page numbers. Cross-references to the designated record on appeal by Bankruptcy Court docket numbers are contained in the table of contents to the excerpt of record. V. STATEMENT OF FACTS The Debtor entered into an equity purchase agreement with Robert and Alyssa Scott to purchase the equity in the Property. [ER050 ­ 051]. The agreement is dated November 18, 2002. [ER050]. By grant deed executed on December 6, 2002, and recorded in the Official Records of Alameda County on December 6, 2002, the Scotts conveyed title to "R. Rad, a single man." [ER053]. After receiving title from the Scotts, the Debtor, using the "R. Rad" alias, conveyed title to an entity called "Allied Management Trust." [ER089: 25 - 90:2]. The Debtor paid approximately $164,000 for the Property. [ER006: 14], and the Trustee has inferred that the Debtor continues to believe that what he paid represented the fair market value at the time. The Scotts claimed that the value of the Property was $240,000 or more at the time of sale. [ER088: 27-28.] Based on the conclusion of her appraiser, the Trustee believed that the value of the Property at the time of sale was approximately $190,000. [ER088: 28 ­ 089: 1]. The Trustee anticipated that the Court would consider conflicting testimony on the value of the Property and could reach a valuation in the low $200,000 range. [ER089: 1-2]. Robert and Alyssa Scott filed a $500,000 general unsecured claim in this case based on "fraudulent foreclosure rescue." [ER009]. The Scotts had previously filed a complaint against the

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Debtor in Alameda County Superior Court. [ER084: 28 ­ 085: 2]. In the complaint, the Scotts alleged claims against the Debtor for violations of the California Home Equity Sales Contract Act (Cal. Civ. Code §§ 1695 et seq., "HESA"), Foreclosure Consultants Law (Cal. Civ. Code §§ 2945.1 et seq.), Unfair Business Practices Act (Cal. Bus. & Prof. Code §§ 17200 et seq.), fraud, and undue influence arising out of the Debtor's prepetition purchase from the Scotts of their primary residence (the "Property"). [ER020: 7-10]. [ER085: 3-7]. The Trustee filed an objection to the Scotts' claim in January 2007. [ER085: 7-8]. The Scotts filed an extensive opposition to the objection. [ER019: 19-21]. The Scotts disputed the primary facts that supported the Trustee's objection to their claim. [ER086: 10-19, ER088: 26 ­ 089: 25]. The Trustee filed an extensive response to the Scotts' opposition in September 2007 based on documents provided to the Trustee by the Debtor. [ER015 ­ 035, ER088: 3-7]. Trial was scheduled for January 2, 2008. [ER085: 9-10]. The Trustee conducted written discovery [ER085: 11-12], retained an appraiser and discussed with her the value of the Property [ER085: 14-16], and prepared for trial. The Trustee estimated that trial would take three or four days and cost the estate a considerable sum in attorneys fees. [ER090: 13-19]. Serious settlement discussions took place between the Trustee and the Scotts shortly before the scheduled January 2, 2008, trial date. An agreement was reached before the trial and counsel for the Trustee and the Scotts appeared in the Bankruptcy Court on the trial date and read the settlement terms into the record. [ER085: 20-21]. Under the requirements of the Bankruptcy Code, separate Court approval of the compromise on notice to creditors was a condition to Court approval. On January 15, 2008, the Trustee served notice of the compromise. [ER037-039]. No creditor objected, but the Debtor did object. A hearing on the objection was held on February 29, 2008. [ER091]. The Bankruptcy Court agreed with the Trustee's assessment of the probability of success on the merits, the expense of trial, and the best interests of the creditors and stated its findings on the record at the hearing: I'm going to approve the proposed compromise. I want to go through the A & C Properties factors. The first factor and the most important is whether this settlement is within the range of reasonableness with respect to the taking account of the amount at issue and

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the merits of the action. And I think that there are three things which make this settlement within the range of reasonableness. Number one, this statute is very unforgiving. It's a very robust statue that gives the very strong power to rescind a sale and to recover damages where the procedural requirements of the Home Equity Sales Act are not fully complied with. Number two, whether the Act is going to apply here, whether there's been a violation of the Act, is going to turn into a credibility contest between the applicants and the debtor. And the debtor's record of dealing with property and inconsistent statements is like -- that is a grown-up that has been demonstrated in these other adversary proceedings and which are likely admissible to show intent and lack of mistake are going to substantially handicap the debtor in such a credibility contest. The third is to go to trial would cost the estate substantial attorneys' fees. And if the estate loses they will pay not only their own fees for that trial but the Scotts' fees for that trial because of the fee-shifting statute. These are very, very substantial risks. I agree with the Trustee that it's -- from what I can see of this, that the Scotts' claim is overstated in amount. It looks, however, like it -- there's a substantial possibility that they would prevail to some damages and that the -- that there would -- that damages would not be insignificant, the attorneys fees would be recoverable and be significant. A second A & C factor is the difficulty of collection. I think both parties have correctly noted that that is not a factor in this case and does not -- not compel a settlement that would otherwise not be warranted. The third factor is cost and delay involved in trying the claim. I don't think delay is so much of a problem, unless there was an appeal. But the cost is for the reasons I've mentioned. It is a factual matter: it's a heavily-factual matter. There's enough at stake that the trial would require considerable discovery and two or three days of trial likely. And, again, there is a very distinct possibility the estate would bear the cost of both sides. And last is the wishes of creditors and other parties-in-interest. Now I don't think the Trustee has convinced me that the debtor, because of the fraudulent conveyances, has no possible interest in the proceeds. The case, Judge Weissbrodt's decision that you decided, talks about in pari delicto, but then also talks about Moore versus Bay, which brings it all back into the estate. It's very ambiguous as to whether it would have the effect of that the Trustee argues. The one thing that is clear, however, is that the creditors are -- clearly have an interest in this. And the debtor may have an interest in it. And none of the creditors have objected. And I think, looking at the pool of potential beneficiaries realistically, the creditors are the more important, and they have not objected to this. So under that analysis of the A & C Properties, the Trustee's judgment should be sustained and the settlement approved. The Trustee should be accorded authority to enter into this settlement.

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ER100-102. VI. ARGUMENT In evaluating a proposed compromise in a bankruptcy case, a court must determine whether the compromise is fair and reasonable. The Ninth Circuit has established a test for making this determination. The bankruptcy court must consider the following four factors: 1. 2. 3. The probability of success in the litigation; The difficulty, if any, to be encountered in collection; The complexity of the litigation involved and the expense, inconvenience, and delay

necessarily attending it; and 4. The paramount interest of creditors and proper deference to their reasonable views.

In re A&C Properties, 784 F. 2d 1377, 1381 (9th Cir. 1986). The primary factors for consideration of the compromise with the Scotts were the first and third: (a) the probability of success and (b) complexity, expense, and delay. A. Probability of Success

In the notice the Trustee served on creditors, the Trustee made the following statement: The Trustee believes that the probability of success is uncertain. The Trustee believes the Scotts will be unable to prove certain elements of their claim. The Trustee believes that the most serious question for the Court to consider is the element of damages the Scotts may have suffered. Based on appraisals of the property in question, the Trustee believes there is a strong likelihood that, if the Court found that the Debtor had violated the law, the Scotts would be able to demonstrate some damages, although not in the amount they sought in their proof of claim. The negotiated reduction brings certainty to the amount of damages and the amount and category of the Scotts' claim. ER038. The Debtor correctly points out in his opening brief that the Trustee's initial position on the Scotts' claim was a strong challenge to its validity. [ER:011-013]. The position was based on information provided primarily by the Debtor, including documents [ER088: 3-7], the credibility of the Debtor [ER087: 19-22], and a belief that the dates of documents were accurate. The Trustee's initial position required the Trustee to discount two problems: (a) that the Debtor had paid fair market value for the Property or close to fair market value [ER030: 2-4]; and (b) that the Debtor's use of an

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alias when he purchased the Property did not violate Section 1695(3)(a) of the California Civil Code. [ER029: 1-2]. Other problems with the Debtor's story came to light, creating further factual disputes and increasing doubts about the probability of success. [ER088: 9-15]. At all times, the Trustee was concerned about the Debtor's credibility as a witness [ER087: 15-22], particularly because the Debtor would have to be the Trustee's primary witness in support of the objection. In considering the probability of success in litigation over the validity of the Scotts' claim, the Trustee reviewed the legal arguments the Scotts had presented in favor of their claim as well as the arguments the Trustee had articulated in a pleading filed in the Bankruptcy Court on September 10, 2007, in furtherance of her objection to the Scotts' claim; the Debtor incorporated this pleading in his opposition to the compromise and included it in the record on appeal [ER015-035]. Before she proposed the compromise, the Trustee took the position in her objection to their claim that the Scotts had presented insufficient evidence to support claims against the Debtor under the California Foreclosure Consultant Law or the Unfair Competition Law. The Trustee

acknowledged that whether her position on these two specific claims would be accepted by the Court at trial was an open question. The Trustee acknowledged that the Foreclosure Consultant Law (Cal. Civ. Code §§ 2945.1 et seq.) might be broad enough to cover the acts of the Debtor and the Debtor would be found to have violated that law. The Trustee was confident in her position that the Scotts would be unable to demonstrate that the Debtor had violated California's Unfair Competition Law (Bus. & Prof. Code §§ 17200 et seq.). The Scotts also alleged that the Debtor was liable to them for common law fraud. The documents the Scotts filed in response to the Trustee's objection did not state with sufficient specificity the facts giving rise to the alleged fraud. However, the Trustee acknowledged that it was possible that, at trial, the Scotts might be able to prove with sufficient evidence that the Debtor had defrauded them and that their pleadings would be amended to conform with proof. The Trustee was most concerned about the primary theory of liability asserted by the Scotts: alleged violation of the Home Equity Sales Contract Act (Section 1695 et seq. of the California Civil Code). The Home Equity Sales Contract Act ("HESA") imposes restrictions on persons seeking to purchase equity in homes that are in foreclosure and imposes penalties for violations of those

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restrictions. The Scotts alleged numerous violations of HESA. Included among them were two the Trustee challenged: (a) the Debtor required that the Scotts execute and deliver the grant deed before the statutory cancellation period had elapsed (Civil Code §1695.6); and (b) the Debtor recorded the grant deed before the statutory cancellation period had elapsed (Civil Code §1695.6). [ER027-029]. The Trustee's original position in September 2007 that these two allegations were false was based on information provided by the Debtor in which he asserted that (a) the Equity Purchase Agreement had been executed on November 18, 2002, (b) the statutory cancellation period expired on November 25, 2002, and (c) the grant deed had been executed on December 6, 2002. The Scotts have directly contradicted these "facts," and have asserted in declaration and elsewhere that the Equity Purchase Agreement was not executed on November 18, 2002, but at a later date, and was back-dated by the Debtor. In a declaration filed by another creditor, Nicole Wilkins, Ms. Wilkins has corroborated the Scotts' assertions, stating that the Equity Purchase Agreement was executed by the Scotts in her presence on December 6, 2002, the day on which the grant deed was executed and recorded. [ER088: 8-10]. If the Scotts and Ms. Wilkins are telling the truth, the Debtor violated three important HESA provisions. At the very least, there was a serious factual dispute and uncertainty over whose testimony the Court would believe. In her objection to the Scotts' claim, the Trustee also characterized as false the Scotts' allegation that no written notice had been given to the Scotts informing them of their right to refrain from signing any instruments of conveyance until the statutory cancellation period had elapsed (Civil Code §1695.3(h)). The declaration of the Scotts and the declaration of Ms. Wilkins call into question the veracity of the Debtor's story on this point. A factual dispute exists about whether there was proper notice to the Scotts of their right to refrain from signing conveyance documents before the cancellation period expired. There is no question that the Debtor did not provide the Scotts with the "name, business address, and telephone number of the purchaser" as required by Section 1695(3)(a) of the Civil Code. He used a false name "R. Rad" when he signed the agreement.

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There are serious questions about the Debtor's veracity and credibility that only the Debtor can ignore. The Bankruptcy Court made a comment about the Debtor's lack of credibility that underscored the Trustee's deep concerns about using him as her primary witness at trial: [T]he debtor's record of dealing with property and inconsistent statements ... that has been demonstrated in these other adversary proceedings and which are likely admissible to show intent and lack of mistake are going to substantially handicap the debtor in such a credibility contest. ER100: 022-101:2. On the question of liability, therefore, several damaging facts could not be disputed in good faith and serious disputes existed about others. The Trustee had to recognize the risk that the Court would disbelieve the Debtor's testimony in favor of the Scotts. As the Bankruptcy Court noted, whether HESA was violated would be determined by a credibility contest between the Debtor and the Scotts [ER100: 19-21]. Recognizing the risk of an adverse ruling on liability, the Trustee had to reckon with the question of damages. Under HESA, compensatory damages comprise lost equity at the date of the alleged violation and lost appreciation. The Debtor claimed that he had paid fair market value. The Scotts claimed that the Property was worth at least 50 percent more than the Debtor paid. The Trustee retained an appraiser to evaluate the Property and testify as her expert witness. The appraiser attributed a value of $190,000 to the Property at the sale date resulting in damages for lost equity of $26,000. As explained below, that sum could be trebled. A finding of liability and resulting damages could also result in an award of attorney fees. The Scotts hired their own appraiser who attributed a slightly higher value. The Trustee concluded that there was a significant risk the Bankruptcy Court would have found the $26,000 difference between fair market value and what the Debtor actually paid to be a violation of HESA. The Scotts claimed damages for lost appreciation in the years since the sale closed. Under HESA, a seller seeking damages for lost appreciation must include proof that it would have had a colorable chance of holding on to the property to realize the appreciation. Segura v. McBride, 5 Cal. App. 4th 1028, 1038 7 Cal. Rprt. 436 (First Dist. 1992). The Trustee believed it was unlikely the Scotts would be able to demonstrate that they could have held on to the Property to realize the

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appreciation, but acknowledged risk the Scotts could sustain their burden. Treble damages was also a concern to the Trustee. Section 1695.7 of the Civil Code provides treble damages for (a) transactions found to be unconscionable (Civil Code §1695.13) and (b) transactions followed by subsequent transfer or encumbrance of the property (Civil Code §1695.6(b)(3)). The Trustee believed there was a substantial risk that treble damages would be available under either alternative. Civil Code Section 1695.13 prohibits transactions if "by the terms of such transaction [the equity purchaser] takes unconscionable advantage of the property owner in foreclosure" (Cal. Civ. Code §1695.13). If the Bankruptcy Court determined that (a) the Equity Purchase Agreement was executed on December 6, 2002, and back-dated to November 18, 2002, and (b) the Debtor rushed the Scotts through execution of the agreement and grant deed, the Bankruptcy Court might have concluded that the totality of the circumstances demonstrated an unconscionable advantage in favor of the Debtor under Civil Code Section 1695.13, and awarded treble damages to the Scotts under Civil Code Section 1695.7. Although less probable in the Trustee's opinion, the Bankruptcy Court could also have determined that the price paid by the Debtor was unconscionably low. Treble damages are also available to an equity seller when the equity purchaser transfers the property to someone else after the initial purchase. Cal. Civ. Code §1695.6(b)(3). Several months after the equity sale to "R. Rad" closed, "R. Rad" transferred the Property to Allied Management Trust. The subsequent transfer to Allied Management Trust violated Section 1695.6(b)(3). The Trustee has argued that her subsequent recovery of the Property as a fraudulent conveyance from Allied nullified the subsequent transfer. However, it is not certain that the Court would agree. If not, treble damages would be available under Section 1695.6(b)(3). Finally, Civil Code Section 1695.14(d) provides for an award of reasonable attorney fees and costs to the prevailing party in an action for rescission under HESA. If the Scotts prevailed in any aspect of their claim, an award of attorney fees would be possible. The Scotts claimed that their attorneys fees exceeded $100,000. Based on all of the facts available to the Trustee, including exchanges in discovery, the Trustee concluded that there was a high probability that the Scotts would be entitled to a claim in some

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amount. She concluded that part of the Scotts' claim would be a substantial attorney fee award which would be a general unsecured claim in the case. The Bankruptcy Court agreed with this assessment. [ER101: 8-13]. By eliminating $275,000 of the Scotts' original claim and providing that $125,000 of the remaining amount would be subordinated to general unsecured claims, the Trustee mitigated the estate's exposure and avoided a potentially much larger general unsecured claim against the estate. B. Complexity, Expense, and Delay

If the compromise had not been approved, the Trustee would have proceeded to trial on the claim objection. The negotiations between the Trustee and the Scotts began relatively late in the litigation process. Accordingly, discovery was complete and counsel had begun to prepare for trial. If a trial were put back on the Court's calendar, counsel would have to prepare again for trial. Based on the number of witnesses the Scotts anticipated calling at trial, the Trustee anticipates that the trial would take three or four days to complete. The required attorney time would be significant as would the attorney fees associated with it. The Bankruptcy Court agreed with this assessment. [ER101: 1825]. The Trustee did not and does not predict extensive delay in administration of the bankruptcy estate if a trial were to be held. C. Paramount Interest of Creditors

No creditor objected to the compromise. The Trustee believes it was reasonable to infer that the creditors supported the compromise as the Bankruptcy Court noted. This factor militated in favor of the compromise. [ER102: 10-16]. VII. CONCLUSION The Bankruptcy Court's findings of fact are supported by the record presented to it in support of the compromise proposed by the Trustee. The Debtor/Appellant has not demonstrated any error on the part of the Bankruptcy Court in its findings of fact. Furthermore, the Debtor/Appellant has not demonstrated that the Bankruptcy Court abused its discretion in // // //

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approving the proposed compromise after consideration of the facts and legal basis presented by the Trustee and the Debtor's objection to the compromise. The Bankruptcy Court order ought to be affirmed. DATED: July 18, 2008 LUCE, FORWARD, HAMILTON & SCRIPPS LLP

By: /s/Charles P. Maher, Esq., CSBN 124748 CHARLES P. MAHER Attorneys for Appellee Andrea A. Wirum, Successor-in-Interest to Charles E. Sims
301042440.1

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISON

In re RAMIN YEGANEH, Debtor. RAMIN YEGANEH, Appellant, v. ANDREA A. WIRUM, TRUSTEE, Appellee.

Case No. 4:08-cv-01816 CW

Bankruptcy Case No. 05-30047 TEC

APPELLEE'S EXCERPT OF RECORD

Charles P. Maher, CSB 124748 LUCE, FORWARD, HAMILTON & SCRIPPS, LLP 121 Spear Street, Suite 200 San Francisco, CA 94105 Telephone: (415) 356-4600 Facsimile: (415) 356-4610 Attorneys for Appellee Andrea A. Wirum, Successor-in-Interest to Charles E. Sims

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TABLE OF CONTENTS

Document Declaration of Debtor Re Debtor's Objection to Trustee's Notice of Compromise of Claim of Robert & Alyssa Scott Declaration of Andrea A. Wirum Declaration of Jeffrey L. Fillerup in Support of Compromise Transcript of February 29, 2008 hearing before United States Bankruptcy Court, Northern District of California, San Francisco Division regarding compromise with Robert and Alyssa Scott Order Authorizing Compromise

Docket No. 388 393 393 415

Document No. 1 2 3 4

Page No. ER-001 ER-081 ER-084 ER-091

405

5

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Charles P. Maher, State Bar No. 124748 LUCE, FORWARD, HAMILTON & SCRIPPS LLP Rincon Center II, 121 Spear Street, Suite 200 San Francisco, California 94105-1582 Telephone No.: 415.356.4600 Fax No.: 415.356.4610 Attorneys for Appellee Andrea A. Wirum, Successor-in-Interest to Charles E. Sims, as Chapter 7 Trustee

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

In Re RAMIN YEGANEH, Debtor, RAMIN YEGANEH, Appellant, v. ANDREA A. WIRUM, TRUSTEE, Appellee.

Case No. 4:08-cv-01816 CW

CERTIFICATE OF SERVICE

CERTIFICATE OF SERVICE

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I, Nikki Schrager, declare as follows: At the time of service, I was over 18 years of age and not a party to this action. I am employed in the County of San Francisco, State of California. My business address is Rincon Center II, 121 Spear Street, Suite 200, San Francisco, California 94105-1582. as On July 18, 2008, I served true copies of the following document(s) described APPELLEES' BRIEF; APPELLEE'S EXCERPT OF RECORD on the interested parties in this action as follows: BY MAIL: I enclosed the document(s) in a sealed envelope or package addressed to the persons at the addresses listed in the Service List and placed the envelope for collection and mailing, following our ordinary business practices. I am readily familiar with Luce, Forward, Hamilton & Scripps LLP's practice for collecting and processing correspondence for mailing. On the same day that the correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service, in a sealed envelope with postage fully prepaid. William E. Gilg, Esq. 305 San Bruno Avenue West San Bruno, CA 94066 I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge. Executed on July 18, 2008, in San Francisco, California.

/s/Nikki Schrager Nikki Schrager

301043016

1

CERTIFICATE OF SERVICE