1 2 FILED & ENTERED 3
4 AUG 09 2022
5 UNITED STATES BANKRUPTCY CCOLEURKR UT.S . BANKRUPTCY COURT 6 Central District of California CENTRAL DISTRICT OF CALIFOBRYN C e I t Au l i o DEPUTY CLERK 7 SAN FERNANDO VALLEY DIVISION 8 In re: Case No. 1:12-bk-10986-MB 9 ALLANA BARONI, Chapter 7 10 Debtor. ORDER RE: 11 [1] BARONI AND ANTOGNINI’S 12 EVIDENTIARY OBJECTION AND REQUEST TO STRIKE ENTIRE 13 DECLARATION OF FAY JANATI [CASE DKT. 1433]; AND 14 [2] BARONI AND ANTOGNINI’S 15 EVIDENTIARY OBJECTION AND REQUEST TO STRIKE ENTIRE 16 DECLARATION OF BERNARD J. KORNBERG [CASE DKT. 1434] 17
20 21 22 23 24 25 26 27 28 1 The chapter 7 debtor, Allana Baroni (the “Debtor”), and Richard Antognini (“Antognini”) 2 have filed joint evidentiary objections (case dkt. 1433, 1434) to the declarations of Fay Janati and 3 Bernard J. Kornberg appended to the Supplemental Brief in support of Memorandum in Opposition 4 to Allana Baroni’s Motion to Remove the Trustee and for Criminal Referrals filed by Wells Fargo 5 Bank (case dkt. 1428) and request the Court strike the entirety of those declarations for failure to 6 comply with 28 U.S.C. § 1746(2) because both are signed: “I declare under penalty of perjury that 7 the foregoing is true and correct to the best of my knowledge . . . “ The Debtor and Antognini argue 8 the qualification “to be the best of my knowledge” renders the declarations improper. They fail, 9 however, to offer any authority other than 28 U.S.C. §1746(2) in support. 10 “To the best of my knowledge” is an improper qualification. Sherwin-Williams Co. v. 11 Performance Auto Body, Inc., 2014 WL 12558844, *2 (C.D. Cal., Jan. 29, 2014). However, section 12 1746 requires only that declarations must be “substantially” in the form set forth in the statute. 13 CFTC v. Topworth Int'l Ltd., 205 F.3d 1107, 1112 (9th Cir. 1999). In Schroeder v. McDonald, the 14 Ninth Circuit Court of Appeals determined that a verification of facts as “true and correct as known 15 to me” satisfied 28 U.S.C. § 1746 despite not following the statute’s “form with precision.” 16 Schroeder v. McDonald, 55 F.3d 454, 460 n. 10 (9th Cir. 1995). Because there is no material 17 difference between the qualification “as known to me” and “to the best of my knowledge,” and 18 because the jurat otherwise complies with section 1746, the objection is OVERRULED and the 19 request to strike is DENIED. 20 21 RULINGS ON SPECIFIC OBJECTIONS 22 ¶ OF DECLARATION EVIDENTIARY RULING 23 OBJECTION 24 Objection to the Declaration of Fay Janati ¶ 8. 25 FRE 802 Hearsay to Sustained only as the sentence Even in a case such as this where 26 there is still personal liability owed, which the business “Nationstar’s records still Nationstar’s system can only treat the 27 loan one way. As such the Note is records exception in reflect the account as being returned “paid in full” once the 28 secured portion of the loan has been 803(6) does not open due to the pending 1 RULINGS ON SPECIFIC OBJECTIONS 2 ¶ OF DECLARATION EVIDENTIARY RULING 3 OBJECTION paid. 4 apply. FRE 1002 litigation and the outstanding
5 Nationstar’s records still reflect the Best Evidence Rule. unsecured portion as set forth in account as being open due to the 6 pending litigation and the outstanding the revised proof of claim 7-2 is unsecured portion as set forth in the 7 revised proof of claim 7-2 is still still owed.” owed. 8 Objection to the Declaration of Bernard J. Kornberg 9 ¶ 7, lines 14-18 FRE 802 Hearsay Sustained as inadmissible 10 ...While my conversations with Nationstar are privileged, the ultimate Lack of Foundation hearsay. 11 factual determination was that it was Nationstar’s practice to return the FRE 1002 Best 12 note to a post-confirmation Chapter 11 borrower once a secured claim is Evidence Rule. 13 paid in full. That is because in almost 14 all cases, the payment of the secured claim represents the extinguishment 15 of all recoverable debt owed on the loan. 16 ¶¶ 8-9 Improper legal Overruled. Generally, legal 17 8. However, in this matter, personal liability on the note remained. Debtor conclusions. arguments are inappropriate in 18 was coborrower on the note with her husband, James Baroni. James Irrelevant. declaration testimony. King 19 Baroni is not in bankruptcy and has never received a discharge. Cty. v. Rasmussen, 299 F.3d 20 Accordingly, Wells Fargo still had 1077, 1082 (9th Cir. 2002); 21 recourse against James for the balance of the note. GemCap Lending, LLC. v. 22 9. Further, the unsecured portion of Claim 7 Quarles & Brady, LLP, 269 23 remained unpaid. Therefore, while Allana Baroni’s personal liability F.Supp. 3d 1007, 1026 (C.D. 24 had been discharged, Wells Fargo Cal. 2017). Here, however, Mr. 25 continued to have an unsecured claim in the case. Kornberg is offering his 26 understanding of the legal 27 issues to explain why he signed 28 1 RULINGS ON SPECIFIC OBJECTIONS 2 ¶ OF DECLARATION EVIDENTIARY RULING 3 OBJECTION 4 and filed the Amended Wells 5 Fargo POC, and the testimony 6 is admissible for that purpose. ¶¶ 11-15 7 Improper legal Overruled. Mr. Kornberg is 11. First, the return of the note to 8 Baroni is legally irrelevant to the conclusions. offering his understanding of proof of claim. Section 506(a) states 9 that, to the extent a secured claim is Irrelevant. the legal issues to explain why subject to bifurcation, that a creditor 10 has an “unsecured claim to the extent he signed and filed the that the value of such creditor’s 11 Amended Wells Fargo POC, interest or the amount so subject to 12 set off is less than the amount of such and the testimony is admissible allowed claim.” 11 U.S.C.§ 506(a). 13 Here, Baroni bifurcated Wells for that purpose. Fargo’s claim in the Chapter 11 plan. 14 Thus by operation of law Wells Fargo is entitled to an unsecured claim for 15 the remainder. Therefore, the 16 unsecured claim’s validity is not predicated on the note which created 17 the debt. 12. Second, even if the claim is 18 dependent on the note, the return of the note is not conclusive. In my legal 19 research, I determined that the return 20 of a note to the borrower does not necessarily extinguish the note if 21 personal liability remained. Instead, the “longstanding policy of California 22 law [is] to correct forfeitures (and the accompanying windfall).” Great W. 23 Sav. v. United States, 1986 U.S. Dist. 24 LEXIS 20318, at *4 (C.D. Cal. Sep. 16, 1986). Numerous other cases 25 support this proposition. To the best of my knowledge, no case, binding or 26 persuasive, that stands to the 27 contrary. Accordingly, Wells Fargo could assert a claim predicated on a 28 legal action for the return of the note. 1 RULINGS ON SPECIFIC OBJECTIONS 2 ¶ OF DECLARATION EVIDENTIARY RULING 3 OBJECTION debt, I determined that there was a 4 good faith, and quite likely 5 prevailing, argument that the April 29, 2019 conversion of the case to 6 Chapter 7 lifted the cap on payments set in the Chapter 11 plan to 7 unsecured creditors. 14.
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1 2 FILED & ENTERED 3
4 AUG 09 2022
5 UNITED STATES BANKRUPTCY CCOLEURKR UT.S . BANKRUPTCY COURT 6 Central District of California CENTRAL DISTRICT OF CALIFOBRYN C e I t Au l i o DEPUTY CLERK 7 SAN FERNANDO VALLEY DIVISION 8 In re: Case No. 1:12-bk-10986-MB 9 ALLANA BARONI, Chapter 7 10 Debtor. ORDER RE: 11 [1] BARONI AND ANTOGNINI’S 12 EVIDENTIARY OBJECTION AND REQUEST TO STRIKE ENTIRE 13 DECLARATION OF FAY JANATI [CASE DKT. 1433]; AND 14 [2] BARONI AND ANTOGNINI’S 15 EVIDENTIARY OBJECTION AND REQUEST TO STRIKE ENTIRE 16 DECLARATION OF BERNARD J. KORNBERG [CASE DKT. 1434] 17
20 21 22 23 24 25 26 27 28 1 The chapter 7 debtor, Allana Baroni (the “Debtor”), and Richard Antognini (“Antognini”) 2 have filed joint evidentiary objections (case dkt. 1433, 1434) to the declarations of Fay Janati and 3 Bernard J. Kornberg appended to the Supplemental Brief in support of Memorandum in Opposition 4 to Allana Baroni’s Motion to Remove the Trustee and for Criminal Referrals filed by Wells Fargo 5 Bank (case dkt. 1428) and request the Court strike the entirety of those declarations for failure to 6 comply with 28 U.S.C. § 1746(2) because both are signed: “I declare under penalty of perjury that 7 the foregoing is true and correct to the best of my knowledge . . . “ The Debtor and Antognini argue 8 the qualification “to be the best of my knowledge” renders the declarations improper. They fail, 9 however, to offer any authority other than 28 U.S.C. §1746(2) in support. 10 “To the best of my knowledge” is an improper qualification. Sherwin-Williams Co. v. 11 Performance Auto Body, Inc., 2014 WL 12558844, *2 (C.D. Cal., Jan. 29, 2014). However, section 12 1746 requires only that declarations must be “substantially” in the form set forth in the statute. 13 CFTC v. Topworth Int'l Ltd., 205 F.3d 1107, 1112 (9th Cir. 1999). In Schroeder v. McDonald, the 14 Ninth Circuit Court of Appeals determined that a verification of facts as “true and correct as known 15 to me” satisfied 28 U.S.C. § 1746 despite not following the statute’s “form with precision.” 16 Schroeder v. McDonald, 55 F.3d 454, 460 n. 10 (9th Cir. 1995). Because there is no material 17 difference between the qualification “as known to me” and “to the best of my knowledge,” and 18 because the jurat otherwise complies with section 1746, the objection is OVERRULED and the 19 request to strike is DENIED. 20 21 RULINGS ON SPECIFIC OBJECTIONS 22 ¶ OF DECLARATION EVIDENTIARY RULING 23 OBJECTION 24 Objection to the Declaration of Fay Janati ¶ 8. 25 FRE 802 Hearsay to Sustained only as the sentence Even in a case such as this where 26 there is still personal liability owed, which the business “Nationstar’s records still Nationstar’s system can only treat the 27 loan one way. As such the Note is records exception in reflect the account as being returned “paid in full” once the 28 secured portion of the loan has been 803(6) does not open due to the pending 1 RULINGS ON SPECIFIC OBJECTIONS 2 ¶ OF DECLARATION EVIDENTIARY RULING 3 OBJECTION paid. 4 apply. FRE 1002 litigation and the outstanding
5 Nationstar’s records still reflect the Best Evidence Rule. unsecured portion as set forth in account as being open due to the 6 pending litigation and the outstanding the revised proof of claim 7-2 is unsecured portion as set forth in the 7 revised proof of claim 7-2 is still still owed.” owed. 8 Objection to the Declaration of Bernard J. Kornberg 9 ¶ 7, lines 14-18 FRE 802 Hearsay Sustained as inadmissible 10 ...While my conversations with Nationstar are privileged, the ultimate Lack of Foundation hearsay. 11 factual determination was that it was Nationstar’s practice to return the FRE 1002 Best 12 note to a post-confirmation Chapter 11 borrower once a secured claim is Evidence Rule. 13 paid in full. That is because in almost 14 all cases, the payment of the secured claim represents the extinguishment 15 of all recoverable debt owed on the loan. 16 ¶¶ 8-9 Improper legal Overruled. Generally, legal 17 8. However, in this matter, personal liability on the note remained. Debtor conclusions. arguments are inappropriate in 18 was coborrower on the note with her husband, James Baroni. James Irrelevant. declaration testimony. King 19 Baroni is not in bankruptcy and has never received a discharge. Cty. v. Rasmussen, 299 F.3d 20 Accordingly, Wells Fargo still had 1077, 1082 (9th Cir. 2002); 21 recourse against James for the balance of the note. GemCap Lending, LLC. v. 22 9. Further, the unsecured portion of Claim 7 Quarles & Brady, LLP, 269 23 remained unpaid. Therefore, while Allana Baroni’s personal liability F.Supp. 3d 1007, 1026 (C.D. 24 had been discharged, Wells Fargo Cal. 2017). Here, however, Mr. 25 continued to have an unsecured claim in the case. Kornberg is offering his 26 understanding of the legal 27 issues to explain why he signed 28 1 RULINGS ON SPECIFIC OBJECTIONS 2 ¶ OF DECLARATION EVIDENTIARY RULING 3 OBJECTION 4 and filed the Amended Wells 5 Fargo POC, and the testimony 6 is admissible for that purpose. ¶¶ 11-15 7 Improper legal Overruled. Mr. Kornberg is 11. First, the return of the note to 8 Baroni is legally irrelevant to the conclusions. offering his understanding of proof of claim. Section 506(a) states 9 that, to the extent a secured claim is Irrelevant. the legal issues to explain why subject to bifurcation, that a creditor 10 has an “unsecured claim to the extent he signed and filed the that the value of such creditor’s 11 Amended Wells Fargo POC, interest or the amount so subject to 12 set off is less than the amount of such and the testimony is admissible allowed claim.” 11 U.S.C.§ 506(a). 13 Here, Baroni bifurcated Wells for that purpose. Fargo’s claim in the Chapter 11 plan. 14 Thus by operation of law Wells Fargo is entitled to an unsecured claim for 15 the remainder. Therefore, the 16 unsecured claim’s validity is not predicated on the note which created 17 the debt. 12. Second, even if the claim is 18 dependent on the note, the return of the note is not conclusive. In my legal 19 research, I determined that the return 20 of a note to the borrower does not necessarily extinguish the note if 21 personal liability remained. Instead, the “longstanding policy of California 22 law [is] to correct forfeitures (and the accompanying windfall).” Great W. 23 Sav. v. United States, 1986 U.S. Dist. 24 LEXIS 20318, at *4 (C.D. Cal. Sep. 16, 1986). Numerous other cases 25 support this proposition. To the best of my knowledge, no case, binding or 26 persuasive, that stands to the 27 contrary. Accordingly, Wells Fargo could assert a claim predicated on a 28 legal action for the return of the note. 1 RULINGS ON SPECIFIC OBJECTIONS 2 ¶ OF DECLARATION EVIDENTIARY RULING 3 OBJECTION debt, I determined that there was a 4 good faith, and quite likely 5 prevailing, argument that the April 29, 2019 conversion of the case to 6 Chapter 7 lifted the cap on payments set in the Chapter 11 plan to 7 unsecured creditors. 14. This determination was based in 8 part on the 2015 Supreme Court case 9 of Harris v. Viegelahn, 135 S. Ct. 1829, 1838 (2015), which held that 10 [w]hen a debtor exercises his statutory right to convert, the 11 case is placed under Chapter 7’s governance, and no 12 Chapter 13 provision 13 holds sway. §103(i) (“Chapter 13 . . . applies only in a case 14 under [that] chapter.”). Harris having converted the case, the 15 Chapter 13 plan was no longer “bind[ing].” §1327(a). 16 15. In my opinion, this holding also 17 applies to a conversion of a case from Chapter 11 to Chapter 7. Therefore, I 18 determined that Wells Fargo could assert it was entitled to the entire 19 balance of the loan as an unsecured claim. 20 ¶ 17 Improper legal Sustained. This is 21 And in the opposition to Debtor’s Motion to Dismiss the Case, Wells conclusions. impermissible legal argument 22 Fargo disclosed the following: Debtor asserts that Wells Irrelevant. restating disclosures made to 23 Fargo’s claim was fully 24 extinguished when she paid the Court in a filed pleading the secured portion of the rather than explaining Mr. 25 claim during her Chapter 11 and Wells Fargo reconveyed Kornberg’s intent and reasoning 26 the deed of trust and then released the note to Debtor. for filing the Amended Wells 27 Wells Fargo is still 28 investigating the facts behind Fargo POC for his client. 1 RULINGS ON SPECIFIC OBJECTIONS 2 {| OF DECLARATION EVIDENTIARY RULING 3 OBJECTION 4 this time believes that the release of the note was in 5 error. In 99.9% of cases, the payment of the secured 6 portion of the claim also results in the full discharge of 7 the obligations of the note. In g this case, that was not the case as even if Debtor had received 9 her Chapter 11 discharge, a large unsecured claim 10 remained against James Baroni. If the note was 11 released to Debtor in error, D Wells Fargo may demand its return and payment of the 13 unsecured portion of the claim. [Citation.] Wells Fargo 14 has had preliminary discussion regarding this issue 15 with the Trustee and hopes to 16 resolve the issue without litigation. 17 A copy of this brief is attached as Exhibit 2 to this Declaration. 18 19 □□□ 20 21 22 : Aft, 0 Bast — Date: August 9, 2022 en ODED 24 Martin R Barash 5 United States Bankruptcy Judge 26 27 28