W. Valley Med. Partners, LLC v. Shapow (In re Shapow)
This text of 599 B.R. 51 (W. Valley Med. Partners, LLC v. Shapow (In re Shapow)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
Martin R. Barash, United States Bankruptcy Judge
On March 2, 5, and 9, 2018, the Court conducted a trial in this adversary proceeding. Jamie R. Schloss represented plaintiff West Valley Medical Partners, LLC ("West Valley" or the "Plaintiff"). Michael Jay Berger represented defendant Morris Shapow aka Mike Shapow ("Shapow"
*58or the "Defendant"), the chapter 7 debtor herein. This memorandum constitutes the Court's findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure, made applicable here by Rule 7052 of the Federal Rules of Bankruptcy Procedure.
Plaintiff objects to Defendant's discharge pursuant to Bankruptcy Code sections 727(a)(2)(A), (a)(3), and (a)(4)(A).1 For the reasons set forth herein, the Court finds that Plaintiff has not met its burden on any of its causes of action. Accordingly, the Court will enter judgment in favor of Defendant on the entire complaint.
I. JURISDICTION
The Court has jurisdiction over this adversary proceeding pursuant to
II. PROCEDURAL HISTORY
On November 30, 2015, Defendant filed his voluntary petition under chapter 7 of the Bankruptcy Code (the "Petition Date").2 David K. Gottlieb was appointed the chapter 7 trustee (the "Trustee"). On August 11, 2016, the Trustee moved to dismiss the bankruptcy case based on Defendant's alleged failure to provide the following: (1) a copy of a complaint filed against Defendant by a former employee (and failure to amend his schedules to include the former employee as a creditor); (2) an explanation for a sale or transfer of a property located on Abington Drive in Beverly Hills; (3) an explanation of who owns the entities Java, LLC and Mc3rd Trust; (4) an explanation for whether or not Defendant was a beneficiary of any estate or trust; (5) a copy of the closing statement from the sale of the Abington Drive property; (6) a list of all lienholders that were paid from the sale of the Abington Drive property with an explanation of Defendant's relationship to the lienholder; and (7) copies of all trust documents for all trusts indicating the identity of all trustees and beneficiaries. Case Dkt. 35. On August 31, 2016, Defendant filed a declaration responding to the issues raised in the Trustee's motion to dismiss. Case Dkt. 41. The Trustee withdrew his motion to dismiss on the following day. Case Dkts. 42, 44. On September 16, 2016, the Trustee filed his "no-asset" report.
On February 24, 2016, Plaintiff commenced this adversary proceeding by filing a complaint against Defendant timely asserting claims under Bankruptcy Code sections 727(a)(2), (a)(3), and (a)(5). Adv. Dkt. 1. On March 25, 2016, Defendant moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Adv. Dkt. 3. On May 6, 2016, the Court granted Defendant's motion to dismiss with leave *59to amend as to all three causes of action. See Adv. Dkt. 14.
On June 3, 2016, Plaintiff filed its First Amended Complaint ("FAC"), the operative complaint herein, asserting claims under Bankruptcy Code sections 727(a)(2)(A),3 (a)(3), and (a)(4)(A). Adv. Dkts. 18 (unsigned), 39 (signed). On July 6, 2016, Defendant moved to dismiss the FAC pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Adv. Dkt. 22. On August 15, 2016, the Court denied Defendant's motion to dismiss. See Adv. Dkts. 37, 38. On August 25, 2016, Defendant answered the FAC. Adv. Dkt. 43. The parties thereafter had a contentious relationship, and Defendant moved to dismiss the proceeding for failure to prosecute, see Adv. Dkt. 52, which motion was denied, Adv. Dkt. 68. The parties could not agree on a pre-trial stipulation until the Court intervened at a pre-trial conference on December 14, 2017. See Adv. Dkts. 88, 89. The Court imposed a monetary sanction on Plaintiff's counsel for his role in the parties' failure to file a pretrial stipulation by the ordered deadline. See Adv. Dkt. 90.
On December 18, 2017, the parties filed a joint pre-trial stipulation (the "Pre-Trial Stipulation" or "PTS") limiting Plaintiff's claims for relief to three causes of action under Bankruptcy Code sections 727(a)(2)(A), (a)(3), and (a)(4)(A). Adv. Dkt. 88. The Court thereafter entered an order approving the Pre-Trial Stipulation (the "Pre-Trial Order" or "PTO"). Adv. Dkt. 89. Both the Pre-Trial Stipulation and the Pre-Trial Order provide that they supersede the pleadings and govern the course of trial in this proceeding. See PTS at 38; PTO, ¶ 1.4
At trial, Plaintiff called as witnesses (1) its principal, Gary Grabel, (2) its counsel, Jamie R. Schloss, and (3) Defendant. Plaintiff also offered the deposition transcript of Lori Milas of Westshore Medical Billing, Inc., Plaintiff's Exhibit 91, and both parties designated portions thereof. After Plaintiff concluded its case in chief, Defendant moved for the equivalent of a *60
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Martin R. Barash, United States Bankruptcy Judge
On March 2, 5, and 9, 2018, the Court conducted a trial in this adversary proceeding. Jamie R. Schloss represented plaintiff West Valley Medical Partners, LLC ("West Valley" or the "Plaintiff"). Michael Jay Berger represented defendant Morris Shapow aka Mike Shapow ("Shapow"
*58or the "Defendant"), the chapter 7 debtor herein. This memorandum constitutes the Court's findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure, made applicable here by Rule 7052 of the Federal Rules of Bankruptcy Procedure.
Plaintiff objects to Defendant's discharge pursuant to Bankruptcy Code sections 727(a)(2)(A), (a)(3), and (a)(4)(A).1 For the reasons set forth herein, the Court finds that Plaintiff has not met its burden on any of its causes of action. Accordingly, the Court will enter judgment in favor of Defendant on the entire complaint.
I. JURISDICTION
The Court has jurisdiction over this adversary proceeding pursuant to
II. PROCEDURAL HISTORY
On November 30, 2015, Defendant filed his voluntary petition under chapter 7 of the Bankruptcy Code (the "Petition Date").2 David K. Gottlieb was appointed the chapter 7 trustee (the "Trustee"). On August 11, 2016, the Trustee moved to dismiss the bankruptcy case based on Defendant's alleged failure to provide the following: (1) a copy of a complaint filed against Defendant by a former employee (and failure to amend his schedules to include the former employee as a creditor); (2) an explanation for a sale or transfer of a property located on Abington Drive in Beverly Hills; (3) an explanation of who owns the entities Java, LLC and Mc3rd Trust; (4) an explanation for whether or not Defendant was a beneficiary of any estate or trust; (5) a copy of the closing statement from the sale of the Abington Drive property; (6) a list of all lienholders that were paid from the sale of the Abington Drive property with an explanation of Defendant's relationship to the lienholder; and (7) copies of all trust documents for all trusts indicating the identity of all trustees and beneficiaries. Case Dkt. 35. On August 31, 2016, Defendant filed a declaration responding to the issues raised in the Trustee's motion to dismiss. Case Dkt. 41. The Trustee withdrew his motion to dismiss on the following day. Case Dkts. 42, 44. On September 16, 2016, the Trustee filed his "no-asset" report.
On February 24, 2016, Plaintiff commenced this adversary proceeding by filing a complaint against Defendant timely asserting claims under Bankruptcy Code sections 727(a)(2), (a)(3), and (a)(5). Adv. Dkt. 1. On March 25, 2016, Defendant moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Adv. Dkt. 3. On May 6, 2016, the Court granted Defendant's motion to dismiss with leave *59to amend as to all three causes of action. See Adv. Dkt. 14.
On June 3, 2016, Plaintiff filed its First Amended Complaint ("FAC"), the operative complaint herein, asserting claims under Bankruptcy Code sections 727(a)(2)(A),3 (a)(3), and (a)(4)(A). Adv. Dkts. 18 (unsigned), 39 (signed). On July 6, 2016, Defendant moved to dismiss the FAC pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Adv. Dkt. 22. On August 15, 2016, the Court denied Defendant's motion to dismiss. See Adv. Dkts. 37, 38. On August 25, 2016, Defendant answered the FAC. Adv. Dkt. 43. The parties thereafter had a contentious relationship, and Defendant moved to dismiss the proceeding for failure to prosecute, see Adv. Dkt. 52, which motion was denied, Adv. Dkt. 68. The parties could not agree on a pre-trial stipulation until the Court intervened at a pre-trial conference on December 14, 2017. See Adv. Dkts. 88, 89. The Court imposed a monetary sanction on Plaintiff's counsel for his role in the parties' failure to file a pretrial stipulation by the ordered deadline. See Adv. Dkt. 90.
On December 18, 2017, the parties filed a joint pre-trial stipulation (the "Pre-Trial Stipulation" or "PTS") limiting Plaintiff's claims for relief to three causes of action under Bankruptcy Code sections 727(a)(2)(A), (a)(3), and (a)(4)(A). Adv. Dkt. 88. The Court thereafter entered an order approving the Pre-Trial Stipulation (the "Pre-Trial Order" or "PTO"). Adv. Dkt. 89. Both the Pre-Trial Stipulation and the Pre-Trial Order provide that they supersede the pleadings and govern the course of trial in this proceeding. See PTS at 38; PTO, ¶ 1.4
At trial, Plaintiff called as witnesses (1) its principal, Gary Grabel, (2) its counsel, Jamie R. Schloss, and (3) Defendant. Plaintiff also offered the deposition transcript of Lori Milas of Westshore Medical Billing, Inc., Plaintiff's Exhibit 91, and both parties designated portions thereof. After Plaintiff concluded its case in chief, Defendant moved for the equivalent of a *60nonsuit.5 Both parties argued, and the Court denied the motion. Defendant then called himself and Roy Silver as witnesses. The Court had the opportunity to observe each of the witnesses, evaluate their demeanor, consider their testimony, and assess their credibility.
After providing the parties with an opportunity to respond, the Court memorialized its evidentiary rulings on the exhibits offered into evidence by both parties. Adv. Dkts. 113, 127. The Court admitted the following exhibits offered into evidence by Plaintiff: 9, 15, 20, 26, 27, 36, 40, 44, 46, 48, 60, 61, 62, 63, 64, 65, 66, 67, 69-C, 70, 73, 74, 75, 78, 79, 80, 82, 83, 84, 88, 91, 96, 106, 107, and 108. The Court denied admission of the following exhibits offered by Plaintiff: 22, 24, 34, 69, 76, 77, 81, and 97. Plaintiff withdrew its motion to admit Exhibit 110 into evidence. The Court admitted the following exhibits offered into evidence by Defendant: A, F, G, H, I, J, K, N, O, P, and Q. All other exhibits lodged with the Court were never offered into evidence at trial.
With leave of Court, the parties submitted their closing arguments in writing in the form of post-trial briefs. See Adv. Dkts. 120, 121, 124.6 Upon Court order, Adv. Dkts. 127, 133, the parties electronically filed on the docket all exhibits that were offered into evidence at trial. See Adv. Dkts. 129, 130, 134. The causes of action asserted in this adversary proceeding are now ripe for decision.
III. FACTS
A. The Parties
Defendant has been a licensed physical therapist for approximately 40 years. Trial Transcript dated March 2, 2018, Adv. Dkt. 115 ("Trial Tr., March 2") at 81:18-82:6. He has operated physical therapy clinics whose patients included those with personal injury and workers' compensation claims. Id. at 83:22-84:12; PTS at 3, ¶ 6. Defendant owns, controls, or has an interest in several corporate entities. PTS at 3, ¶ 7.
Plaintiff is a commercial lessor that used to lease office space to a corporation controlled by Defendant. Trial Tr., March 2 at 12:4-20. Plaintiff obtained a $ 474,000 stipulated judgment on September 17, 2010, against Defendant and his wholly owned corporation, Total Wellness Rehabilitation, Inc., on a breach of contract action in Los Angeles Superior Court, LASC Case No. LC084044 (the "State Court Judgment"). Plaintiff's Ex. 48; PTS at 3, ¶ 8; Trial Tr., March 2 at 14:2-14. In the years that followed, Plaintiff attempted to collect on its *61State Court Judgment by conducting multiple judgment debtor examinations of Defendant, moving to compel production of documents, and moving for an assignment and restraining order. PTS at 8, ¶¶ 3-5; Trial Transcript dated March 5, 2018, Adv. Dkt. 116 ("Trial Tr., March 5") at 87:16-109:13; Plaintiff's Exs. 66, 67, 69-C, 70, 73, 74, 75, 78, 79, 80, 82. Plaintiff contends that throughout the State Court Judgment debtor proceedings Defendant possessed but failed to produce documents that were responsive to Plaintiff's document demands. Trial Tr., March 5 at 87:16-109:13. Plaintiff's principal, Gary Grabel, testified that Defendant "never paid a penny" on the State Court Judgment. Trial Tr., March 2 at 14:15-18.
Defendant previously filed a chapter 13 bankruptcy petition on December 12, 2012 ("Defendant's First Bankruptcy Case"). See Case No. 2:12-bk-50729-NB. Defendant's First Bankruptcy Case was converted to chapter 11 then dismissed on October 3, 2013. See id. ; PTS at 2, ¶ 1. Defendant filed the instant chapter 7 petition on November 30, 2015. PTS at 2, ¶ 2. Eighteen days earlier, Defendant filed a chapter 7 petition on behalf of his wholly owned and controlled corporation, the same entity against which Plaintiff obtained the judgment, Total Wellness Rehabilitation, Inc. (the "Total Wellness Rehabilitation Case"). See Case No. 1:15-bk-13752-VK; PTS at 2, ¶ 3; Trial Tr., March 2 at 55:23-56:4.7 In both this case and the Total Wellness Rehabilitation Case, Defendant prepared the petition, schedules, and statement of financial affairs and signed those documents under penalty of perjury. Trial Tr., March 2 at 55:11-56:24; Plaintiff's Exs. 60-65.
B. Income and Accounts Receivable
On Defendant's Statement of Financial Affairs ("SOFA") in this case, in response to item 1 regarding income from employment or operation of a business, he estimated gross income of $ 9,014 in 2013, $ 110,000 in 2014, and $ 49,000 in 2015. Trial Tr., March 2 at 65:8-25; Plaintiff's Exs. 61, 62 at 27; Defendant's Ex. N at 6. Defendant testified that he had no personal bank accounts as of the Petition Date. Trial Tr., March 2 at 67:16-20. He pays for his personal expenses by withdrawing money from one of his company's accounts. Trial Tr., March 5 at 56:16-57:14. On the Schedule B in this case, Defendant claimed to have no interest in accounts receivable. Plaintiff's Ex. 61 at 8; Defendant's Ex. N at 3; PTS at 3, ¶ 9; see Trial Tr., March 2 at 80:11-15.
In the Total Wellness Rehabilitation Case, in response to item 1 of the SOFA regarding income from employment or operation of a business, the debtor therein estimated income from accounts receivable of $ 5,000, $ 5,000, and $ 3,000 for 2013, 2014, and 2015, respectively. Plaintiff's Ex. 65 at 19; PTS at 4, ¶ 10. On the Schedule B in the Total Wellness Rehabilitation Case, the debtor therein claimed an interest in $ 463,936.52 in accounts receivable, which it estimated to have a face value of 10-20%, or $ 69,590.00. Plaintiff's Ex. 63 at 6; PTS at 4, ¶ 10.
Defendant testified that he does not personally bill for his physical therapy services.
*62Trial Tr., March 2 at 83:18-19, March 5 at 27:17-28:8. Since as early as 2011 to the present, Defendant has billed for his services through a company. Trial Transcript dated March 9, 2018, Adv. Dkt. 119 ("Trial Tr., March 9") at 10:19-11:2. He testified that he listed no accounts receivable on his bankruptcy schedules because he did not personally own any accounts receivable on the Petition Date. Trial Tr., March 5 at 34:16-35:13. He said that he always bills through one of his companies, and the respective company is the owner of the accounts receivable. Trial Tr., March 5 at 27:17-28:8. Defendant's companies typically collect on about only 25 to 30 percent of their accounts receivable due to insurance companies' discretionary price reductions and the difficulty of collecting on personal injury and workers' compensation claims. Trial Tr., March 5 at 64:4-65:18. Defendant testified that for a health care provider to bill an insurance company it must be assigned a national provider identifier number ("NPI"). Trial Tr., March 9 at 11:13-12:8. He testified that although the companies through which he bills have their own NPI, he does not personally have an NPI.8 Trial Tr., March 9 at 12:9-14:10. From 2013 through 2015, all his clients paid by insurance. Trial Tr., March 9 at 13:3-8. Defendant testified that "Total Wellness" and "Joint Effort" held accounts receivable for work performed by Defendant in the one-year period before the Petition Date. Trial Tr., March 2 at 87:4-88:11. He later testified that he "billed through" "Beverly Hills Health Works" in the six months before the Petition Date, and that this was the same entity as "Beverly Hills Health Works II dba Joint Effort Medical Wellness" listed in the bank statements offered into evidence by Plaintiff. Trial Tr., March 9 at 49:20-50:1; see Plaintiff's Exs. 84, 108.
Defendant controlled multiple bank accounts at JPMorgan Chase belonging to certain of his related entities. See Plaintiff's Exs. 84, 106-108. Plaintiff presented bank statements for two such accounts from certain months in 2014 and 2015. See id. One account, ending in 2619, was in the name of Beverly Hills Health Works II dba Joint Effort Medical Wellness (the "BHHW Bank Account"). Plaintiff's Exs. 84, 108; Trial Tr., March 2 at 105:2-25, 169:19-170:17. Another bank account, ending in 1150, was originally in the name of Joint Effort Medical Wellness and changed in early 2014 to the name of Joint Effort Medical Wellness II (the "Joint Effort Bank Account"). Plaintiff's Exs. 106, 107; Trial Tr., March 2 at 167:11-168:10.
The bank statements admitted into evidence reflect the following activity for the BHHW Bank Account:9
*63Month Deposits Withdrawals/Fees Record November 2014 $5,889.59 $6,167.87 Plaintiff's Ex. 108 at 1-6 December 2014 $41,539.86 $40,986.99 Plaintiff's Ex. 108 at 7-14 May 2015 $30,057.55 $31,457.58 Plaintiff's Ex. 84 2014 Total: $47,429,45 $47,154,86 2015 Total: $30,057,55 $31,457,58
The bank statements admitted into evidence reflect the following activity for the Joint Effort Bank Account:10
Month Deposits Withdrawals/Fees Record January 2014 $12,959.79 $13,621.91 Plaintiff's Ex. 106 at 1-8 February 2014 $25,805.29 $25,381.50 Plaintiff's Ex. 106 at 9-18 March 2014 $23,726.99 $25,174,34 Plaintiff's Ex. 106 at 19-28 April 2014 $30,398.80 $29,832.79 Plaintiff's Ex. 106 at 29-38 May 2014 $35,401.80 $35,934.26 Plaintiff's Ex. 106 at 39-48 June 2014 $48,332.45 $47,131.59 Plaintiff's Ex. 107 at 1-12 July 2014 $45,388.51 $39,598.79 Plaintiff's Ex. 107 at 13-25 August 2014 $21,609.16 $28,943.42 Plaintiff's Ex. 107 at 25-34 September 2014 $222.36 $238.00 Plaintiff's Ex. 107 at 35-38 October 2014 $1,676.64 $204.00 Plaintiff's Ex. 107 at 39-42 2014 Total: $245,521,79 $246,060,60
Thus, in 2014, the total amount of deposits in both accounts was $ 292,951.24 and the total in withdrawals and fees was $ 293,215.46. The only statement from 2015 was the May 2015 statement for the BHHW Bank Account, which shows $ 30,057.55 in deposits and $ 31,457.58 in withdrawals and fees in May 2015.
Plaintiff took the deposition of Lori Milas of Westshore Medical Billing, Inc. ("Westshore"), and the deposition transcript was admitted into evidence as Plaintiff's Exhibit 91 ("Depo. Tr.").11 Westshore *64is a medical billing service specializing in workers' compensation collection. Depo. Tr. at 10:19-25. Defendant hired Westshore to bill and to collect on certain older accounts receivable from April to October 2014. Id. at 12:7-11, 13:15-21, 15:4-15, 26:6-9.; Trial Tr., March 5 at 33:4-10. Westshore apparently terminated its relationship with Defendant because he was not paying the invoices as they came due. Depo. Tr. at 21:3-20, 26:10-27:2. Westshore sued Defendant in state court to collect on $ 9,271.35 in outstanding invoices and eventually obtained a judgment against him. Id. at 14:18-15:15, 28:8-17; see Ex. 7 to Depo. Tr.
In connection with Westshore's services, Defendant executed a service agreement revised on April 8, 2014, and executed on April 14, 2014 (the "Service Agreement"). Ex. 103 to Depo. Tr.; see Depo. Tr. at 22:12-15; see Trial Tr., March 2 at 131:12-19. The Service Agreement defines "client" as "Mike Shapow PhD, RPT." See Ex. 103 to Depo. Tr. at 1. However, the signature block indicates that Defendant signed the Service Agreement as "president," though it does not specify the entity for which he serves as president. See id. at 4. Defendant testified that the Service Agreement was made on behalf of Joint Effort Medical Wellness, that Joint Effort Medical Wellness owned the subject accounts receivable, and that it was his understanding when he signed the Service Agreement that he did so on behalf of Joint Effort Medical Wellness. Trial Tr., March 2 at 131:12-23; Trial Tr., March 5 at 27:10-28:8, 32:12-23.
Westshore produced an aging report that it compiled listing certain accounts receivable that Defendant hired Westshore to collect (the "Aging Report"). Ex. 100 to Depo. Tr.; see Depo. Tr. at 17:11-16, 18:3-19, 19:11-20; 29:7-19; Trial Tr., March 5 at 49:7-22. Only a portion of the accounts for which Westshore did the billing or collections were listed in the Aging Report. Depo. Tr. at 51:13-52:24, 53:15-54:1; see Ex. 108 to Depo. Tr. The header of the Aging Report indicates that the client is "Joint Effort." See Ex. 100 to Depo. Tr. The total amount of accounts receivable listed in the Aging Report that Westshore was hired to collect, was $ 1,025,875. See id. at 6; Depo. Tr. at 29:7-19; Trial Tr., March 2 at 133:18-134:1. Milas testified that Defendant has never questioned the accuracy of Westshore's invoices. Depo Tr. at 32:9-16. Defendant sent Westshore two forms that would enable it to access his billing software. Ex. 107 to Depo. Tr.; see Depo Tr. at 50:21-51:3. Neither of those forms lists Defendant as a service provider; one lists "Joint Effort Medical Wellness," and the other lists "BKP Wellness." See Ex. 107 to Depo. Tr. at 2, 3.
Milas testified that she did not know whether Defendant operated through any corporations or whether he made any representations to her about who owned the accounts receivable that Westshore was hired to collect. Depo. Tr. at 21:21-22:2. Milas did opine, however, that "[a]ccording to the [S]ervice [A]greement," Defendant owned the accounts. Id. at 22:12-15.12 She also emphasized how important it is that her clients had not factored or sold their accounts receivable to anyone else prior to retaining Westshore's services. Id. at 22:16-23:13. Further, even though Milas *65testified that she did not know whether Defendant made any representations about who owned the accounts receivable, see id. at 21:24-22:2, she responded affirmatively when asked whether she relied on such a representation when she agreed to work with Defendant, id. at 22:12-19. Milas also opined that the power of attorney provision in the Service Agreement included a representation that Defendant owned the accounts receivable "free and clear." See id. at 22:19-23:1.13
All the invoices that Westshore sent for collections done on behalf of Defendant were invoiced to "Joint Wellness Medical Center." Depo. Tr. at 21:3-20; Exs. 101, 102 to Depo. Tr.14 Milas believed that Defendant operated under the trade names "Joint Efforts Physical Therapy" and "Joint Wellness Medical Center" and that Defendant used these names on his office billing statements and letterhead. Ex. 7 to Depo. Tr.; see Depo. Tr. at 23:14-25:18.
Defendant testified that as of the Petition Date, the accounts receivable that he hired Westshore to collect in April 2014 were property of an entity named Epic Medical Management, LLC ("Epic"), as a result of a judgment it obtained against Joint Effort Medical Wellness in state court. Trial Tr., March 2 at 134:5-17, 142:19-21; Trial Tr., March 5 at 73:9-21. Defendant produced a copy of a state court default judgment for $ 135,485.99 in favor of Epic, against Joint Effort Medical Wellness, lodged on March 27, 2014, and entered on April 2, 2014. See Defendant's Ex. O; Trial Tr., March 9 at 8:10-10:8. He testified that he turned over the subject accounts receivable to Epic as a result of the default judgment it obtained against Joint Effort Medical Wellness. Trial Tr., March 5 at 33:16-34:6.
C. Business Entities With Which Defendant is Affiliated
Defendant has compiled an extensive and entangled list of business entities with which he has been affiliated. He testified that he operated different segments of his business under different but related fictitious names because each entity pertained to a different practice or different client base (e.g., workers' compensation, personal injury, or HMO). Trial Tr., March 2 at 83:18-84:12, 170:12-171:24; see PTS at 3, ¶ 6. In the Pre-Trial Stipulation, Defendant admitted to owning, controlling, or having an interest in the following corporate entities:
• Total Wellness Rehabilitation, Inc. (C2617599), see PTS at 3, ¶ 7.ii;
• Total Wellness Rehabilitation II (C3533554), see PTS at 3, ¶ 7.i; id. at 7, ¶ 2.2;
• Beverly Hills Health Works (C2200188), see PTS at 3, ¶ 7.ii; id. at 7, ¶ 2;
• Beverly Hills Health Works II (C3533555), see PTS at 7, ¶ 2.1;
• BKP Wellness, see PTS at 3, ¶ 7.iii; Trial Tr., March 2 at 114:2-5;
• Joint Effort Wellness, see PTS at 3, ¶ 7.iv; Trial Tr., March 2 at 88:25-89:2; and
• Gratto Aquatic Rehab, see PTS at 3, ¶ 7.v; Trial Tr., March 2 at 162:1-22, 166:11-167:10.
*661. Disclosures in Defendant's First Bankruptcy Case
On the Schedule B filed in Defendant's First Bankruptcy Case on December 26, 2012, in response to item 13 regarding stock and interests in incorporated and unincorporated businesses, Defendant listed a 100% ownership interest in four entities with the following parentheticals: "Total Wellness Rehabilitation (corporation presently suspended)"; "Joint Effort Medical Wellness (corporation presently suspended)"; "Beverly Hills Health Works (corporation presently suspended)"; and "Mike Shapow, Registered Physical Therapist, Inc. (corporation never operated; suspended)." Plaintiff's Ex. 44 at 2; see Case No. 2:12-bk-50729-NB, Dkt. 9 at 8.15 Defendant testified that those four entities held no accounts receivable as of the petition date in Defendant's First Bankruptcy Case. Trial Tr., March 5 at 49:23-50:10. Defendant testified that "Mike Shapow, Registered Physical Therapist, Inc." never operated, never billed for Defendant's services, held no accounts receivable, and had no assets. Trial Tr., March 5 at 66:9-67:2.
2. Initial Disclosures in This Bankruptcy Case
In this case, Defendant originally filed his schedules, SOFA, and other case commencement documents on December 14, 2015. See Case Dkt. 9; Plaintiff's Exs. 60-62. In response to item 13 on Schedule B regarding stock and interests in incorporated and unincorporated businesses, Defendant listed only a 100% ownership interest in "Beverly Hills Health Works." Plaintiff's Exs. 60 at 2, 61 at 8.16 On his original SOFA, in response to item 18 regarding businesses the debtor had control over or conducted business through, Defendant listed "Total Wellness Rehabilitation," "Beverly Hills Health Works," and "Joint Effort Medical." Plaintiff's Exs. 61, 62 at 32. He indicated that Total Wellness Rehabilitation and Joint Effort Medical were "currently suspended" and provided an "ending date" of 2013 for both businesses. See id.
3. Amended Schedule B and SOFA and Gratto Aquatic Rehab
On November 21, 2017, Defendant amended his Schedule B and SOFA. See Case Dkt. 56; Defendant's Ex. N. He amended his response to item 13 on Schedule B to reflect a 30% ownership interest in Gratto Aquatic Rehab, Inc. ("Gratto Aquatic"), which was apparently formed in June 2015 and had no assets on the Petition Date. Defendant's Ex. N at 3. He also amended his response to item 18 on his SOFA to add Gratto Aquatic. See id. at 11. Defendant testified that he did not initially list Gratto Aquatic on his Schedule B and SOFA because it had no assets or value as of the Petition Date and had only recently been formed. Trial Tr., March 2 at 73:12-18, 162:1-11, 165:7-14; Trial Tr., March 5 at *6736:13-24; Trial Tr., March 9 at 57:11-25, 59:5-11, 62:12-20. He testified that his failure to list Gratto Aquatic on his schedules was "unintentional." Trial Tr., March 5 at 36:22-24. Defendant is one of three shareholders of Gratto Aquatic, but he is not the chief operating officer. Trial Tr., March 2 at 162:12-22, 164:22-165:6, 166:14-167:10. Defendant testified that Gratto Aquatic was formed to facilitate a contract for him to provide aquatic therapy at a spa on North La Brea Avenue in Los Angeles, named Grotto del Sal, that had pools of salt water from the Dead Sea in Israel. Trial Tr., March 2 at 162:9-11, 165:15-22; Trial Tr., March 9 at 58:16-59:23.
4. Other Entities
Defendant testified that Joint Effort Medical Wellness had a negative net worth on the Petition Date because of judgments held against the company by Epic, the Franchise Tax Board, and Century City Medical Plaza (another judgment creditor). Trial Tr., March 5 at 35:14-36:8, 73:9-74:1; see PTS at 4, ¶ 11.
"Beverly Hills Health Works" was a name under which Defendant or his entities conducted business in 2013. Trial Tr., March 2 at 123:10-13. Defendant directed his staff person, Valerie Saenz, to incorporate Beverly Hills Health Works II in February 2013. Trial Tr., March 2 at 123:14-16.
Defendant estimated that Joint Effort Medical Wellness "stopped doing business" approximately four or five years before the trial date, sometime before Defendant's First Bankruptcy Case. Trial Tr., March 5 at 68:17-69:10. Defendant differentiated between "doing business" and continuing to collect checks and making deposits into the bank accounts. Trial Tr., March 9 at 28:16-24. He explained that accounts receivable and mail continue to come in after a company stops doing business. Trial Tr., March 9 at 65:12-67:5. He testified that he kept the fictitious name "Joint Effort Medical Wellness" so he could continue to collect on bills and receive mail. Trial Tr., March 9 at 81:19-82:4. Many of Joint Effort's receivables were uncollectable, and others were turned over to Epic as a result of its judgment. Trial Tr., March 5 at 74:7-20.
Plaintiff moved into evidence a screenshot of the website for Joint Effort Medical Wellness that included the date January 4, 2017, at the bottom of the page. Plaintiff's Ex. 96. Defendant testified that notwithstanding the date shown on the screenshot, Joint Effort Medical Wellness had stopped doing business in 2013, and the website's continued availability would have been a mistake. Trial Tr., March 9 at 72:15-73:1, 74:4-9, 75:23-76:20, 79:7-18. Defendant does not do his own web development, he pays a monthly fee to a third party to modify the website for him, and he believes the website was taken down in early 2017. Trial Tr., March 9 at 92:6-94:15. However, he failed to explain why the website was updated to display the new address of his business but not to remove the name of the supposedly discontinued Joint Effort Medical Wellness. See Trial Tr., March 9 at 79:22-81:22.
At first, Defendant testified that the paperwork he presented to his clients still read "Joint Effort Medical Wellness" as late as 2015 or 2016. Trial Tr., March 9 at 96:3-11, 97:21-24. He later changed his story and said that the paperwork would have included only the name of Beverly Hills Health Works at that time. Trial Tr., March 9 at 98:3-14.
Defendant testified that he was a part owner of BKP Wellness. Trial Tr., March 2 at 114:2-6. BKP Wellness ceased doing business under its own name in 2007 and instead operated under the fictitious business name "Total Wellness Rehabilitation," at the request of Defendant's former business *68partner, Brian Padveen. Trial Tr., March 2 at 117:7-118:9, 128:3-6; Plaintiff's Ex. 26.
5. Entities Renamed With "II"
Defendant listed in his bankruptcy schedules Beverly Hills Health Works, Joint Effort Medical Wellness, and Total Wellness Rehabilitation (the "Series I Entities"), but he did not list Beverly Hills Health Works II, Joint Effort Medical Wellness II, or Total Wellness Rehabilitation II (the "Series II Entities"). Defendant testified that when he amended his Schedule B, he did not separately list the Series II Entities because he believed those entities were the same as the respective Series I Entities. Trial Tr., March 9 at 89:24-90:20; see Defendant's Ex. N. at 11. Defendant testified that he did not list Total Wellness Rehabilitation II in his SOFA because he believed Total Wellness Rehabilitation was the same entity as Total Wellness Rehabilitation II. Trial Tr., March 2 at 73:1-8, 111:17-112:7, 128:7-10; Trial Tr., March 9 at 62:21-63:10, 83:5-16. He testified that the same was true of Beverly Hills Health Works, Trial Tr., March 2 at 111:17-112:7, 128:11-13; Trial Tr., March 9 at 63:25-64:13, and of Joint Effort Medical Wellness. Trial Tr., March 2 at 111:17-22; Trial Tr., March 9 at 30:16-31:7, 33:1-9, 64:14-19.
On May 6, 2013, Defendant executed a Certificate of Amendment of Articles of Incorporation for Beverly Hills Health Works, C3533555, which changed the corporation's name to "Beverly Hills Health Works II." Trial Tr., March 2 at 120:9-21; Plaintiff's Ex. 36. Also, on May 6, 2013, Defendant executed a Certificate of Amendment of Articles of Incorporation for Total Wellness Rehabilitation, C3533554, which changed the corporation's name to "Total Wellness Rehabilitation II." Trial Tr., March 2 at 64:5-23, 126:24-127:21; Plaintiff's Exs. 20, 40. These documents were filed with the California Secretary of State on May 31, 2013. Trial Tr., March 2 at 120:19-21; see Plaintiff's Exs. 20, 36, 40. Total Wellness Rehabilitation II and Beverly Hills Health Works II issued no share certificates. Trial Tr., March 2 at 63:10-12, 64:2-4; Plaintiff's Exs. 20, 36, 40. Defendant also testified that he changed the name of Total Wellness Rehabilitation to Total Wellness Rehabilitation II in May 2013. Trial Tr., March 2 at 113:4-7. When he was asked why he amended the articles of incorporation to change the name of Total Wellness Rehabilitation to Total Wellness Rehabilitation II, Defendant testified, "I had a Franchise Tax Board lien that I couldn't operate, and I just had to form another corporation. I couldn't make a living." Trial Tr., March 2 at 64:11-17. Defendant later said he had changed the names of both Total Wellness Rehabilitation and Beverly Hills Health Works because his business associate, Brian Padveen, left the business. Trial Tr., March 2 at 119:2-4, 128:2-10. Defendant testified that he changed the name of Joint Effort Medical Wellness to add "II" to the end of the name because of the Franchise Tax Board lien. Trial Tr., March 2 at 168:21-24. When he was asked, "[O]ther than delaying, making it harder for someone to levy on the bank account, what reason would you have for changing the name?," Defendant responded, "No other reason." Trial Tr., March 2 at 169:15-18.
D. The Car Driven by Defendant
In response to item 25 on Defendant's Schedule B, regarding automobiles and other vehicles, Defendant wrote the following under "Description and Location of Property": "Debtor's residence: 2013 Toyota FJ Cruiser with 20,000 miles. The Debtor does not own the vehicle but makes the monthly payments." Plaintiff's Ex. 61 at 9. Defendant testified further that his father owns the vehicle (the "FJ Cruiser"), but *69Defendant makes the payments. Trial Tr., March 2 at 161:5-17. The parties stipulated at trial, and the Plaintiff offered into evidence an online vehicle record showing, that Defendant's father, Nathan Shapow, is the record title holder of the FJ Cruiser. Trial Tr., March 5 at 23:19-23; Plaintiff's Ex. 83. Defendant testified that his father is "handicapped," so his father bought the FJ Cruiser and paid the down payment so Defendant could drive him around. Trial Tr., March 5 at 26:7-27:6. Defendant also uses the FJ Cruiser to drive himself around without his father. Trial Tr., March 5 at 54:12-19.
E. Defendant's Residence
Defendant currently lives in a condominium at 10350 Wilshire Boulevard, Suite 703, Los Angeles, California 90024 (the "Wilshire Condominium"). Trial Tr., March 2 at 97:9-15, March 5 at 18:23-19:2. Prior to that, he lived at 3183 Abington Drive, Beverly Hills, California 90210 (the "Abington Property"). Trial Tr., March 2 at 97:5-8. Defendant testified that he listed neither the Wilshire Condominium nor the Abington Property on his bankruptcy schedules because he did not own the properties. Trial Tr., March 5 at 19:18-20:9, 27:3-6. Defendant's parents at times lived at the Wilshire Condominium and at the Abington Property with Defendant, but they no longer live with him. Trial Tr., March 5 at 54:23-55:11.
The record title holder of the Wilshire Condominium is an entity named Java, LLC ("Java"). Trial Tr., March 2 at 151:14-17; Trial Tr., March 9 at 108:2-4. Java also owned the Abington Property. Trial Tr., March 5 at 17:5-8; see Defendant's Ex. Q. While Plaintiff contends that Defendant is the true owner of the Wilshire Condominium, Defendant testified that Java is the 100% owner. Trial Tr., March 5 at 19:21-20:4. Defendant testified that Java is owned by his father, Nathan Shapow, his late mother, Hela Shapow, previously co-owned Java with her husband, and Defendant has never held an ownership interest in Java, even though he was at one point the agent for service of process. Trial Tr., March 2 at 151:14-24, 156:14-20, 159:6-12, Trial Tr., March 5 at 17:2-17. Plaintiff produced a copy of Java's statement of information filed with the California Secretary of State on October 14, 1999, which Defendant acknowledged signing as manager and agent for service of process. Plaintiff's Ex. 9; Trial Tr., March 2 at 157:9-158:9. To Defendant's knowledge, Java's only business was owning the Abington Property (and later the Wilshire Condominium). Trial Tr., March 2 at 158:3-5.
The Abington Property was sold several years before this bankruptcy case was initiated. Trial Tr., March 5 at 18:14-16. Java apparently acquired the Wilshire Condominium in a 1031 exchange for the Abington Property. Trial Tr., March 2 at 158:23-159:2, March 5 at 18:20-19:4; Defendant's Ex. Q. Defendant testified that his father allows him to live in the Wilshire Condominium. Trial Tr., March 5 at 19:5-7. He testified that, while he used to pay rent on the Abington Property, he does not pay rent on the Wilshire Condominium, and he pays only the homeowners' association fees. Trial Tr., March 2 at 159:13-25, March 5 at 20:10-12. He does not have a lease agreement or anything in writing memorializing this arrangement, but he did have a lease agreement for the Abington Property. Trial Tr., March 5 at 55:12-56:5.
Defendant's stepson, Roy Silver, corroborated Defendant's testimony about the Wilshire Condominium and Java. See Trial Tr., March 9 at 100:25-117:21. Silver testified that Defendant's father, Nathan Shapow, is the 100% owner of Java, Defendant *70has no ownership interest in Java, and Silver manages Java. Trial Tr., March 9 at 102:7-23. Silver testified that the original members of Java were Defendant's father, Nathan Shapow, and late mother, Hela Shapow, and that Silver is the only manager of Java. Trial Tr., March 9 at 104:12-105:19. Java's operating agreement was offered by Defendant to corroborate Silver's testimony. Defendant's Ex. P; see Trial Tr., March 9 at 105:22. Silver testified that he signed the paperwork for the 1031 exchange of the Abington Property for the Wilshire Condominium, that all the proceeds from the sale of the Abington Property went to the purchase of the Wilshire Condominium, and that Defendant received none of the proceeds for himself. Trial Tr., March 9 at 106:2-111:3; see Defendant's Exs. A, Q.
Plaintiff produced a copy of a mechanic's lien in the amount of $ 3,336.76 in favor of Tri-Tech Restoration Company, Inc., recorded against the Abington Property on May 13, 2010. Plaintiff's Ex. 15. The mechanic's lien states, "The owners and reputed owners of the property is/are Mike Shapow 31833 [sic] Abington Dr., Beverly Hills, CA 90210."See id. The Defendant recalled having a mold problem at the Abington Property and possibly hiring Tri-Tech Restoration, but he testified that he never would have told someone that he owned the Abington Property because he did not own it. Trial Tr., March 2 at 153:13-155:18, March 5 at 16:10-24.
Plaintiff's principal, Gary Grabel, testified that in approximately 2009 when Defendant occupied Plaintiff's property, Grabel and Defendant had a conversation about the manner in which one should hold title to real property, and Defendant said Grabel should hold title to his real property in the name of a limited liability company or a corporation to avoid creditors. See Trial Tr., March 2 at 17:8-22:3. Defendant disputes that this conversation ever took place. Trial Tr., March 5 at 13:2-10.
IV. ANALYSIS
"In keeping with the 'fresh start' purposes behind the Bankruptcy Code, courts should construe § 727 liberally in favor of debtors and strictly against parties objecting to discharge." Retz v. Samson (In re Retz) ,
A. Ownership of Accounts Receivable
The principal focus of Plaintiff's case is the allegation that Defendant personally owned accounts receivable on or before the Petition Date, notwithstanding his testimony that he did all his billing through business entities, and his omission of his alleged ownership interest in such accounts from his schedules should support a claim under section 727(a)(4)(A). Alternatively, Plaintiff asserts that the accounts receivable in favor of Defendant's business entities and the entities' bank accounts should be deemed Defendant's assets for purposes of section 727 because the entities are Defendant's alter egos. As discussed below, Plaintiff failed to prove that Defendant personally owned any accounts receivable, *71and Plaintiff's alter ego claim fails as a matter of law.
"Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations." Sonora Diamond Corp. v. Superior Court ,
"It is well accepted that a filing by an individual who is an owner of a corporation brings into the estate only his ownership interest and not the assets of the corporation." In re Young ,
Plaintiff failed to prove that the accounts receivable at issue were not assets of Defendants' entities and that they were actually assets of Defendant individually. Plaintiff failed to provide evidence to contradict Defendant's testimony that he does not personally bill for his physical therapy services, that he has billed through business entities since as early as 2011, and he did not list an ownership interest in accounts receivable on his bankruptcy schedules because he did not personally own accounts receivable on the Petition Date. Plaintiff presented nothing to undermine Defendant's testimony that only his companies have NPIs and he does not personally have his own NPI.
Plaintiff's primary evidence on the issue of ownership of accounts receivable was the deposition testimony of Lori Milas of Westshore, which demonstrates only Westshore's confusion about the issue of ownership of the accounts receivable. Milas testified that she did not know whether Defendant operated through any corporations or whether he made any representations to her about who owned the accounts receivable that Westshore was hired to collect. Depo. Tr. at 21:21-22:2. However, shortly thereafter she responded affirmatively when asked whether she relied on such a representation when she agreed to work with Defendant. Id. at 22:12-19. Milas also opined that "[a]ccording to the [S]ervice [A]greement," Defendant owned *72the accounts, id. at 22:12-15, and that the power of attorney provision in the Service Agreement included a representation that Defendant owned the accounts receivable "free and clear," see id. at 22:19-23:1. The Court must disregard Milas' legal conclusions because Milas is not qualified as a legal expert for purposes of Rule 702 of the Federal Rules of Evidence, and a technical opinion testimony by a lay witness is not admissible under Rule 701(c). Moreover, the power of attorney provision contains no representation that Defendant personally owned the accounts receivable; rather, it grants Westshore the right to collect on behalf of the client. See Ex. 103 to Depo. Tr., ¶ 5. And while the Service Agreement defines "client" as "Mike Shapow PhD, RPT," see Ex. 103 to Depo. Tr. at 1, the signature block indicates that Defendant signed as "president" (though it does not specify the entity of which he is president), see id. at 4.
Moreover, the other documents from the deposition indicate that Westshore was collecting on behalf of different corporations, not on behalf of Defendant as an individual. For example, the header of the Aging Report shows that the client is "Joint Effort." See Ex. 100 to Depo. Tr. The billing software forms sent by Defendant to Westshore do not list Defendant as a service provider; one lists "Joint Effort Medical Wellness," and the other lists "BKP Wellness." See Ex. 107 to Depo. Tr. at 2, 3; see also Depo Tr. at 50:21-51:3. All the invoices that Westshore sent for collections done on behalf of Defendant were invoiced to "Joint Wellness Medical Center." Depo. Tr. at 21:3-20; Exs. 101, 102 to Depo. Tr. Milas believed that Defendant operated under the trade names "Joint Efforts Physical Therapy" and "Joint Wellness Medical Center" and that Defendant used these names on his office billing statements and letterhead. Ex. 7 to Depo. Tr.; see Depo. Tr. at 23:14-25:18. Milas' testimony and the exhibits to the Deposition Transcript simply fail to provide evidence that Defendant personally owned any accounts receivable.
Plaintiff also failed to present any evidence undermining Defendant's testimony that he does not personally have an NPI, the unique number required for a health care provider to bill an insurance company. See Trial Tr., March 9 at 11:13-12:8. He testified that all his clients paid by insurance during the relevant time period, Trial Tr., March 9 at 13:3-8, and only the companies through which he billed had NPIs, Trial Tr., March 9 at 12:9-14:10.
Accordingly, because Plaintiff failed to prove Defendant's ownership of accounts receivable, the Court cannot find that Defendant personally owned any accounts receivable as of the Petition Date.
Plaintiff alternatively seeks to impute ownership of the accounts receivable on Defendant using alter ego liability. There are three methods of disregarding the corporate form to "pierce the corporate veil." See Postal Instant Press, Inc. v. Kaswa, Corp. ,
*73The third method, relevant here, is "sometimes called 'outside' or 'third party' reverse piercing, [and it] occurs when a third party outsider seeks to reach corporate assets to satisfy claims against an individual shareholder."
While reverse piercing and the traditional alter ego doctrine have similar goals, the doctrines achieve those goals in a very different manner. [ Postal Instant Press, Inc. , 162 Cal. App. 4th] at 1522 [77 Cal.Rptr.3d 96 ]. "Traditional piercing of the corporate veil is justified as an equitable remedy when the shareholders have abused the corporate form to evade individual liability, circumvent a statute, or accomplish a wrongful purpose."Id. Outside reverse piercing does not seek to remedy the misuse of the corporate form to shield the individual shareholder. See id. at 1523 [77 Cal.Rptr.3d 96 ]. "Rather, the issue addressed by outside reverse piercing is the shareholder's transfer of personal assets to the corporation to shield the assets from collection by a creditor of the shareholder. In other words, outside reverse piercing seeks to protect the judgment creditor from the shareholder's fraudulent transfer of assets to the corporation."Id. While some courts have applied outside reverse piercing, California courts recognize that such a remedy is "an unacceptable shortcut" because "conversion and fraudulent conveyance already afford judgment creditors an adequate remedy."Id.
Greiling v. Zahoudanis , No. CV 08-06467 ODW (ANx),
*74Like the Ninth Circuit Bankruptcy Appellate Panel in Mihranian , this Court finds that " Postal Instant Press is carefully reasoned and persuasive," and this Court "must follow the law of California's intermediate appellate courts on this point unless [it is] convinced that the California Supreme Court would decide the issue differently." In re Mihranian ,
To support its alter ego theory, Plaintiff relies in part on Sethi v. Wells Fargo Bank, N.A. (In re Sethi) , BAP No. EC-13-1312-KuJuTa,
The bankruptcy court's refusal to acknowledge the separateness of asset ownership between the Debtor and her corporations is troublesome. That the Debtor personally guaranteed the loans to purchase the equipment is irrelevant, as is the fact that the Debtor was the sole shareholder of the medical corporation. While that may have meant that the corporate stock was estate property, the reach of § 541(a) in an individual bankruptcy case did not automatically extend to corporate assets.
Id. at *3. The BAP's reversal of the bankruptcy court on this basis support's this Court's refusal to pierce the corporate veil to impute upon Defendant ownership of his corporations' assets.18
Moreover, even if this Court could apply the outside reverse piercing doctrine, Plaintiff failed to meet its burden as the party seeking to establish alter ego *75liability. Plaintiff must prove: "(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow." Associated Vendors, Inc. v. Oakland Meat Co. ,
"The first requirement for disregarding the corporate entity under the alter ego doctrine-whether there is sufficient unity of interest and ownership that the separate personalities of the individual and the corporation no longer exist-encompasses a series of factors." Misik v. D'Arco ,
(i) commingling of funds and other assets and failure to segregate funds of the separate entities;
(ii) the treatment by an individual of the assets of the corporation as his own;
(iii) the disregard of legal formalities and the failure to maintain arm's length relationships among related entities; and
(iv) the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets between entities so as to concentrate the assets in one and the liabilities in another.
In re Schwarzkopf ,
"Alter ego is an extreme remedy, sparingly used." Sonora Diamond Corp. v. Superior Court ,
While Defendant testified that he has no personal bank accounts and he uses his corporations' bank accounts as his own, *76Plaintiff failed to present other evidence demonstrating such unity of interest and ownership that the separate personalities of the corporations and Defendant no longer exist. For example, Plaintiff presented no evidence that Defendant's corporations diverted assets to the detriment of creditors, commingled funds, or disregarded corporate formalities. Plaintiff's arguments at trial and in its briefing simply cannot take the place of admissible evidence.19
Accordingly, the Court finds that Plaintiff failed to prove that Defendant personally owned any accounts receivable on the Petition Date or during the one-year period preceding the Petition Date, and Plaintiff's alter ego claim also fails as a matter of law. Moreover, even if alter ego liability was an appropriate remedy in this case, Plaintiff failed to carry its burden.
B. The "Transfer" of Accounts Receivable Under Section 727(a)(2)(A)
Plaintiff failed to identify a theory under section 727(a)(2)(A) for which it provided evidence supporting denial of Defendant's discharge. Section 727(a)(2)(A) provides that the "court shall grant the debtor a discharge unless ... the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed ... property of the debtor , within one year before the date of the filing of the petition."
Plaintiff identifies its second claim for relief as a denial of discharge under section 727(a)(2)(A)"for transfers taken to hinder, delay or defraud creditors." See FAC, Adv. Dkt. 39 at 8-9; PTS at 15, ¶ 5. Although Plaintiff failed to identify at trial any alleged transfer of property that could support a claim under section 727(a)(2), the FAC alleges as follows:
... Defendant Shapow, with intent to hinder, delay or defraud Plaintiff and the chapter 7 trustee and all creditors, has transferred, removed, destroyed, mutilated, or concealed property of the Defendant within one year prior to the date of the filing of the petition or ha[s] authorized such acts. Such acts consists of, but are not limited to, transferring accounts receivables [sic] between Shapow and his corporation in order to make a bogus exemption claim and to avoid West Valley's secured liens, and Shapow's personal use of monies obtained from his receivables at any time from December 15, 2014 through November 30, 2015 when the Bankruptcy *77petition was filed, which on information was all used by Shapow for his personal expenses.
FAC, Adv. Dkt. 39 at 9, ¶ 30. Plaintiff's trial brief further alleged that "Shapow either made false ownership statements regarding what legal entity owned the assets or he transferred the assets in violation of the secured liens so these assets were dissipated." Adv. Dkt. 97 at 2:6-8. At no time did Plaintiff identify a disposition of debtor's property, such as transfer or concealment, that could support a claim under section 727(a)(2)(A). To the extent Plaintiff relies on the allegation that Defendant personally owned certain accounts receivable, the Court rejects this allegation as discussed in detail above. Accordingly, the Court will enter judgment in favor of Defendant on the claim under section 727(a)(2)(A).
C. Omissions From the Schedules and SOFA Under Section 727(a)(4)(A).
Section 727(a)(4)(A) provides that the "court shall grant the debtor a discharge unless ... the debtor knowingly and fraudulently, in or in connection with the case ... made a false oath or account."
"A false statement or an omission in the debtor's bankruptcy schedules or statement of financial affairs can constitute a false oath." In re Retz ,
"A fact is material 'if it bears a relationship to the debtor's business transactions or estate, or concerns the discovery of assets, business dealings, or the existence and disposition of the debtor's property.' " In re Khalil ,
Plaintiff must demonstrate that Defendant acted "knowingly and fraudulently."
A debtor has a duty to prepare his statement of financial affairs and schedules "carefully, completely, and accurately." Cusano v. Klein ,
Plaintiff contends that Defendant made false oaths in violation of Bankruptcy Code section 727(a)(4)(A) by failing to disclose in his bankruptcy filings (1) ownership of certain accounts receivable; (2) additional income in 2014 and 2015; (3) ownership of the FJ Cruiser and the Wilshire Condominium; and (4) ownership interests in certain corporate entities.
1. Accounts Receivable
As discussed in detail above, the Court finds that Plaintiff failed to prove that Defendant personally owned any accounts receivable on the Petition Date or during the one-year period preceding the Petition Date, and Plaintiff's alter ego claim fails as a matter of law. Plaintiff failed to carry its burden and the Court cannot conclude that Defendant's failure to list ownership of accounts receivable on his bankruptcy schedules constituted a false oath within the meaning of Bankruptcy Code section 727(a)(4)(A).
2. Income in 2014 and 2015
Similarly, the Court cannot impute ownership of the BHHW Bank Account or the Joint Effort Bank Account on Defendant individually. These bank accounts were undisputedly owned by the respective corporations. See Plaintiffs Exs. 84, 106, 107, 108. However, Defendant admittedly had no personal bank account and used his corporations' bank accounts for his own personal expenses. On his SOFA, he estimated gross income of $ 110,000 in 2014 and $ 49,000 in 2015. Plaintiff's Exs. 61, 62 at 27; Defendant's Ex. N at 6. Accordingly, for Plaintiff to prove that Defendant understated his income in 2014 and 2015, Plaintiff could have shown that Defendant spent materially more than $ 110,000 in 2014 and $ 49,000 in 2015 on personal expenses from his corporate bank accounts. But Plaintiff failed to do so.
The bank statements offered into evidence by Plaintiff for the BHHW Bank Account and the Joint Effort Bank Account show that (i) in 2014, the total amount of deposits in both accounts was $ 292,951.24 and the total in withdrawals and fees was $ 293,215.46; and (ii) the only statement from 2015 was the May 2015 statement for the BHHW Bank Account, which shows $ 30,057.55 in deposits and $ 31,457.58 in withdrawals and fees in May 2015. Other than the May 2015 bank statement for the BHHW Bank Account, Plaintiff offered no other evidence of bank activity in 2015. Even if the entirety of the withdrawals and fees from May 2015 could be classified as Defendant's personal expenses, *79this amount is much less than his estimated income of $ 49,000, so Plaintiff failed to prove that Defendant understated his 2015 income.
As for the 2014 income, the bank statements show numerous ATM withdrawals and checks payable to "cash" or to Defendant. The statements also show expenditures at restaurants, grocery stores, and utilities, among other things. There is no evidence in the record differentiating between personal expenses and business expenses from these bank accounts. Plaintiff did not elicit testimony from Defendant about the purpose of these expenses or otherwise provide evidence demonstrating that Defendant spent more than $ 110,000 in 2014 on personal expenses from these bank accounts. Accordingly, the Court cannot conclude that Defendant's statement of his 2014 and 2015 income constituted a false oath within the meaning of Bankruptcy Code section 727(a)(4)(A).
3. The FJ Cruiser and the Wilshire Condominium
Plaintiff contends that Defendant owns both the FJ Cruiser and the Wilshire Condominium, notwithstanding the uncontroverted evidence that he is not the record title holder of either. In California, there is a record title presumption codified in California Evidence Code section 662, which provides generally that "[t]he owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof."
Regarding the FJ Cruiser, the parties stipulated at trial that Defendant's father, Nathan Shapow, is the sole record title holder of the FJ Cruiser. Trial Tr., March 5 at 23:19-23. Plaintiff offered into evidence an online vehicle record consistent with this stipulation. See Plaintiff's Ex. 83. Plaintiff offered no evidence to refute Defendant's testimony that his father is disabled and made the down payment on the car so Defendant could drive him around. The fact that Defendant makes the payments on the car loan does not rise to the level of clear and convincing proof necessary to rebut California's record title presumption. Accordingly, because Plaintiff failed to prove that Defendant owns the FJ Cruiser, the Court cannot conclude that Defendant's failure to list ownership of the FJ Cruiser on his bankruptcy schedules constituted a false *80oath within the meaning of Bankruptcy Code section 727(a)(4)(A).
Similarly, it is undisputed that the sole record title holder of the Wilshire Condominium, like the Abington Property before it, is Java, LLC. See Trial Tr., March 2 at 151:14-17; Trial Tr., March 5 at 17:5-8; Trial Tr., March 9 at 108:2-4; Defendant's Ex. Q. However, Plaintiff contends that Java is owned by Defendant, notwithstanding the testimony and evidence that Java is owned by Defendant's father, and it was previously owned by Defendant's father and late mother. Defendant's testimony about the Abington Property, the Wilshire Condominium, and ownership of Java was corroborated by Defendant's stepson, Roy Silver, whom the Court found to be a credible witness. Silver testified that he signed the paperwork for the 1031 exchange of the Abington Property for the Wilshire Condominium, that all the proceeds from the sale of the Abington Property went to the purchase of the Wilshire Condominium, and that Defendant received none of the proceeds for himself. Trial Tr., March 9 at 106:2-111:3; see Defendant's Exs. A, Q.
The mechanic's lien on the Abington Property, Plaintiff's Ex. 15, does not establish that Defendant owned the Abington Property because such a conclusion would rely on inadmissible hearsay. It simply establishes that Tri-Tech Restoration Company, Inc. believed that Defendant owned the Abington Property. Defendant testified that he never would have told someone that he owned the Abington Property because he did not own it, and Plaintiff simply failed to refute this testimony. Moreover, ownership of the Abington Property would be of little probative value because the issue here is whether Defendant made a false oath regarding ownership of the Wilshire Condominium.
As for the testimony of Gary Grabel that Defendant discussed with him sometime in 2009 the manner in which one should hold title to property, the Court does not accord much weight to such testimony. Mr. Grabel, as Plaintiff's principal and longtime adversary of Defendant, has a material interest in the outcome of this proceeding and on the issue of Defendant's ownership of the Wilshire Condominium. Moreover, Mr. Grabel's testimony regarding the alleged conversation with Defendant differed on direct examination and cross-examination. On direct examination, Mr. Grabel testified that Defendant told him he should hold title to his house in a limited liability company or corporation so he could avoid creditors. Trial Tr., March 2 at 17:21-18:1. However, on cross-examination, Mr. Grabel testified that Defendant said that he held title to his own house in the name of an entity to avoid his creditors. Trial Tr., March 2 at 20:17-24. Such conflicting testimony by an interested witness is of little probative value in establishing clear and convincing proof to overcome the record title presumption.
Thus, because Plaintiff failed to prove that Defendant is the beneficial owner of the Wilshire Property or the actual owner of Java, LLC, the Court cannot conclude that Defendant's failure to list ownership of the Wilshire Property on his bankruptcy schedules constituted a false oath within the meaning of Bankruptcy Code section 727(a)(4)(A).
4. Corporate Interests
Despite the numerous business entities with which Defendant has been involved, he listed an ownership interest in only two entities in response to item 13 on his Schedule B regarding "[s]tock and interests in incorporated and unincorporated businesses." He initially listed only a 100% ownership interest in Beverly Hills Health Works, and then he later amended his *81Schedule B to add a 30% interest in Gratto Aquatic. See Plaintiff's Exs. 60 at 2, 61 at 8; Defendant's Ex. N at 3. However, Defendant's original SOFA disclosed interests in Total Wellness Rehabilitation, Beverly Hills Health Works, and Joint Effort Medical, see Plaintiff's Exs. 61, 62 at 32, and his amended SOFA added an interest in Gratto Aquatic, see Defendant's Ex. N at 11. As described below, the Court cannot conclude that any omission justifies denial of Defendant's discharge under section 727(a)(4)(A) because Plaintiff failed to prove either that the omission was a false oath, that it was material, or that Defendant did not simply omit a fictitious business name.
a. Gratto Aquatic
It is undisputed that, as of the Petition Date, Defendant had a 30% ownership interest in Gratto Aquatic, which was formed in June 2015, approximately five months before the Petition Date. While Defendant did not initially list an ownership interest in Gratto Aquatic in his schedules, he amended his Schedule B and SOFA on November 21, 2017, to represent his 30% ownership interest as of the Petition Date.
The Court is not persuaded that Defendant acted "knowingly and fraudulently" when he omitted Gratto Aquatic from his Schedule B and SOFA. Defendant testified the Gratto Aquatic was formed to facilitate a contract for Defendant to provide aquatic therapy at the Los Angeles spa Grotto del Sal using its salt water pools and facilities. He also testified that Gratto Aquatic had no assets on the Petition Date because it was not yet operating, which is why he did not initially list it on his bankruptcy schedules. Given that there would be no incentive for Defendant to omit Gratto Aquatic from his original schedules because it had no assets or value, and he later amended his Schedule B and SOFA to add Gratto Aquatic, the Court cannot conclude that Defendant acted knowingly and fraudulently by initially omitting Gratto Aquatic from his schedules.
However, even if Defendant had acted knowingly and fraudulently, Plaintiff failed to prove that Defendant's omission of Gratto Aquatic was material. There is no evidence that Gratto Aquatic owned any assets or otherwise had value on the Petition Date. The only additional information the Trustee would have obtained if Defendant initially listed Gratto Aquatic in his schedules was that Defendant had a 30% ownership interest in a valueless entity under which he may or may not perform services in the future. Such an omission does not detrimentally affect administration of the estate. Accordingly, the Court cannot conclude that Defendant's omission of Gratto Aquatic from his schedules and SOFA justifies denial of his discharge under section 727(a)(4)(A).
b. Other Entities
i. BKP Wellness
Defendant testified that he was a part owner of BKP Wellness. Trial Tr., March 2 at 114:2-6. However, BKP Wellness ceased doing business under its own name in 2007 and instead operated under the fictitious business name "Total Wellness Rehabilitation," at the request of Defendant's former business partner, Brian Padveen. Trial Tr., March 2 at 117:7-118:9, 128:3-6; Plaintiff's Ex. 26. Thus, the Court cannot conclude that Defendant's omission of BKP Wellness from Schedule B was a false oath because the business operated under the name "Total Wellness Rehabilitation" since 2007, see
ii. Mike Shapow, Registered Physical Therapist, Inc.
Defendant listed no ownership interest in "Mike Shapow, Registered Physical Therapist, Inc." on his Schedule B in this case, but on the Schedule B filed in Defendant's First Bankruptcy Case on December 26, 2012, Defendant did list a 100% ownership interest in this entity. See Plaintiff's Ex. 44 at 2; Case No. 2:12-bk-50729-NB, Dkt. 9. However, the Court cannot conclude that this omission was a false oath because there is nothing in the record indicating that Defendant still had an ownership interest in this entity on the Petition Date in this case . Moreover, Defendant testified that "Mike Shapow, Registered Physical Therapist, Inc." never operated, never billed for Defendant, held no accounts receivable, and had no assets. Trial Tr., March 5 at 66:9-67:2. Plaintiff failed to refute these facts.
iii. Total Wellness Rehabilitation
Defendant did not list an ownership interest in Total Wellness Rehabilitation on his Schedule B in this case, but he identified himself as the President and 100% owner on the SOFA in the Total Wellness Rehabilitation Case. See Case No. 1:15-bk-13752-VK, Dkt. 9 at 25, ¶ 21. The Court concludes that this omission was not material under the circumstances. First, Plaintiff did not raise this omission, implicitly acknowledging it could not support a section 727 claim. Second, while Defendant did not list Total Wellness Rehabilitation on his Schedule B, he did list it on his SOFA. Third, the schedules in the Total Wellness Rehabilitation Case indicate that the entity's liabilities ($ 1,068,491) far exceeded its assets ($ 69,682), so Total Wellness Rehabilitation was valueless. See Case No. 1:15-bk-13752-VK, Dkt. 9. This is supported by the "no-asset" report entered by the chapter 7 trustee in that case. See
iv. Joint Effort Medical Wellness
Defendant did not list an ownership interest in Joint Effort Medical Wellness on his Schedule B in this case, but he testified that he presently owns the entity. Trial Tr., March 2 at 88:25-89:2. Defendant also listed a 100% ownership interest in Joint Effort Medical Wellness on the Schedule B filed in Defendant's First Bankruptcy Case on December 26, 2012. See Plaintiff's Ex. 44 at 2; Case No. 2:12-bk-50729-NB, Dkt. 9. However, Defendant also testified that "Joint Effort" was simply a fictitious name that he continued to use after the business wound down so that he could continue to collect on bills and receive mail. Trial Tr., March 9 at 81:19-82:4. This testimony is supported by bank statements from the BHHW Bank Account on which Plaintiff heavily relied, which identify the account holder as "Beverly Hills Health Works II dba Joint Effort Medical Wellness." See Plaintiff's Exs. 84, 108. As for the screenshot of the website for Joint Effort Medical Wellness offered into evidence by Plaintiff, Plaintiff's Ex. 96, Defendant testified that notwithstanding the date shown on the screenshot, January 4, 2017, Joint Effort Medical Wellness had stopped doing business in 2013, and the website's continued availability would have been a mistake because he did not maintain the website himself. Trial Tr., March 9 at 72:15-73:1, 74:4-9, 75:23-76:20, 79:7-18, 92:6-94:15. At first Defendant testified that the paperwork he presented to his clients still read "Joint Effort Medical Wellness" as late as *832015 or 2016. Trial Tr., March 9 at 96:3-11, 97:21-24. He later changed his story and said that the paperwork would have included only the name of Beverly Hills Health Works at that time. Trial Tr., March 9 at 98:3-14. The Court finds that the testimony regarding the website and Defendant's continued use of the Joint Effort Medical Wellness paperwork is consistent with the notion that Joint Effort Medical Wellness was no longer operating and was simply a fictitious business name he kept to enable him to collect receivables and accept mail.
The Court cannot conclude that Defendant made a false oath in violation of section 727(a)(4)(A) by omitting Joint Effort Medical Wellness from his Schedule B because Plaintiff failed to offer evidence demonstrating the nature of Joint Effort Medical Wellness in relation to Defendant's business. However, even if such an omission was a false oath, Plaintiff failed to prove that the omission was material for several reasons. First, Joint Effort Medical Wellness appears to have been a fictitious name for Beverly Hills Health Works, which Defendant did disclose on his Schedule B, and Joint Effort Medical Wellness was listed on Defendant's SOFA. Moreover, Defendant testified that many of Joint Effort Medical Wellness' receivables were uncollectable, and others appear to have been turned over to Epic as a result of its judgment. Finally, Plaintiff failed to demonstrate that Joint Effort owned assets or otherwise had value on the Petition Date, that the Trustee would have obtained additional information if Defendant had listed Joint Effort Medical Wellness on his schedule B, or that such an omission detrimentally affected administration of the estate.
c. Series II Entities
Defendant listed on his SOFA Beverly Hills Health Works, Joint Effort Medical Wellness, and Total Wellness Rehabilitation, but he did not list Beverly Hills Health Works II, Joint Effort Medical Wellness II, or Total Wellness Rehabilitation II. Plaintiff contends that Defendant's failure to list the Series II Entities was a material omission that supports denial of discharge under section 727(a)(4). The Court concludes that the omission of the Series II Entities were false oaths under section 727(a)(4), but Plaintiff failed to prove that these omissions were material.
As of the trial date, the California Secretary of State's records showed the following business entity profiles:20
*84Entity Registration Status Entity Name Agent for Service Number Date of Process C2200188 10/13/2000 SOS/FTB Beverly Hills Health Mike Shapow SUSPENDED21 Works C3533555 02/11/2013 FTB SUSPENDED Beverly Hills Health Sepi Dayan Works II C2617683 07/12/2004 FTB SUSPENDED Joint Effort Medical Mike Shapow Wellness C3546801 03/25/2013 FTB SUSPENDED Joint Effort Medical Morris Shapow Wellness II C2617599 07/12/2004 FTB SUSPENDED Total Wellness Mike Shapow Rehabilitation C3533554 02/11/2013 FTB SUSPENDED Total Wellness Sepi Dayan Rehabilitation II
[Editor's Note: The preceding image contains the reference for footnote21 ].
See Business Search , CALIFORNIA SECRETARY OF STATE , https://businesssearch.sos.ca.gov.
In each case the record shows that the Series I Entity was registered with the California Secretary of State in the early 2000s, and the Series II Entity was registered in early 2013 while the Series I Entity was suspended for failure to pay state taxes. See Business Search , CALIFORNIA SECRETARY OF STATE , https://businesssearch.sos.ca.gov; Trial Tr., March 2 at 64:11-17, 168:21-24, 169:15-18. The Series II Entities each have different entity numbers from their respective Series I Entity. See
However, even if Defendant was correct in his belief that each Series II Entity was *85the same entity as its respective Series I Entity, this does not explain his failure to schedule the entities using their true names. Defendant's testimony shows that he changed the names of the Series I Entities so he could continue to operate while avoiding a levy by the California Franchise Tax Board. When he was asked why he changed the name of Total Wellness Rehabilitation to Total Wellness Rehabilitation II, Defendant testified, "I had a Franchise Tax Board lien that I couldn't operate, and I just had to form another corporation. I couldn't make a living." Trial Tr., March 2 at 64:11-17. He said the same was true of Joint Effort Medical Wellness. Trial Tr., March 2 at 168:21-24. When he was asked, "[O]ther than delaying, making it harder for someone to levy on the bank account, what reason would you have for changing the name?," the Defendant responded, "No other reason." Trial Tr., March 2 at 169:15-18 Trial Tr., March 2 at 64:11-17, 168:21-24, 169:15-18. This testimony proves that Defendant's only reason for changing the names was to deceive at least one creditor, the Franchise Tax Board, and he did this deliberately and consciously. Moreover, his failure to schedule the Series II Entities was "fraudulent" for purposes of section 727(a)(4)(A) because he knew the Series I Entities' names had been changed when he listed them on his SOFA, and the Court can easily infer that his intention when he made the omission was the same as it was when he decided to change the names-to deceive his creditors. Thus, Defendant acted "knowingly and fraudulently" when he failed to list the true names of the Series II Entities on his SOFA.
However, on the record before it, the Court cannot conclude that these omissions were material. As discussed above, Plaintiff failed to demonstrate that the Series II Entities were different entities from their respective Series I Entities, which Defendant did list on his SOFA. Plaintiff identified no asset, transfer, cause of action, or anything else the Trustee would have been able to discover had Defendant scheduled the Series II Entities. Plaintiff has not articulated how the Trustee's understanding of Defendant's financial condition would have been different without these omissions. Thus, these omissions were not material because they did not detrimentally affect administration of the estate, and they cannot support denial of Defendant's discharge under section 727(a)(4)(A).
d. Westshore Medical Billing
At trial, Plaintiff presented for the first time a theory that Defendant made a false oath by not listing Westshore in response to item 19 on his SOFA. See Trial Tr., March 2 at 76:18-21, March 5 at 146:25-147:2. Item 19 asks for a list of all (a) "bookkeepers and accountants" who "kept or supervised the keeping of books of account and records of the debtor" within two years preceding the Petition Date; (b) "firms or individuals" who "audited the books ... or prepared a financial statement of the debtor" within two years preceding the Petition Date; (c) "firms or individuals" who "were in possession of the books of account and records of the debtor" on the Petition Date; and (d) "financial institutions, creditors and other parties" to whom a financial statement was issued by the debtor within two years preceding the Petition Date. See Plaintiff's Exs. 61, 62 at 33. First, the Court rejects that notion that Westshore, as a billing collector, is a "bookkeeper or accountant" For the debtor. Even though Westshore performed its billing and collection work within two years of the Petition Date, it performed the work for Defendant's business entities, not for Defendant, so any books or records it possessed did not belong to Defendant. Finally, even if Plaintiff could establish *86that Westshore possessed Defendant's books and records, and the omission of Westshore from item 19 was a false oath, such an omission was not material because Westshore possessed only information regarding the accounts receivable that the Court finds were not property of the Defendant. Thus, omission of Westshore from item 19 on the SOFA did not detrimentally affect administration of the estate.
* * *
Thus, the Court will enter judgment in Defendant's favor on the claims under section 727(a)(4)(A) because Plaintiff failed to prove that Defendant, knowingly and fraudulently, made a false statement or omission regarding a material fact.
D. Section 727(a)(3)
Although it appears that Plaintiff has all but abandoned its cause of action under Bankruptcy Code section 727(a)(3), the Court will address the theory on the merits. The Pre-Trial Stipulation references section 727(a)(3) as a disputed issue of law to be litigated at trial. Plaintiff, however, failed to present any evidence in support of this cause of action. Plaintiff also failed to direct the Court to any such evidence in its post-trial briefs. Adv. Dkt. 120, 124. In fact, in the 54 pages of Plaintiff's post-trial briefing, the only mention of section 727(a)(3) comes in the conclusion of the final brief as follows: "Plaintiff carried its burden of proof to prove facts supporting denial of discharge under 727(a)(4), 727(a)(2) and 727(a)(3)." Adv. Dkt. 124 at 9.
Section 727(a)(3) provides for denial of a debtor's discharge if "the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor's financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case."
Plaintiff has not identified any failure by Defendant to maintain or preserve adequate records. To the extent Plaintiff intended to base a section 727(a)(3) claim on the theory that Defendant failed to provide documents in response to Plaintiff's discovery requests in the underlying state court action and related judgment debtor examinations, the theory fails because those events were too remote in time, and there is no evidence that Defendant failed to maintain and preserve records in connection with this case . Plaintiff obtained its judgment in the state court action in September 2010, more than five years before the Petition Date, and Plaintiff's counsel testified that he sought documents in connection with the judgment debtor examination conducted in December 2014, almost one year before the Petition Date. See, e.g., Trial Tr., March 5 at 87:16-21. There is no evidence that Defendant failed to respond to discovery in this case or that the Trustee could not ascertain Defendant's financial condition based on Defendant's failure to maintain or preserve his books and records. To the extent Plaintiff intended to base this claim on Defendant's failure provide documentation of the billing done by entities collecting *87accounts receivable in connection with his services, the theory fails because those accounts receivable were not property of the Defendant. Accordingly, the Court will enter judgment in favor of Defendant on the claim under section 727(a)(3).
V. CONCLUSION
Plaintiff stated plausible theories under section 727 in the FAC, in its briefing, and at trial, but it simply failed to provide enough evidence to support those theories, especially in light of the policy construing section 727 liberally in favor of debtors and strictly against parties objecting to discharge. See In re Retz ,
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