I REPRESENTED a foreign company with a $250,000-claim for a 40-foot container of manufactured goods that it delivered to the debtor, a California company, on December 30, 2014.
The debtor had been in Chapter 11 for a year before the trustee was able to convert the case to Chapter 7 on April 4, 2015. The client continued doing business with the debtor while it was in Chapter 11, shipping the latter millions of dollars worth of merchandise, and up to a week before the debtor converted to Chapter 7. When debtor converted to Chapter 7, it owed the client $250,000 of unpaid merchandise, and a trademark that the client had paid debtor $120,000 for.
The court had previously ruled in favor of the client for the $120,000 trademark, saying that it belongs to the client since they paid $120,000 for it. The trustee argued that the transfer to the client of the trademark occurred after the case was converted to Chapter 7, even though the client had paid $120,000 for it two years prior. Hence, the transfer was void. That issue went to the court on a motion, and the court ruled that the trademark belonged to the client since they paid for it.
It did not matter that the transfer was made after conversion to Chapter 7, implying that debtor no longer had any legal or equitable interest on the trademark as of payment date. The court, however, left the issue of client’s claim for $250,000 hanging. A hearing was heard on this second matter after discovery was completed, and still the court could not decide one way or the other. The objecting creditor argued that the forty foot container did not exist and that the shipment was never made to the debtor, or even if the shipment was made, the debtor had paid the $250,000 in full.
Needless to say, I found the argument rather strange.
The client presented invoices signed by the owner of the company, the truck receipt for the 40-foot container, and an accounting summary showing a net unpaid amount of $250,000. So, the court set just this issue, whether or not the $250,000 was owed to the client for trial on September 12, 2016.
Three weeks before the trial date, my client informs me that the foreign government, which owns the company has decided that the client, the president of the company, will not be allowed to appear and testify before a U.S. court for political reasons. I filed a motion to allow the client’s testimony by telephone. The creditor objected that they would not be able to observe the demeanor of the witness if he is allowed to testify by phone. This became moot because the government also prohibited the witness from testifying by phone.
So, all the evidence we submitted for trial, including the declaration of the witness was thrown out the door on the day of trial because the witness was not around to testify and be cross-examined. In other words, we had no evidence, documentary or testimony, supporting our position at trial, while the other party had all its evidence coming in since its witness appeared to testify.
On September 12, trial promptly started at 9.30 a.m. and I was sitting there on my side all by myself (and God the Holy Spirit who is invisible but there nevertheless, giving me aid and comfort). The other side had two lawyers and their expert witness on international trade documents. First order of business, the judge said that the declaration of our witness was stricken off the record since our witness was not around to be cross-examined, meaning, we had no evidence!
The creditor called their expert witness to testify. I objected that he was not a percipient witness. The judge agreed with me. They insisted that their expert witness would testify on the redaction of information on the bill of lading and customs entry. I saw the loophole and I withdrew my objection to the testimony of their expert witness. My plan was to bring our evidence in by cross-examining the witness as an adverse witness. Lo and behold, I was able to cross-examine the witness for two hours with pinpoint precision on all relevant documents using his expertise against the other party. This is what happens when God the Holy Spirit is helping you out. They tried to salvage the damage done by a series of direct questions to their own witness. But it was too late.
Just before noontime, the judge gave his ruling. He said that this was indeed a strange case as there was no witness for my client to testify and there was no evidence to support our position. But during the cross-examination, the evidence slowly crept in. By a hairline, the judge ruled in favor of my client for $250,000. For me, this was a miracle, indeed. I had zero chance of winning this case but at the last minute, the situation reversed itself with God’s help.
87-year-old senior seeks Chapter 7 relief
The second client is 87 years old. We filed his first Chapter 7 case 20 years ago when he was 67 and his wife was still alive. They owed about $50,000 in credit cards 20 years ago.
Those were all discharged and they built up their credit again. However, they now owe about $20,000.
The wife passed last year. They were able to travel the world in the last 20 years. But since the wife has passed away, he doesn’t feel like paying the $20,000 anymore. He’s just tired of paying for it. They used the cards to travel the world, but that was their last time around.
Last week, one credit card sued him for $10,000. With his social security at $1,000 a month, there really is no money to pay the cards. So, the only logical step is the get rid of his cards with a Chapter 7 discharge.
The client is still able to drive around by himself at 87. He has chronic back pain and has four stents in his heart arteries, but he still praises the Lord for his relatively good health!
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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S. Fremont Ave, Mailstop 58, Building A-1 Suite 1125, Alhambra, CA 91803.
