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In re
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) FORORDER:
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Debtors.
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) (4)WAIVING14DAYSTAYIMPOSEDBY
) FEDERAL RULE OF BANKRUPTCY
) PROCEDURE 6004(h);
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) Hearing:
) Date: January 2, 2013
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Ctrm: 1475
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TABLE OF CONTENTS
Page
Chapter 7 Trustee's Motion For Order: Approving (1) Sale Agreement With
Michael Flynn Regarding The Sale And Purchase Of The Estate's Interest In Certain
Property; (2) Approving Overbid Procedure; (3) Deeming Buyer To Be A Good
Faith Purchaser Pursuant To 11 U.S.C. Section 363(m); (4) Waiving 14 Day
Stay Imposed By Federal Rule Of Bankruptcy Procedure 6004(h) ........................ 1
Summary .............................................................. 1
Background Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
910
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Description Of Assets To Be Sold And Fair Market Value Of The Assets ...... 5
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The Proposed Sale Of The Saleable Assets Is For Fair Market Value ............... 7
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I..
II.
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III.
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IV.
Conclusion ...................................................... 14
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Declaration Of Michael Flynn, Proposed Buyer ..................................... 27
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TABLE OF AUTHORITIES
Page(s)
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CASES
In re Crown Corf.oration,
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STATUTES
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u.s.c. 363(b)(l)
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u.s.c. 703.140(b)(l)
u.s.c. 703.140(b)(3)
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u.s.c. 703.140(b)(5)
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OTHER AUTHORITIES
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Federal Rule of Bankruptcy Procedure 6004(h) .................... 1, 10, 11, 13, 15, 24, 25
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TO THE HONORABLE SHERI BLUEBOND, UNITED STATES BANKRUPTCY JUDGE;
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THE OFFICE OF THE UNITED STATES TRUSTEE, AND ALL INTERESTED PARTIES:
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Jason M. Rund, the duly appointed, qualified and acting Chapter 7 Trustee ("Trustee") for
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the bankruptcy estate of Dennis Lee Montgomery and Brenda Kathleen Montgomery ("Debtors"), ____ _
brings this Motion ("Motion") for Order Approving the Trustee's Sale Agreement with Michael
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Flynn regarding the Trustee's sale of certain assets and in support of the Motion, the Trustee
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SUMMARY
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The Trustee has received and accepted an offer from Michael Flynn ("Proposed Buyer") for
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the purchase of certain assets of the estate not previously claimed exempt, purchased by the Debtors,
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or previously abandoned by the Trustee for the amount of $20,000 subject to overbid. By this
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Motion, the Trustee is requesting approval of his proposed Sale Agreement, approval of overbid
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procedures and a waiver of the 14 day stay imposed by FRBP 6004(h). The specific assets subject
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to the Sale Agreement are discussed below. The Trustee's Motion should be approved. Fair market
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value is being realized for the assets subject to the Sale Agreement and the approval of the Motion
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BACKGROUND INFORMATION
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1.
On June 26, 2009 ("Petition Date"), the Debtors filed a voluntary petition for relief
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2.
Jason M. Rund is the duly appointed, qualified and acting Chapter 7 Trustee
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3.
Listed assets ofthe bankruptcy estate on the Debtors' Schedules include the following
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real property: real property located at 6 Toscana Way, Rancho Mirage, California valued at
$952,000; real property located at 3812 94th Ave NE, Yarrow Point, Washington, valued at
$2,150,000; and real property located at 12720 Buckthorn Lane, Reno, Nevada, valued at $605,000
(collectively, "Real Properties"). A copy of the Debtor's Schedule A is attached hereto as Exhibit
4.
The Debtors' Schedules also include the following personal property assets: Certain
bank accounts valued at a total of $10,036.89; household goods and furnishings valued at $8,000;
books and pictures, including a CD Juke Box, valued at $1, 100; wearing apparel valued at $4,540;
9- jewelry valued ar$98~902~80; a term lifeinsurance policy valuea af$U:UO; an IRA valueffaf$2o~4U2;
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1,000 shares of Nevada Security Bank Stock valued at $859; Accounts Receivable valued at
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$526,204; certain patents valued at $10,000,000; three automobiles - a 2006 Silverado valued at
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$9,845; a 2005 Cadillac CTS valued at $13,850; and a 2003 Tahoe valued at $8,915; office
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equipment valued at $875; other personal property listed as "per Court Order entered in this
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$2,104,600.12; and claims against various parties valued $38,809,011.12, scheduled as follows: (a)
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the Claims against the Liner Firm, Teri Pham, and Deborah Klar for indemnification regarding
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sanction order in Federal Court Reno, NV Case No. 306-cv-0056-PMP-VPC valued at $204,411.00;
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(b) Claims for legal malpractice against Liner firm, Terri Pham, Deborah Klar, Tuneen Chisolm,
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Shannon Anderson, Robert Oliver, Richard Mooney, Ryan Lapine, Robert Shore, Stuart A. Liner,
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Peter Bransten, Ellen Garofalo, and Randal Sunshine in Federal Court Reno, NV Case No. 306-cv-
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0056-PMP-VPC valued at $10,000,000.00; and (c) Claims for misrepresentations against Edra
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Blixseth and the Liner Law Firm for settlement agreement with Warren Trepp and Etreppid
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of the Debtors' Schedule B is attached hereto as Exhibit "2" and incorporated herein by this
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reference.
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The Debtors have claimed fully exempt the following Personal Property Assets:
household goods and furnishings in the amount of $21,065 per Section 703.140(b)(3) and (b)(6);
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books and pictures in the amount of $3,188 per Section 703.140(b)(3); wearing apparel in the
amount of $4,540 under Section 703.140(b)(3); and the Debtors' IRA in the amount of $26,402
6.
The Debtors have claimed partially exempt the following Personal Property
Assets: jewelry in the amount of $19,900 per Section 703.140(b)(4), (1) and (5); and 2006 Chevy
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The following Personal Property Assets were sold to the Debtors per Court Order
three automobiles - a 2006 Silverado; a 2005 Cadillac CTS; and a 2003 Tahoe valued at $8,915.
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The following scheduled Personal Property Assets were abandoned by the Trustee
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pursuant to Court Order entered November 10, 2010: (a) the Claims against the Liner Firm, Teri
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Pham, and Deborah Klar for indemnification regarding sanction order in Federal Court Reno, NV
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Case No. 306-cv-0056-PMP-VPC valued at $204,411.00; (b) Claims for legal malpractice
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against Liner firm, Terri Pham, Deborah Klar, Tuneen Chisolm, Shannon Anderson, Robert
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Oliver, Richard Mooney, Ryan Lapine, Robert Shore, Stuart A. Liner, Peter Bransten, Ellen
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Garofalo, and Randal Sunshine in Federal Court Reno, NV Case No. 306-cv-0056-PMP-VPC
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valued at $10,000,000.00; and (c) Claims for misrepresentations against Edra Blixseth and the
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Liner Law Firm for settlement agreement with Warren Trepp and Etreppid Technologies on
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09/08 valued at $26,500,000.00. Attached hereto as Exhibit "3" and incorporated herein by this
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9.
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Trustee pursuant to Court Order entered March 24, 2010: Complaint for violation of the False
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Claims Act 31 U.S.C. Section 3129, et seq. and conspiracy to violate the False Claims Act filed
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by the Debtor on behalf of himself and the United States Government in camera and under seal in
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the District Court of Nevada. Attached hereto as Exhibit "4" and incorporated herein by this
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10.
The Trustee is currently holding a large number of documents at All Aboard Mini
Storage, 1705 S. State College Boulevard, Unit #19, Anaheim, California, ("Documents In
Storage"), including but not limited to, documents delivered from the Liner Firm obtained in
their representation of the Debtor and from discovery documents received by the Liner Firm in
connection with litigation in which they represented the Debtor; and documents relating to
litigation in Nevada, wherein upon the request of the United States Department of Justice
("DOJ"), the Nevada District Court entered several protective orders including an Order entered
protective order regarding discovery matters between the Debtor and eTreppid on September 11,
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The DOJ reviewed and redacted all of the Documents In Storage prior to their
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receipt by the Trustee so as to comply with the Protective Order. The Trustee has caused the
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review of the Documents In Storage and has verified that all of the documents appear to have
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been reviewed by the DOJ. The Trustee is informed and believes that the Documents In Storage,
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since they are fully redacted, are no longer subject to the DOJ Protective Order.
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With regards to the eTreppid Protective Order and the Documents In Storage
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additional stipulation with eTreppid, which was approved by the Bankruptcy Court on August
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30, 2010. Pursuant to this additional stipulation with eTreppid, the Trustee may seek and obtain
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an order from the Bankruptcy Court allowing the release of these documents, after providing
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eTreppid with the opportunity to collect the documents. A copy of the Trustee's stipulation with
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eTreppid approved by Order entered August 30, 2010 is attached hereto as Exhibit "5" and is
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incorporated herein by this reference. The Trustee has requested direction from eTreppid as to
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their desire to collect the documents and has not received a response. As part of the motion to
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approve this Agreement, the Trustee will also seek confirmation that the documents marked by
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The Proposed Buyer, Michael Flynn, wishes to purchase the Bankruptcy Estate's
interest, if any, the remaining assets not claimed exempt, purchased by the Debtors or previously
abandoned by the Trustee, for the purchase price of $20,000 ("Offer") as follows:
a.
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That certain real property located at 3 812 9th Ave. NE, Yarrow Point, WA,
THE SOUTH 25 FEET OF LOT 21, AND ALL OF LOT 22, BLOCK 1,
REPLAT OF PORTIONS OF YARROW, ACCORDING TO THE PLAT
THEREOF, RECORDED IN VOLUME 21 OF PLATS, PAGE 11, IN
KING COUNTY, WASHINGTON
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(herein after referred to as the "Yarrow Point Property"). The Yarrow Point Property is over
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encumbered. A Relief from Stay Order was entered by the Bankruptcy Court on May 26, 2010.
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In addition, the Debtors' Schedules indicate that Warren Trepp may have a judgment lien
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encumbering this property.
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b.
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California ("Rancho Mirage Property"). The Rancho Mirage Property is over encumbered. A
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Relief from Stay Order was entered by the Bankruptcy Court on October 27, 2009. In addition,
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the Debtors' Schedules indicate that Warren Trepp may have a judgment lien encumbering this
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property.
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c.
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("Nevada Property"). The Nevada Property is over encumbered. Relief from Stay Orders were
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entered by the Bankruptcy Court on October 28, 2009 and November 18, 2009. In addition, the
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Debtors' Schedules indicate that Warren Trepp may have a judgment lien encumbering this
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property.
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d.
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that on the Petition Date, the Debtors had no non-exempt funds in their scheduled bank accounts.
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e.
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executed on Blxware's assets in Washington State. Accordingly, Blxware is no longer operating
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and the scheduled receivable has no value.
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Debtors' scheduled interest in patents has no value. The Debtor's alleged patents and technology
were part of an investigation of the Debtor by the U.S. Government for, among other things,
fraud. Considering the allegations of fraud against the Debtor involving the Debtor's alleged
technology, the estate's interest in the patents have no value. Moreover, the alleged patents are
subject to a judgment lien in favor of eTreppid Technologies in the approximate amount of $26
million.
g.
Any and all claims and/or causes of action derived from or arising out of
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previously abandoned by the Trustee. The Trustee is unaware of any claims or causes of action
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"derived from or arising out of the assets identified on the Debtors' schedules".
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h.
Any and all proceeds derived from or arising out of assets identified on the
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Debtors' Schedules which are not claimed exempt, purchased by the Debtors or previously-
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abandoned by the Trustee. The Trustee is unaware of any proceeds derived from or arising out of
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assets identified on the Debtors' Schedules which are not claimed exempt, purchased by the
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1.
Any and all claims and/or causes of action against Edra D. Blixseth. The
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Trustee is unaware of any claims or causes of action he may have against Edra Blixseth. Further,
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Edra Blixseth filed a chapter 11 bankruptcy petition in U.S. Bankruptcy Court for the District of
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Montana on March 26, 2009, under case number 09-60452. Accordingly, the estate's interest in
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any and all claims and/or causes of action against Edra D. Blixseth has no value. Furthermore,
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some claims against Edra Blixseth have already been abandoned by the Trustee. See, Exhibit
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"3 ".
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J.
Any and all claims and/or causes of action against the original lender,
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mortgage broker, subsequent loan holder, loan assignee, loan related certificate holder, loan
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servicer, mortgage servicer, or similar lender or loan entity associated with the purported loan
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and purported security instruments which encumber or use as security for repayment, the Yarrow
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Point Property. Such entities may include, but are not limited to, Bank of New York Mellon,
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Bank of America, N.A., Countrywide Home Loans, Inc., NV Mortgage, Inc. dba SOMA
Financial, Fannie Mae, Freddie Mac, Mortgage Electronic Registration Systems, Inc.,
Certificateholders CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-17, Mortgage Pass-
Through Certificates, 2006-17, and all successors and assigns thereto (hereinafter referred to as
"Yarrow Point Claims"). The Trustee is unaware of any claims and/or causes of action he may
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continuing storage fees represent a liability to the estate. Per the Sale Agreement, the Proposed
------------9- --Buyer must assume tlle future storage fees for tlie Documents lllStorage.
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Any and all claims against Blxware, LLC; Opspring, LLC; Blxware, Inc.;
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and Opspring, Inc. These claims were subject to pre-petition litigation and have no value to the
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estate.
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All assets to be sold include only those assets which existed on the Debtors'
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bankruptcy Petition Date. Collectively, the above described assets are hereinafter referred to as
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the "Saleable Assets". An asset scheduled by the Debtor is: "Per court order entered in this
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entitled to reimbursement of legal fees from the United States of America for wrongful conduct
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of the Federal Bureau oflnvestigation" ("Potential Claim Against The U.S. Government"). The
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Saleable Assets do not include any potential causes of action against the United States
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Government, including but not limited to, the Potential Claim Against The U.S. Government.
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The understanding of the Trustee and the Buyer that these potential causes of action are not
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included as saleable assets is confirmed by the email of Trustee counsel dated December 4, 2012
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and the confirming email of counsel for the Buyer dated December 4, 2012, attached hereto as
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THE PROPOSED SALE OF THE SALEABLE ASSETS IS FOR FAIR MARKET VALUE
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15.
Subject to Court approval, the Trustee has accepted an offer from Proposed
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Buyer, Michael Flynn, to purchase the Saleable Assets for the amount of $20,000 ("Offer"). A
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copy of the sale agreement entered into between Michael Flynn and the Trustee ("Sale
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16.
Fair market value for the Saleable Assets will be realized through the utilization
of the requested overbid procedure, which will ensure fair market value of the Saleable Assets is
achieved. Further, the Saleable Assets appear to have a value less than the $20,000 purchase
price.
SALE TERMS
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Subject to Court approval, the Trustee proposes to sell the Saleable Assets to the
Proposed Buyer for the amount of $20,000. Pursuant to the terms of the Sale Agreement, the
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Saleable Assets from the bankruptcy estate subject to any and all liens,
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b.
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Order approving a sale of the Estate's interest in the Saleable Assets, the
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c.
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from the Bankruptcy Estate "as is" without warranties of any kind,
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of the property or the quality of the title thereto, or any other matters
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d.
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e.
Any and all disputes which involve in any matter the bankruptcy estate or
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the Trustee arising from the Sale Agreement shall be resolved only in the
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19.
In order to obtain the highest and best offer for the benefit of the creditors of the
estate, the Trustee proposes that the foregoing Offer be subject to overbid. Notice is being
provided of the opportunity for overbidding to all interested parties in this matter.
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The Trustee requests that the Court approve the following overbid procedure:
a.
one who provides a financial statement and such business and banking references as are required
in Trustee's reasonable discretion, sufficient to assure Trustee of the bidder's ability (based on
on~--------
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Personal Property, AND one who can consummate the purchase of the Saleable Assets on the
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same terms and conditions, other than price, as those proposed in the Offer.
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b.
Each bid must be received by the Trustee and the Trustee's counsel no
later than three (3) business days prior to the hearing on the Motion.
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c.
The initial overbid must exceed the Purchase Price by a minimum of Five
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Hundred U.S. dollars ($500.00). For instance, the first bid must be at least Twenty Thousand
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Five Hundred U.S. dollars ($20,500.00). Each subsequent bid must then be in increments of Five
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Hundred U.S. dollars ($500.00). For instance, the first subsequent bid must be at least Twenty
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d.
Each bid must be all cash, non-contingent, and on the same terms and
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e.
Each bidder must match all terms and conditions of the original bid. Thus,
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the payment of the full $20,000 Purchase Price must be made to the Trustee. Said payment must
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be received by the Trustee by no later than three (3) business days prior to the hearing on this
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Motion. Said Payment must be in cash. cashier's check. or certified check, and must be
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deposited with the Trustee so that the Trustee will have access to said funds no later than three
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21.
The foregoing procedures will provide for an orderly completion of the sale of the
Saleable Assets by permitting all bidders to compete on similar terms, and will allow interested
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parties and the Court to compare competing bids in order to realize the highest benefit for the
estate.
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The Trustee further seeks an Order determining that the Proposed Buyer is a
"good faith purchaser" within the context of 11 U.S.C. Section 363(m) such that any appeal of
the Order granting this Motion, even if successful, will not affect the validity of the sale unless a
23.
The Proposed Buyer is Michael Flynn. The Proposed Buyer is not an "insider" as
------- -----9- --manerm isaefinecrinlTU:s-:-c:-smion roT(3T)-;-in tliat lie is not a relative or general partner of-- -10
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the Debtor, nor is the Debtor his partner, director, officer or person in control of him.
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Proposed Buyer, Michael Flynn, previously represented the Debtors in the matter
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Massachusetts and is a judgment creditor of the Debtors by virtue of an alleged breach of the
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amount of $833,223.15.
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The proposed sale is in good faith and the Sale Agreement was an arms-length
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The Proposed Buyer, Michael Flynn, filed a claim in the bankruptcy estate in the
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The waiver of the stay imposed by Rule 6004(h) is appropriate. Time is of the
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essence on the Sale Agreement, the Proposed Buyer cannot take possession of the Saleable
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Assets and a waiver of the stay is a condition of the proposed sale. Accordingly, the Trustee
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requests that the Court waive the stay imposed by Rule 6004(h).
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WHEREFORE, based on the foregoing, the Trustee requested that the Court grant the
Motion and enter an Order:
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1.
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2.
Approving the above referenced Sale Agreement, which does not include the sale
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of any potential causes of action against the United States Government, and the Potential Claim
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"Confidential"or "Restricted Confidential" to the Buyer per the terms of the Sale Agreement;
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363(m);
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6004(h); and
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For sucn otner anci-runner rehefastne Court may deem just and proper.
Respectfully submitted,
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By:
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d, Chapter 7
Thomas H. Casey, Attorney for Jason M.
Trustee for the bankruptcy estate of De s Lee
Montgomery and Brenda Kathleen Montgomery
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11 U.S. C. Section 363(b)(l) provides that "[t]he trustee, after notice and a hearing, may
use, sell, or lease, other than in the ordinary course of business, property of the estate." The sale
proposed is outside the ordinary course of business in that it is the sale of a significant asset of
the estate. A trustee must show that: (1) a "sound business purpose justified the sale"; (2)
"accurate and reasonable notice" of the sale was provided; (3) the "price to be paid is adequate,
----- -------9- --i.e., fair and reasonafile";(4J"good-faitU,-i.e., tlie aosence of any lucrative deals witninsiaers, is___ -- -
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present." See In re Industrial Valley Refrig. & Air Cond Supplies Inc., 77 B.R. 15, 21 (Bankr.
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E.D. Pa. 1987). As discussed below, the proposed sale of the Saleable Assets to the Buyer as
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There is a sound business purpose, in that this is a Chapter 7 liquidation case and the sale
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of the Saleable Assets will allow liquidation of an estate asset for the benefit of the estate and its
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creditors.
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Notice of the Sale and of the hearing is being provided to all creditors and interested
parties.
The Trustee believes that, under the circumstances, the proposed sale represents the best
purchase price that can be expected by the estate.
The Trustee has fully investigated the value of the Saleable Assets and believes that the
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proposed sale of the Saleable Assets, which includes the possibility of overbids is for fair market
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IL
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business. Bankruptcy Code Section 363(b)(1) provides that a trustee "after notice and hearing,
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may use, sell or lease, other than in the ordinary course of business, property of the estate."
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Further, under Bankruptcy Code Section 105(a), "[t]he court may issue any order, process, or
judgment that is necessary or appropriate to carry out the provisions of this title." Thus, pursuant
to Bankruptcy Code Sections 363(b)(l) and 105(a), this Court may authorize the implementation
of overbidding procedures.
The Ninth Circuit, in a case under the Bankruptcy Act, recognized the power of a
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bankruptcy court to issue orders determining the terms and conditions for overbids with respect
to a sale of estate assets. In re Crown Corporation, 679 F .2d 77 4 (91h Cir. 1982). The Crown
Corporation court entered an order specifying the minimum consideration required for an
-- ---- --- ---9- - overl5i0 as well as tlie partiCtilar contractual terms requirefftooe offerea-oy overoiooers. Ia.----ar--- 10
777. The Crown Corporation decision also approves of an order requiring and setting the
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amount of potential overbidder's deposits and authorized courts to determine the disposition of
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The overbid procedures proposed in this matter will ensure that the Saleable Assets will
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generate the greatest possible value to the estate. The procedure also places appropriate checks
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III.
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7.
Under Rule 6004(h), an order authorizing the sale of property is stayed for 14 days
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after the entry of the order, unless the Court orders otherwise. Fed. R. Bankr. P. 6004(h). The
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Advisory Committee Note states that the Court may, in its discretion, order that the stay is
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inapplicable so that the sale or assumption may take place immediately upon entry of the order.
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Here, the waiver of the stay imposed by Rule 6004(h) is appropriate. Time is of
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the essence on the Sale Agreement as the Proposed Buyer is unable to take possession of the
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Saleable Assets until the proposed sale takes place and in addition, a waiver of the stay is a
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condition of the proposed sale. Accordingly, the Trustee requests that the Court waive the stay
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IV.
CONCLUSION
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Based upon the foregoing, the Trustee respectfully requests that the Motion be granted.
Respectfully submitted,
Date: December
_f_, 2012
By:
Thomas H. Casey, Attorney for Jas
. Rund,
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1.
I am the duly appointed, qualified and acting Chapter 7 Trustee for the
Bankruptcy Estate of In re Dennis Lee Montgomery and Brenda Kathleen Montgomery. The
facts contained herein are based upon information which I have acquired in my capacity as
Trustee and upon my review of the pleadings, records and files in this matter, and are true and
2.
I make this declaration in support of my Motion For Order: Approving (1) Sale
Certain Property; (2) Approving Overbid Procedure; (3) Deeming Buyer To Be A Good Faith
11
Purchaser Pursuant To 11 U.S.C. Section 363(m); (4) Waiving 14 Day Stay Imposed By Federal
12
13
14
15
3.
16
17
On June 26, 2009 ("Petition Date"), the Debtors filed a voluntary petition for
5.
Listed assets of the bankruptcy estate on the Debtors' Schedules include the
18
following real property: real property located at 6 Toscana Way, Rancho Mirage, California
19
valued at $952,000; real property located at 3812 94th Ave NE, Yarrow Point, Washington,
20
valued at $2,150,000; and real property located at 12720 Buckthorn Lane, Reno, Nevada, valued
21
22
23
6.
The Debtors' Schedules also include the following personal property assets:
24
Certain bank accounts valued at a total of $10,036.89; household goods and furnishings valued at
25
$8,000; books and pictures, including a CD Juke Box, valued at $1,100; wearing apparel valued
26
at $4,540; jewelry valued at $98,902.80; a term life insurance policy valued at $0.00; an IRA
27
valued at $26,402; 1,000 shares of Nevada Security Bank Stock valued at $859; Accounts
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Receivable valued at $526,204; certain patents valued at $10,000,000; three automobiles - a 2006
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Silverado valued at $9,845; a 2005 Cadillac CTS valued at $13,850; and a 2003 Tahoe valued at
$8,915; office equipment valued at $875; other personal property listed as "per Court Order
valued at $2, 104,600.12; and claims against various parties valued $38,809,011.12, scheduled as
follows: (a) the Claims against the Liner Firm, Teri Pham, and Deborah Klar for indemnification
regarding sanction order in Federal Court Reno, NV Case No. 306-cv-0056-PMP-VPC valued at
$204,411.00; (b) Claims for legal malpractice against Liner firm, Terri Pham, Deborah Klar,
Tuneen Chisolm, Shannon Anderson, Robert Oliver, Richard Mooney, Ryan Lapine, Robert
Reno, NV Case No. 306-cv-0056-PMP-VPC valued at $10,000,000.00; and (c) Claims for
11
misrepresentations against Edra Blixseth and the Liner Law Firm for settlement agreement with
12
13
"Personal Property Assets"). A copy of the Debtors' Schedule Bis attached hereto as Exhibit
14
15
16
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Debtors have claimed fully exempt the following Personal Property Assets: household goods
18
and furnishings in the amount of $21,065 per Section 703.140(b)(3) and (b)(6); books and
19
pictures in the amount of$3,188 per Section 703.140(b)(3); wearing apparel in the amount of
20
$4,540 under Section 703.140(b)(3); and the Debtors' IRA in the amount of $26,402 per Section
21
703.140(b)(1 O)(E).
22
8.
The Debtors have claimed partially exempt the following Personal Property
23
Assets: jewelry in the amount of $19,900 per Section 703.140(b)(4), (1) and (5); and 2006 Chevy
24
25
26
9.
By Court entered June 11, 2010, in my capacity as Trustee, I sold the following
27
Personal Property Assets to the Debtors: CD Juke Box; Jewelry; 1,000 shares ofNevada Security
28
Bank Stock; and three automobiles - a 2006 Silverado; a 2005 Cadillac CTS; and a 2003 Tahoe
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valued at $8,915.
2
3
Desc
10.
Pursuant to Court Order entered November 10, 2010, I abandoned the following
scheduled Personal Property Assets: (a) the Claims against the Liner Firm, Teri Pham, and
Deborah Klar for indemnification regarding sanction order in Federal Court Reno, NV Case No.
306-cv-0056-PMP-VPC valued at $204,411.00; (b) Claims for legal malpractice against Liner
firm, Terri Pham, Deborah Klar, Tuneen Chisolm, Shannon Anderson, Robert Oliver, Richard
Mooney, Ryan Lapine, Robert Shore, Stuart A. Liner, Peter Bransten, Ellen Garofalo, and Randal
$10,000,000.00; and (c) Claims for misrepresentations against Edra Blixseth and the Liner Law
11
Firm for settlement agreement with Warren Trepp and Etreppid Technologies on 09/08 valued at
12
$26,500,000.00. Attached hereto as Exhibit "3" and incorporated herein by this reference is the
13
14
11.
15
to Court Order entered March 24, 2010: Complaint for violation of the False Claims Act 31
16
U.S.C. Section 3129, et seq. and conspiracy to violate the False Claims Act filed by the Debtor
17
on behalf of himself and the United States Government in camera and under seal in the District
18
Court of Nevada. Attached hereto as Exhibit "4" and incorporated herein by this reference is the
19
2O
21
22
Storage, 1705 S. State College Boulevard, Unit #19, Anaheim, California, ("Documents In
23
Storage"), including but not limited to, documents delivered from the Liner Firm obtained in
24
their representation of the Debtor and from discovery documents received by the Liner Firm in
25
connection with litigation in which they represented the Debtor; and documents relating to
26
litigation in Nevada, wherein upon the request of the United States Department of Justice
27
("DOJ"), the Nevada District Court entered several protective orders including an Order entered
28
on August 29, 2007 ("DOJ Protective Order"). The Nevada District Court also entered a
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protective order regarding discovery matters between the Debtor and eTreppid on September 11,
13.
The DOJ reviewed and redacted all of the Documents In Storage prior to their
receipt by the estate so as to comply with the Protective Order. I have caused the review of the
Documents In Storage and have verified that all of the documents appear to have been reviewed
by the DOJ. I am informed and believe that the Documents In Storage, since they are fully
14.
With regards to the eTreppid Protective Order and the Documents In Storage
stipulation with eTreppid, which was approved by the Bankruptcy Court on August 30, 2010.
11
Pursuant to this additional stipulation with eTreppid, I may seek and obtain an order from the
12
Bankruptcy Court allowing the release of these documents, after providing eTreppid with the
13
opportunity to collect the documents. A copy of my stipulation with eTreppid approved by Order
14
entered August 30, 2010 is attached hereto as Exhibit "5" and is incorporated herein by this
15
reference. I am informed and believe that my counsel, on behalf of the estate, has requested
16
direction from eTreppid as to their desire to collect the documents and has not received a
17
response. As part of the motion to approve this Agreement, I will also seek confirmation that the
18
19
the Buyer.
20
21
The Proposed Buyer, Michael Flynn, wishes to purchase the Bankruptcy Estate's
22
interest, if any, the remaining assets not claimed exempt, purchased by the Debtors or previously
23
abandoned by the estate, for the purchase price of $20,000 ("Offer") as follows:
24
a.
25
26
27
9th
THE SOUTH 25 FEET OF LOT 21, AND ALL OF LOT 22, BLOCK 1,
REPLAT OF PORTIONS OF YARROW, ACCORDING TO THE PLAT
THEREOF, RECORDED IN VOLUME 21 OF PLATS, PAGE 11, IN
KING COUNTY, WASHINGTON
28
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(herein after referred to as the "Yarrow Point Property"). Based on my review of the Debtors'
Schedules, I am informed and believe that the Yarrow Point Property is over encumbered. A
Relief from Stay Order was entered by the Bankruptcy Court on May 26, 2010. In addition, the
Debtors' Schedules indicate that Warren Trepp may have a judgment lien encumbering this
property.
b.
informed and believe that the Rancho Mirage Property is over encumbered. A Relief from Stay
-------- - - 9 - --erderwmrenteTI!ll-by the Bankruptcy eourt on October 27;-2009-:-In aclattion, tne DelJtors------ 1O
Schedules indicate that Warren Trepp may have a judgment lien encumbering this property.
11
c.
12
("Nevada Property"). Based on my review of the Debtors' Schedules, I am informed and believe
13
that the Nevada Property is over encumbered. Relief from Stay Orders were entered by the
14
Bankruptcy Court on October 28, 2009 and November 18, 2009. In addition, the Debtors'
15
Schedules indicate that Warren Trepp may have a judgment lien encumbering this property.
16
17
d.
that on the Petition Date, the Debtors had no non-exempt funds in their scheduled bank accounts.
e.
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f.
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Debtors' scheduled interest in patents has no value. The Debtor's alleged patents and technology
24
were part of an investigation of the Debtor by the U.S. Government for, among other things,
25
fraud. Considering the allegations of fraud against the Debtor involving the Debtor's alleged
26
technology, the estate's interest in the patents have no value. Moreover, the alleged patents are
27
subject to a judgment lien in favor of eTreppid Technologies in the approximate amount of $26
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million.
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g.
Desc
Any and all claims and/or causes of action derived from or arising out of
assets identified on the Debtors' Schedules not claimed exempt, purchased by the Debtors or
previously abandoned by the estate. I am unaware of any claims or causes of action "derived
h.
Any and all proceeds derived from or arising out of assets identified on the
Debtors' Schedules which are not claimed exempt, purchased by the Debtors or previously-
abandoned by the estate. I am unaware of any proceeds derived from or arising out of assets
identified on the Debtors' Schedules which are not claimed exempt, purchased by the Debtors or
1.
Any and all claims and/or causes of action against Edra D. Blixseth. I am
11
unaware of any claims or causes of action the estate may have against Edra Blixseth. Further,
12
Edra Blixseth filed a chapter 11 bankruptcy petition in U.S. Bankruptcy Court for the District of
13
14
any and all claims and/or causes of action against Edra D. Blixseth has no value. Furthermore,
15
some claims against Edra Blixseth have already been abandoned by the estate. See, Exhibit "3".
16
J.
Any and all claims and/or causes of action against the original lender,
17
mortgage broker, subsequent loan holder, loan assignee, loan related certificate holder, loan
18
servicer, mortgage servicer, or similar lender or loan entity associated with the purported loan
19
and purported security instruments which encumber or use as security for repayment, the Yarrow
20
Point Property. Such entities may include, but are not limited to, Bank of New York Mellon,
21
Bank of America, N.A., Countrywide Home Loans, Inc., NV Mortgage, Inc. dba SOMA
22
Financial, Fannie Mae, Freddie Mac, Mortgage Electronic Registration Systems, Inc.,
23
Certificateholders CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-17, Mortgage Pass-
24
Through Certificates, 2006-1 7, and all successors and assigns thereto (hereinafter referred to as
25
"Yarrow Point Claims"). I am unaware of any claims and/or causes of action the estate may have
26
27
28
k.
continuing storage fees represent a liability to the estate. Per the Sale Agreement, the proposed
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Case 2:10-bk-18510-BB
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Buyer must assume the future storage fees for the Documents In Storage.
1.
Any and all claims against Blxware, LLC; Opspring, LLC; Blxware, Inc.;
and Opspring, Inc. These claims were subject to pre-petition litigation and have no value to the
estate.
16.
All assets to be sold include only those assets which existed on the Debtors'
bankruptcy Petition Date. Collectively, the above described assets are hereinafter referred to as
the "Saleable Assets". An asset scheduled by the Debtor is: "Per court order entered in this
of the Federal Bureau of Investigation" ("Potential Claim Against The U.S. Government"). The
11
Saleable Assets do not include any potential causes of action against the United States
12
Government, including but not limited to, the Potential Claim Against The U.S. Government.
13
My understanding with the Buyer is that these potential causes of action are not included as
14
saleable assets and is confirmed by the email of my counsel dated December 4, 2012 and the
15
confirming email of counsel for the Buyer dated December 4, 2012, attached hereto as collective
16
17
THE PROPOSED SALE OF THE SALEABLE ASSETS IS FOR FAIR MARKET VALUE
17.
18
Subject to Court approval, I have accepted an offer from Proposed Buyer, Michael
19
Flynn, to purchase the Saleable Assets for the amount of $20,000 ("Offer"). A copy of the sale
20
agreement entered into between myself and Michael Flynn ("Sale Agreement") is attached hereto
21
22
Fair market value for the Saleable Assets will be realized through the utilization
23
of the requested overbid procedure, which will ensure fair market value of the Saleable Assets is
24
achieved.
25
pnce.
SALE TERMS
26
27
28
Further, the Saleable Assets appear to have a value less than the $20,000 purchase
19.
Subject to Court approval, I propose to sell the Saleable Assets to the Proposed
Buyer for the amount of $20,000. Pursuant to the terms of the Sale Agreement, the Proposed
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Buyer has remitted $20,000 to the estate for the purchase of the Saleable Assets.
20.
a.
Saleable Assets from the bankruptcy estate subject to any and all liens,
b.
Order approving a sale of the Estate's interest in the Saleable Assets, the
c.
10
11
from the Bankruptcy Estate "as is" without warranties of any kind,
12
13
property or the quality of the title thereto, or any other matters relating to
14
d.
15
16
e.
17
Any and all disputes which involve in any matter the bankruptcy estate or
18
myself as Trustee arising from the Sale Agreement shall be resolved only
19
20
21
21.
In order to obtain the highest and best offer for the benefit of the creditors of the
22
estate, I am proposing that the foregoing Offer be subject to overbid. Notice is being provided of
23
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25
22.
26
one who provides a financial statement and such business and banking references as are required
27
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of financing, experience or other conditions) to consummate the purchase of the Saleable Assets,
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Desc
AND one who can consummate the purchase of the Saleable Assets on the same terms and
3
4
b.
Each bid must be received by me and my counsel no later than three (3)
The initial overbid must exceed the Purchase Price by a minimum of Five
Hundred U.S. dollars ($500.00). For instance, the first bid must be at least Twenty Thousand
Five Hundred U.S. dollars ($20,500.00). Each subsequent bid must then be in increments of Five
Hundred U.S. dollars ($500.00). For instance, the first subsequent bid must be at least Twenty
d.
10
11
Each bid must be all cash, non-contingent, and on the same terms and
12
Each bidder must match all terms and conditions of the original bid. Thus,
13
the payment of the full $20,000 Purchase Price must be made to the estate. Said payment must
14
be received by me by no later than three (3) business days prior to the hearing on this Motion.
15
Said Payment must be in cash. cashier's check. or certified check, and must be deposited with me
16
so that I will have access to said funds no later than three (3) business days prior to the hearing
17
on the Motion.
23.
18
The foregoing procedures will provide for an orderly completion of the sale of the
19
Saleable Assets by permitting all bidders to compete on similar terms, and will allow interested
20
parties and the Court to compare competing bids in order to realize the highest benefit for the
21
estate.
DETERMINATION OF GOOD FAITH PURCHASER
22
23
24.
24
faith purchaser" within the context of 11 U.S.C. Section 363(m) such that any appeal of the
25
Order granting this Motion, even if successful, will not affect the validity of the sale unless a stay
26
27
28
25.
The Proposed Buyer is Michael Flynn. I am informed and believe that the
Proposed Buyer is not an "insider" as that term is defined in 11 U.S.C. Section 101(31), in that
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23
Case 2:10-bk-18510-BB
Desc
he is not a relative or general partner of the Debtor, nor is the Debtor his partner, director, officer
26.
I am further informed and believe that Proposed Buyer, Michael Flynn, previously
represented the Debtors in the matter of Montgomery v. eTreppid Technologies, 2009 U.S. Dist.
LEXIS 35543.
27.
licensed in the State of Massachusetts and is a judgment creditor of the Debtors by virtue of an
alleged breach of the Debtors' contractual obligation to pay attorneys fees due pre-petition.
9
10
11
12
28.
amount of$833,223.15.
29.
I am informed and believe that the proposed sale is in good faith and the Sale
Agreement was an arms-length transaction negotiated in good faith between the Parties.
WAIVER OF THE STAY
13
14
The Proposed Buyer, Michael Flynn, filed a claim in the bankruptcy estate in the
30.
Time is of the essence on the Sale Agreement, the Proposed Buyer cannot take
15
possession of the Saleable Assets and a waiver of the stay is a condition of the proposed sale.
16
Accordingly, I am requesting that the Court waive the stay imposed by Rule 6004(h).
17
31.
18
the estate.
19
20
I declare under penalty of perjury that the foregoing is true and correct and that
r-fh
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27
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Case 2:10-bk-18510-BB
1
2
Desc
I am the attorney for the Chapter 7 Trustee of the estate of In re Dennis Lee
Montgomery and Brenda Kathleen Montgomery ("Debtors"). The facts contained herein are
based upon information which I have acquired in my capacity as attorney for the Trustee and
upon my review of the pleadings, records and files in this matter, and are true and correct to the
2.
I make this declaration in support of the Trustee's Motion For Order: Approving
Interest In Certain Property; (2) Approving Overbid Procedure; (3) Deeming Buyer To Be A
11
Good Faith Purchaser Pursuant To 11 U.S.C. Section 363(m); (4) Waiving 14 Day Stay Imposed
12
13
3.
All assets to be sold include only those assets which existed on the Debtors'
14
bankruptcy Petition Date. Collectively, the above described assets are hereinafter referred to as
15
the "Saleable Assets". An asset scheduled by the Debtor is: "Per court order entered in this
16
17
entitled to reimbursement of legal fees from the United States of America for wrongful conduct
18
of the Federal Bureau oflnvestigation" ("Potential Claim Against The U.S. Government"). The
19
Saleable Assets do not include any potential causes of action against the United States
20
Government, including but not limited to, the Potential Claim Against The U.S. Government.
21
The Trustee's understanding with the Buyer is that these potential causes of action are not
22
23
Ill
24
Ill
25
Ill
26
27
28
S:\Wordperfect\Montgomery\Pleadings\Mtn.Approve.Sale.Agreement.Flynn. wpd
S
2
Case 2:10-bk-18510-BB
Desc
4.
2012 and a confirming email from counsel for the Proposed Buyer to me dated December 4,
3
2012, attached hereto as collective Exhibit "6" and incorporated herein by this reference.
4
I declare under penalty of perjury that the foregoing is true and correct and that this
5
Declaration was executed on December
10
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13
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15
16
17
18
19
20
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22
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24
25
26
27
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Case 2:10-bk-18510-BB
Desc
1.
Motion. I executed the Sale Agreement attached hereto and incorporated herein by reference as
Exhibit "7".
2.
6
7
8
9
10
the Debtors by virtue of an alleged breach of the Debtors t contractual obligation to pay attorneys
fees due pre~petition.
4.
11
On or about September 7, 2010, I filed a claim in the bankruptcy estate fur the
12
amount of $834,891.24 representing a judgment and sanction order against the Debtor. This
13
claim is docketed as Claim Number 15 on the Court's claims register ("Claim 15"). On the same
14
day, I filed an amendment to Claim 15, revising the claim amount to $833,223.15.
5.
15
16
"insider'' as that term is defined in 11 U.S.C. 101(31), in that I am not a relative or general
17
partnerof the Debtor. Further, I have no relationship with the Trustee, his employees or agents,
1B
19
20
21
22
6.
parties.
I decJare under penalty of perjury under the laws of the United States of America that the
foregoing is true and correct. Executed at
23
24
Michael Fl .
25
26
27
28
S:\W onlporfoollM onljoutory\Ploadlnp\M tn.Approve.Salo.Alll'Wtllnt..Plynu.,.pd
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r-::::-- ----
,,
Case 2:10-bk-18510-BB
Exhibit 1
Desc
Case 2:10-bk-18510-BB
Desc
Debtor
If an entity claims to have a lien or hold a secured interest in any property, state the amount of the secured claim. See Schedule D. If no entity claims
to hold a secured interest in the property, write "None" in the column labeled "Amount of Secured Claim."
If the debtor is an individual or if a joint petition is filed, state the amount of any exemption claimed in the property only in Schedule C - Property
Claimed as Exempt.
DF.SCRIPTION AND
LOCATION OF
PROPERTY
~e:
NATURE OF DEBTOR'S
INTEREST IN PROPERTY
Oz
"'OJ
~::E
~:E
c8
a~
CURRENT VALUE
OF DEBTOR'S
INTEREST IN
PROPERTY, WITHOUT
DEDUCTING ANY
SECURED CLAIM
OR EXEMPTION
AMOUNT OF
SECURED
CLAIM
i
Primary Residence - 6 Toscana Way
Rancho Mirage, CA 92270
Fee
952,000.00
1,095,471.70
House-3812 94th Av NE
Yarrow Point, WA 98004
Fee
2, 150,000.00
2,477,813.65
Fee
605,000.00
661,556.21
3,707,000.00
Total>
(Report also on Summary ol Schedules.)
, ..
.
EXHIBIT 1, P
Case 2:10-bk-18510-BB
Exhibit 2
Desc
Case 2:10-bk-18510-BB
Desc
TYPE OF PROPERTY
I. Cash on hand.
0
N
E
ii
CURRENT VALUE OF
DEBTOR'S INTf:REST
IN PROP'f:RT\', WITll
OUT DlmUC..'TING ANY
SECURED CLAIM
OR EXEMPTION
Nominal
10,036.89
8,000.00
CD Juke Box
1,100.00
4,540.00
98,902.80
Term Life
0.00
x
x
EXHIBIT 2, PAGE 29
Case 2:10-bk-18510-BB
Desc
SCHEDULEB-PERSONALPROPERTY
(Continuation Sheet)
TYPE OF PROPERTY
N
0
N
E
IRA
26,402.00
859.00
Blxware Payroll
42765 Dunes View Road
Rancho Mirage, CA 92270
526,204.00
x
x
II
CURRENT VALUE OF
DEBTOR'S INTEREST
IN PROPERTY, WITH
OUT DEDUCTING ANY
SECURED Cl.AIM
OR EXEMPTION
x
x
x
x
x
EXHIBIT 2, PAGE 30
Case 2:10-bk-18510-BB
Desc
TYPF. OF PROPERTY
N
0
N
E
II
H
I 0,000,000.00
32,610.00
x
x
See Rider
CURRENT VALUE OF
DEBTOR'S INTEREST
IN PROPERTY, WITH
OUT DEDUCTING ANY
SECURED CLAIM
OR EXEMPTION
x
x
x
875.00
x
29. Machinery, fixtures, equipment,
and supplies used in business.
JO. Inventory.
31. Animals.
32. Crops growing or harvested.
Give particulars.
33. Fam1ing equipment and implements.
34. Farm supplies, chemicals, and feed.
35. Other personal property of any kind
not already tisted. ltemi1:e.
x
x
x
x
x
x
38,809,011.12
49,518,540.81
EXHIBIT 2, PAGE 31
Case 2:10-bk-18510-BB
Desc
TYPE OF PROPERTY
2. Checking, Savings or
other financial accounts,
certificates of deposit or
shares in banks, savings,
and loan, thrift, building
and loan, and homestead
associations, or credit
$2,027.22
--------un1ons,brok~agefi~ou~s~es',~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
and cooperatives.
$240.10
$856.67
$3,275.56
$3.206.67
$10,036.89
EXHIBIT 2, PAGE 32
Case 2:10-bk-18510-BB
Desc
TYPE OF PROPERTY
w
w
w
w
w
w
$8,087.40
$19,605.60
$2,586.00
$1J,822.20
$22,915.20
$25,883.40
~6.003.00
$98,902.80
22. Patents, copyright,
and other intellectual
property.. Give partculars.
$I 0,000.000.00
EXHIBIT 2, PAGE 33
Case 2:10-bk-18510-BB
Desc
TYPE OF PROPERTY
~--------~----------------
J
J
J
$9,845.00
$8.915.00
$13.850.00
$32,610.00
$2,104,600.12
$204,411.00
$10,000,000.00
$26,500,000.00
EXHIBIT 2, PAGE 34
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
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9-
NOV 10 2010
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In re
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Chapter 7
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Debtor.
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The Court having considered the Motion, proper notice having been given and good
cause having been shown,
Ill
Ill
EXHIBIT 3, PAGE 35
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Document
Page 41
of 79 11/10/10 12:57:13 Des
Case 2:10-bk-18510-BB Main
Doc 159
Filed 11/10/10
Entered
Main Document Page 2 of 5
IT IS FURTHER ORDERED that the Trustee is authorized to abandon the estate's interest in
the Debtor's potential causes of action as follows: (1) Against the Liner Firm, Teri Pham and
Deborah Klar, for indemnification regarding a sanction order in District Court in Nevada case
number 3:06-cv-0056; (2) For legal malpractice against the Liner Firm, Teri Pham, Deborah
Klar, Tuneen Chisolm, Shannon Anderson, Robert Oliver, Richard Mooney, Ryan Lapine,
Robert Shore, Stuart A. Liner, Peter Bransten, Ellen Garolfalo, and Randal Sunshine in
connection with District Court in Nevada case number 3:06-cv-0056; and, (3) For
------------910
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###
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EXHIBIT 3, PAGE 36
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Main159
Document
Page 42
of 79 11/10/10 12:57:13 Des
Case 2:10-bk-18510-BB Doc
Filed 11/10/10
Entered
Main Document Page 3 of 5
NOTE: When using this form to indicate service of a proposed order, DO NOT list any person or entity in
Category I.
Proposed orders do not generate an NEF because only orders that have been entered are placed on the
CM/ECF docket.
5
6
I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business
address is:
22342 Avenida Empresa, Ste. 260
Rancho Santa Margarita, CA 92688
The foregoing document described Order Authorizing Chapter 7 Trustee's Abandonment of Estate's
Interest in Certain Potential Causes of Action Against the Liner Firm and Various Individuals will be
served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d);
-------9- -and-(b)-in-the-manner-indicated-below'~:- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8
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II. SERVED BY U.S. MAIL OR OVERNIGHT MAIL(indicate method for each person or entity served):
On October 28. 2010 I served the following person(s) and/or entity(ies) at the last known address(es) in
this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed
envelope in the United States Mail. first class. postage prepaid, and/or 'J.<itll an overnigllt mail service
addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be
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Ill. SERVED BY PERSONAL DELIVERY. FACSIMILE TRANSMISSION OR EMAIL (indicate method for
I served the
each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on
following person(s) and/or entity(ies) by personal delivery, or (for those who consented in writing to such
service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a
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declaration that personal delivery on the judge will be completed no later than 24 hours after the
document is filed.
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Date
Marissa Silva
Type Name
EXHIBIT 3, PAGE 37
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Main159
Document
Page 43
of 79 11/10/10 12:57:13 Des
Case 2:10-bk-18510-BB Doc
Filed 11/10/10
Entered
Main Document Page 4 of 5
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----9-
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Notice is given by the court that a judgment or order entitled (specify) Order Authorizing Chapter 7
Trustee's Abandonment of Estate's Interest in Certain Potential Causes of Action Against the Liner Firm
and Various Individuals was entered on the date indicated as "Entered" on the first page of this judgment
or order and will be served in the manner indicated below:
I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING ("NEF") - Pursuant to controlling
General Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on the following
person(s) by the court via NEF and hyperlink to the judgment or order. As of October 28. 2010 the
following person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or adversary
proceeding to receive NEF transmission at the email address(es) indicated below.
II. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this judgment or
order was sent by United States Mail, first class, postage prepaid to the following person(s) and/or
entity(ies) at the address(es) indicated below:
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22
23
24
25
26
Debtors
Dennis Lee Montgomery
6 Toscana Way
Rancho Mirage, CA 92270
Ill. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment
or order which bears an "Entered" stamp, the party lodging the judgment or order will serve a complete
copy bearing an "Entered" stamp by U.S. Mail, overnight mail, facsimile transmission or email and file a
proof of service of the entered order on the following person(s) and/or entity(ies) at the address( es),
facsimile transmission number(s) and/or email address( es) indicated below:
27
28
EXHIBIT 3, PAGE 38
Case 2:10-bk-18510-BB
Case 2:10-bk-18510-BB
2
3
4
5
6
Desc
Interested Parties
Raphael 0. Gomez
Carlotta P. Wells
Senior Trial Counsel
Federal Programs Branch
US Department of Justice
Civil Division - Room 6114
20 Massachusetts Ave., N.W.
PO Box 883
Washington, DC 20044
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EXHIBIT 3, PAGE 39
Case 2:10-bk-18510-BB
Exhibit 4
Desc
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Main104
Document
Page 46
of 7903/24/10 15:40:35 Desc
Case 2:10-bk-18510-88 Doc
Filed 03/24/10
Entered
Main Document Page 1 of 4
2
3
4
6
7
MAR 24 2010
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY wesley DEPUTY CLERK
----9-
CENTRAL---UTSTR1CT-O-PTA.TIFORNfA/TOS-ANGECES-DTVTSION
10
11
In re
12
Chapter 7
13
14
Debtor.
15
16
17
18
19
20
Estate's Interest in Certain Pending Litigation ("Motion") was filed with the Clerk of the Court,
21
and the Notice of Chapter 7 Trustee's Motion for Order Authorizing Abandonment of Estate's
22
Interest in Certain Pending Litigation (the ''Notice") was served on creditors and parties in
23
24
25
The Court having considered the Motion, proper notice having been given and good
cause having been shown,
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27
Ill
28
Ill
EXHIBIT 4, PAGE 40
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Main
Document
Page 47
of 7903/24/10 15:40:35 Des
Case 2:10-bk-18510-BB Doc
104
Filed 03/24/10
Entered
Main Document Page 2 of 4
interest in the Complaint for Violation of the False Claims Act 31 U.S.C. 3129, Et Seq., and
Conspiracy to Violate the False Claims Act filed by Dennis Montgomery in the District Court of
###
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_ _ _g _ l - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - - - - - -
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EXHIBIT 4, PAGE 41
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Main104
Document
Page 48
of 79 03/24/10 15:40:35 Des
Case 2:10-bk-18510-88 Doc
Filed 03/24/10
Entered
Main Document Page 3 of 4
NOTE: When using this form to indicate service of a proposed order, DO NOT list any person or entity in
Category I.
Proposed orders do not generate an NEF because only orders that have been entered are placed on the
CM/ECF docket.
5
6
I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business
address is:
22342 Avenida Empresa, Ste. 260
Rancho Santa Margarita, CA 92688
The foregoing document described Order Authorizing Chapter 7 Trustee's Abandonment of Estate's
Interest in Certain Pending Litigation will be served or was served (a) on the judge in chambers in the
9- form-and-manner-required-by-tBR-5005-2(d);-and-(b)-in-the-manner-indicated-below~.- - - - - - -
8
1O
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13
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19
II. SERVED BY U.S. MAIL OR OVERNIGHT MAIL(indicate method for each person or entity served):
On March 18, 2010 I served the following person(s) and/or entity(ies) at the last known address(es) in this
bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope
in the United States Mail, first class, postage prepaid, and/or with an overnight mail service addressed as
follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no late
than 24 hours after the document is filed.
United States Bankruptcy Court
Attn: Hon. Sheri Bluebond
255 E. Temple St., Ste. 1482
Los Angeles, CA 90012
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Marissa Silva
Type Name
Signature
EXHIBIT 4, PAGE 42
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Main104
Document
Page 49
of 79 03/24/10 15:40:35 Des
Case 2:10-bk-18510-BB Doc
Filed 03/24/10
Entered
Main Document Page 4 of 4
Notice is given by the court that a judgment or order entitled (specify) Order Authorizing Chapter 7
Trustee's Abandonment of Estate's Interest in Certain Pending Litigation was entered on the date
indicated as "Entered" on the first page of this judgment or order and will be served in the manner
indicated below:
I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING ("NEF"l - Pursuant to controlling
General Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on the following
- - - - 9 - . -person(s)-by-the-court-via-NEi:-.and-hyperlink-to-the-judgment-or-order.-As-of-Marcl'l-18.-20jQ_theJollowing ,_ _ __
person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or adversary proceeding
10
to receive NEF transmission at the email address(es) indicated below.
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11
12
13
14
15
16
17
18
19
20
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II. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this judgment or
order was sent by U.S. Mail to the following person(s) and/or entity(ies) at the address( es) indicated
below:
Debtors
Dennis Lee Montgomery
6 Toscana Way
Rancho Mirage, CA 92270
25
26
27
Ill. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment
or order which bears an "Entered" stamp, the party lodging the judgment or order will serve a complete
copy bearing an "Entered" stamp by U.S. Mail, overnight mail, facsimile transmission or email and file a
proof of service of the entered order on the following person(s) and/or entity(ies) at the address( es),
facsimile transmission number(s) and/or email address( es) indicated below:
28
EXHIBIT 4, PAGE 4
Case 2:10-bk-18510-BB
Exhibit 5
Desc
Case 2:10-bk-18510-BB
,-..
:~,.
1-~~11.1 ..:.0
Desc
-r.::.:fJI
~., f.1
r. u
3
4
5
--1
6
1-
10
11
12
13
14
15
16
vs.
STIPULATION TO AMEND.
PROTECTIVE ORDER ENTERED ON
17
18
This Stipulation (the 1'Stipulation") is entered into by and between Jason M. Rund, in his
19
capacity as Chapter 7 Trustee ("Trustee") of the estate of Dennis Lee Montgomery and Brenda
2O
Kathleen Montgomery and eTreppld Technologies, L.L.C. and Warren Trepp ("eTreppid")
21
FACTS
22
23
24
in the above entitled case, among other litigation matters pending in the U.S. District Court of
25
26
27
28
2007.
WHEREAS, Flynn's representation of the Debtor in the Nevada Actions ended in July of
Si'IWorlp1rlo1llM0Di,oaoeyll'lol4ll111SllpA01dP1o'"cll,.01lenT"ppld.wpd
EXHIBIT 5, PAGE 44
Case 2:10-bk-18510-BB
Filed 04/28/1
Desc
Page 2 of 19
WHEREAS, upon the withdrawal of Flynn as counsel, Liner, Grode, Stein, Yankelevitz,
l
2
Sunshine, Regenstreif & Taylor (the "Liner Finn") began to represent the Debtor In the Nevada
Actions.
WHEREAS, upon the request of the United States Department of Justice ("DOJ") the
Court in the Nevada Actions entered several protective orders including an Order entered on
August 29, 2007 ('4USA Protective Orders'~. Pursuant to the USA Protective Orders, the Debtor
- -and-e'Freppid-arebarred-from-seeking-discoveryor-disclosure-fromany_party_which_couldcause
8
damage to the national security of the United States, However, specific areas of inquiry were
delineated as allowed areas of inquiry Including any contract or agreement regarding the
10
technology claimed to be owned by either the Debtors or eTreppid, facts relating to the issue of
11
12
WHEREAS, the Nevada District Court In the Nevada Actions entered a protective order
13
regarding discovery matters between the Debtor and eTreppid. The Order, entered on September
14
15
WHEREAS, the Protective Order provides that documents produced between the Debtor
16
and eTreppid could be labeled as "Confidential" or "Restricted Confidential" and that such
17
designated documents could not be disclosed or communicated in any fashion and could not be
18
used for any purpose other then preparing for the litigation of the Nevada Actions.
19
WHEREAS, in the Nevada Actions eTreppid may have produced documents to Flynn
20
pursuant to document requests from the Debtor, and eTreppid may have marked certain,
21
22
WHEREAS, in the Nevada Actions eTreppid did produced approximately I00 boxes of
23
documents to the Liner Firm pursuant to a document requests from the Debtor, and eTreppid did
24
25
WHEREAS, Lhe Debtor, along with his wife, Brenda Kathleen Montgomery, filed a
26
voluntary petition under Chapter 7 of the Bankruptcy Code on June 26, 2009 ("Petition Date").
27
WHEREAS, Jason M. Rund is the duly appointed trustee ("Trustee'~ of the bankruptcy
28
estate of Dennis Lee Montgomery and Brenda Kathleen Montgomery ("Bankruptcy Bstate'l
S:Wlordptrltclv.lot1om1111tldla11\81lpAm11dP1011e1lv10tdroTnppld.,.,pd
EXHIBIT 5, PAGE 45
Case 2:10-bk-18510-BB
Desc
"
.1
steps into the shoes of the Debtor and pursuant to 11 U.S.C. Section S4 I is vested with all right,
title and interest in all property of the Debtor as of the Petition Date.
WHEREAS, in order to properly fUlfill his statutory and fiduciary duties to investigate
and administer the assets of the Bankruptcy Estate, the Trustee requires the turnover of any and
all documents regarding the Debtor from Flynn and the Liner Finn.
-----'/
WHEREAS,such-a-tumove~otdocuments-fromElynnand-the-Liner_Einn_toJhc_Im_atce___, _ _ __
10
11
12
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15
WHEREAS, the Parties enter into this Stlpulatlon to resolve issues concerning the
Protective Order and the Liner Finn's turnover of documents to the Trustee.
16
17
STIPULATION
IT IS HEREBY STIPULATED that, except for the Trustee and his professionals, the
18
documents turned over to the Trustee by Flynn or the Liner Finn shall remain subject to the
l9
20
IT IS FURTHER STIPULATED, that upon entty of the orders of the Nevada U.S.
21
District Court and the U.S. Bankruptcy Court approving this Stipulation, Btreppid has no
22
objection to Flynn or the Liner Firm turning over all documents in its possession, custody and
23
24
lT IS FURTHER STJPULATED, the Trustee will not release any document marked as
25
"Contldential''or "Restricted Confidential" by eTreppid to any party unless prior written approval
26
is obtained by eTreppid.
27
28
unreasonably.
l:IWordpAlct\Moa19omol)'IPln4lns11S1lp/\11oadPIOl..1l1'00rdo1tTHpPfd.wpd
EXHIBIT 5, PAGE 46
Case 2:10-bk-18510-BB
..,.
Filed 04/28/1
Desc
Page 4 of 19
pursuant to the Protective Order, the United States Banknlptcy Court for the Central District of
California, Riverside Division, presiding over the Debtors' bankruptcy case may hear and rule on
the Trustee's request to except a particular document ftom the Protective Order.
lo
11
12
13
ofoption.
14
entry of an order of the United States Bankruptcy Court authorizing the Trustee to enter Into this
15
Stipulation and approving the tenns set forth herein. Absent entry of an order of the United
16
States Bankruptcy Court approving this Stipulation, this Stipulation shall be null and void.
17
18
the United States Bankruptcy Court for the Central District of California, Riverside Division
19
20
21
22
DATED: March
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25
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27
28
B:IW01dp01r111\Mooqiomo11'\Ploadloa1\ltlpAmoIProt..1IT10rdmTrtppld.wpd
Case 2:10-bk-18510-BB
Desc
l
2
IT IS SO ORDERED:
DATED:
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S:\Wordpo.rfcct\Montgo1nol}\l'lcedln;a\SllpA1nondProtccllvcOrdcrcTrvppid.wpd
S
"'1
EXHIBIT 5, PAGE 48
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Main148
Document
Page 56
of 79 08/30/10 08:40:35 Des<
Case 2:10-bk-18510-88 Doc
Filed 08/30/10
Entered
Main Document Page 1 of 5
2
3
4
5
6
7
-----9-
11
) Chapter 7
12
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10
AUG 30 2010
Debtors.
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l
l
18
)
)
19
)
~~~~~~~~~~~~~~~
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23
24
25
26
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Jason Rund, Chapter 7 Trustee's Motion for Order Approving Stipulation with Etreppid
Technologies, LLC to Amend Protective Order Entered on September 11, 2007 ("Motion") was
filed with the Clerk of the Court, and the Notice of Chapter 7 Trustee's Motion for Order
Approving Stipulation with Etreppid Technologies, LLC to Amend Protective Order Entered on
September 11, 2007 was served on creditors and parties in interest on June 25, 2010.
The Court having considered the Motion, proper notice having been given and good
cause having been shown,
28
EXHIBIT 5, PAGE 49
Case 2:10-bk-18510-BB
Case 2:10-bk-18510-88
2
3
4
###
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DATED:August30,2010
EXHIBIT 5, PAGE 50
Case 2:10-bk-18510-BB
Case 2:10-bk-18510-BB
NOTE: When using this form to indicate service of a proposed order, DO NOT list any person or entity in
Category I.
Proposed orders do not generate an NEF because only orders that have been entered are placed on the
CM/ECF docket.
3
4
6
7
10
11
12
13
14
15
16
21
22
23
II. SERVED BY U.S. MAIL OR OVERNIGHT MAIL(indlcate method for each person or entitv served):
On August 24. 2010 I served the following person(s) and/or entity(ies) at the last known address(es) in
this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed
envelope in the United States Mail. first class. postage prepaid, and/or with an overnight mail service
addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be
completed no later than 24 hours after the document is filed.
Ill. SERVED BY PERSONAL DELIVERY. FACSIMILE TRANSMISSION OR EMAIL (indicate method for
each person or entitv served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on
I served the
following person(s) and/or entity(ies) by personal delivery, or (for those who consented in writing to such
service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a
declaration that personal delivery on the judge will be completed no later than 24 hours after the
document is filed.
24
26
I declare under penalty of perjury under the laws of the United States of America that the foregoing is true
and correct.
27
2a
Marissa Silva
Type Name
EXHIBIT 5, PAGE 51
Case 2:10-bk-18510-BB
Case 2:10-bk-18510-BB
2
3
5
6
I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING ("NEF") - Pursuant to controlling
General Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on the following
-- - - - - 9 - -persen(s)-by-the-Gourt-via-NEF-ana-hypeFlink-to-the-judgment-or-order.-As-of-August-24,20to-the------following person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or adversary
10 proceeding to receive NEF transmission at the email address(es) Indicated below.
8
11
12
13
14
15
16
17
18
II. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this judgment or
order was sent by United States Mail, first class, postage prepaid, to the following person(s) and/or
entity(ies) at the address(es) indicated below:
19
Debtors
Dennis Lee Montgomery
20
6 Toscana Way
Rancho Mirage, CA 92270
6 Toscana Way
Rancho Mirage, CA 92270
21
25
Ill. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment
or order which bears an "Entered" stamp, the party lodging the judgment or order will serve a complete
copy bearing an "Entered" stamp by U.S. Mail, overnight mail, facsimile transmission or email and file a
proof of service of the entered order on the following person( s) and/or entity(ies) at the address(es),
facsimile transmission number(s) and/or email address(es) indicated below:
26
27
28
EXHIBIT 5, PAGE 52
Case 2:10-bk-18510-BB Doc 203 Filed 12/06/12 Entered 12/06/12 16:23:06 Desc
Case 2:10-bk-18510-BB Doc
Filed 08/30/10
Entered
Main148
Document
Page 60
of 79 08/30/10 08:40:35 Desc
Main Document Page 5 of 5
4
5
6
7
8
----
10
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12
13
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17
Interested Parties
Michael Flynn, Esq.
PO Box690
6156 La Flecha
Rancho Santa Fe, CA 92067
eTreppid Technologies, LLC
755 Trademark Drive
Reno, NV 89521-5920
eTreppid Technologies, LLC
%Timothy Lukas, Esq.
Holland & Hart LLP
5441 Kietzke Ln., 2hd Floor
Reno, NV 89511-3026
18
19
20
21
22
23
24
25
26
27
28
EXHIBIT 5, PAGE 53
Case 2:10-bk-18510-BB
Exhibit 6
Desc
Case 2:10-bk-18510-BB
From:
To:
Cc:
Subject:
Date:
Desc
Christopher Conant
Tom casey
Linda Miiier
RE: Montgomery
Tuesday, December 04, 2012 4:52:28 PM
Tom,
Not a problem, I hereby confirm with this reply email. Have you been communicating with
Carlotta Wells with the DOJ about this motion?
Christopher J. Conant
Conant Law LLC
730 17th Street
Suite 200
Denver, CO 80202
(303) 298-1800
cconant@conantlawyers.com
THlS
EHAIL HESSAGI!
rs FOR
THE
sou
use OF THE IN'l'ENOED RECIPIEHT(s} AND HAY INCLUDE CONFlOEH11AL AND PRIVIUiGEO IHFORHAnON.
THE INTJ!NOEO RECIPIENT, PLEASE CONTAcr THI! SENOl!R BY Rl!PLY llHAIL, ANO OfSTllOY AU COPIES OF THI! ORIGINAL HESSAG
THlS
J.O.
1'0 /IE USED, ANO CANNOT /II! USED, llY AHY PERSON FOR THI! PURPOSE OF
rs HAOI! IN
CONANT LAW LLC.
THrs STATEHENT
IF THEllE ARE ANY TYFOS IN THIS [ O/SCUUH ALL RESl'ONSIBIUTY AND ATTR/81111! IT
THANK YOU.
COHPUANCE
WlTN
CIRCULAR
230, 3J.
C.F.R. PART
ro USER ERROR,
EXHIBIT 6, PAGE 54
Case 2:10-bk-18510-BB
Desc
CJ, please confirm your understanding of the above by a reply e-mail. Thank you.
Tom
Thomas H. Casey
The Law Offices of Thomas H. Casey, Inc.
22342 Avenida Empresa, Ste. 200
Rancho Santa Margarita, CA 92688
Phone: (949) 766-8787, ext. 102
Fax:
(949) 766-9896
Confidentiality Notice: The Information in this e-mail message, Including any files or documents
attached hereto, Is confidential and intended only for the use of the addressee(s) named above.
If the reader of this message is not the intended recipient, or the employee or agent responsible
to deliver It to the Intended recipient, you are hereby notified that dissemination, distribution or
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EXHIBIT 6, PAGE 55
Case 2:10-bk-18510-BB
Exhibit 7
Desc
Case 2:10-bk-18510-BB
Desc
1.
The Debtors filed a voluntary petition under Chapter 7 of the Bankruptcy Code on
Jason M. Rund is the duly appointed trustee of the bankruptcy estate of Dennis
The proposed Buyer, Michael Flynn, filed a claim in the bankruptcy estate in the
amount of $833,223.15.
4.
Listed assets of the Bankruptcy Estate on the Debtors' Schedules include the
following real property: real property located at 6 Toscana Way, Rancho Mirage, California
valued at $952,000; real property located at 3812 941h Ave NE, Yarrow Point, Washington,
valued at $2,150,000; and real property located at 12720 Buckthorn Lane, Reno, Nevada, valued
at $605,000 (collectively, "Real Properties").
5.
The Debtors' Schedules also include the following personal property assets:
certain bank accounts valued at a total of $10,036.89; household goods and furnishings valued at
$8,000; books and pictures, including a CD Juke Box, valued at $1,100; wearing apparel valued
at $4,540; jewelry valued at $98,902.80; a term life insurance policy valued at $0.00; an IRA
EXHIBIT 7, PAGE 56
Case 2:10-bk-18510-BB
Desc
valued at $26,402; 1,000 shares of Nevada Security Bank Stock valued at $859; Accounts
Receivable valued at $526,204; certain patents valued at $10,000,000; three automobiles - a 2006
Silverado valued at $9,845; a 2005 Cadillac CTS valued at $13,850; and a 2003 Tahoe valued at
$8,915; office equipment valued at $875; other personal property listed as "per Court Order
entered in this proceeding in the US Federal Court, Reno, NV -Case #306-cv-00056-PMP-VPC
valued at $2,104,600.12; and claims against various parties valued at $38,809,011.12, scheduled
.__as_follows:_(a)_the_Claims_againsUhe..LinerEinn, Teri Pham,~a~nd~D~eb~o~ra~h~K~l~ar~fi~o~r_ _ _ _ _ _ __
indemnification regarding sanction order in Federal Court Reno, NV Case No. 306-cv-0056PMP-VPC valued at $204,411.00; (b) Claims for legal malpractice against Liner firm, Terri
Pham, Deborah Klar, Tuneen Chisolm, Shannon Anderson, Robert Oliver, Richard Mooney,
Ryan Lapine, Robert Shore, Stuart A. Liner, Peter Bransten, Ellen Garofalo, and Randal
Sunshine in Federal Court Reno, NV Case No. 306-cv-0056-PMP-VPC valued at
$10,000,000.00; and (c) Claims for misrepresentations against Edra Blixseth and the Liner Law
Firm for settlement agreement with Warren Trepp and Etreppid Technologies on 09/08 valued at
$26,500,000.00 (collectively, "Personal Property Assets").
6.
The Debtors have claimed fully exempt the following Personal Property Assets:
household goods and furnishings in the amount of $21,065 per Section 703.140(b)(3) and (b)(6);
books and pictures in the amount of $3, 188 per Section 703. l 40(b)(3); wearing apparel in the
amount of $4,540 under Section 703.140(b)(3); and the Debtors' IRA in the amount of $26,402
per Section 703.140(b)(10)(E).
7.
The Debtors have claimed partially exempt the following Personal Property
Assets: jewelry in the amount of $19,900 per Section 703.140(b)(4), (1) and (5); and 2006 Chevy
2
EXHIBIT 7, PAGE 57
Case 2:10-bk-18510-BB
Desc
The following Personal Property Assets were sold to the Debtors per Court Order
entered June 11, 2010: CD Juke Box; Jewelry; 1,000 shares of Nevada Security Bank Stock; and
three automobiles - a 2006 Silverado; a 2005 Cadillac CTS; and a 2003 Tahoe valued at $8,915.
9.
Trustee pursuant to Court Order entered March 24, 2010: Complaint for violation of the False
Claims Act 31 U.S.C. Section 3129, et seq. and conspiracy to violate the False Claims Act filed
by the Debtor on behalf of himself and the United States Government in camera and under seal in
the District Court of Nevada.
10.
The following scheduled Personal Property Assets were abandoned by the Trustee
pursuant to Court Order entered November 10, 2010: (a) the Claims against the Liner Firm, Teri
Pham, and Deborah Klar for indemnification regarding sanction order in Federal Court Reno, NV
Case No. 306-cv-0056-PMP-VPC valued at $204,411.00; (b) Claims for legal malpractice
against Liner firm, Terri Pham, Deborah Klar, Tuneen Chisolm, Shannon Anderson, Robert
Oliver, Richard Mooney, Ryan Lapine, Robert Shore, Stuart A. Liner, Peter Bransten, Ellen
Garofalo, and Randal Sunshine in Federal Court Reno, NV Case No. 306-cv-0056-PMP-VPC
valued at $10,000,000.00; and (c) Claims for misrepresentations against Edra Blixseth and the
Liner Law Firm for settlement agreement with Warren Trepp and Etreppid Technologies on
09/08 valued at $26,500,000.00.
11.
The Trustee is currently holding a large number of documents at All Aboard Mini
Storage, 1705 S. State College Boulevard, Unit #19, Anaheim, California, ("Documents In
Storage"), including but not limited to, documents delivered from the Liner Firm obtained in
3
EXHIBIT 7, PAGE 58
Case 2:10-bk-18510-BB
Desc
their representation of the Debtor and from discovery documents received by the Liner Firm in
connection with litigation in which they represented the Debtor; and documents relating to
litigation in Nevada, wherein upon the request of the United States Department of Justice
("DOJ"), the Nevada District Court entered several protective orders including an Order entered
on August 29, 2007 ("DOJ Protective Order". The Nevada District Court also entered a
protective order regarding discovery matters between the Debtor and eTreppid on September 11,
2007-(''eTTeppid-Protective-Qrder!!_),.--.- - - - - - - - - - - - - - - - - - - - - - 12.
The DOJ reviewed and redacted all of the Documents In Storage prior to their
receipt by the Trustee so as to comply with the Protective Order. The Trustee has caused the
review of the Documents In Storage and has verified that all of the documents appear to have
been reviewed by the DOJ. The Documents In Storage, since. they are fully redacted, are no
longer subject to the DOJ Protective Order.
13.
With regards to the eTreppid Protective Order and the Documents In Storage
EXHIBIT 7, PAGE 59
Case 2:10-bk-18510-BB
14.
Desc
The Buyer, Michael Flynn, wishes to purchase the Bankruptcy Estate's interest, if
any, the remaining assets not claimed exempt, purchased by the Debtors or previously abandoned
by the Trustee, for the purchase price of $20,000 ("Offer") as follows:
a.
California. A Relief from Stay Order was entered by the Bankruptcy Court on October 27, 2009.
In addition, the Debtors' Schedules indicate that Warren Trepp may have a judgment lien
Relief from Stay Order was entered by the Bankruptcy Court on October 28, 2009 and November
18, 2009. In addition, the Debtors' Schedules indicate that Warren Trepp may have a judgment
lien encumbering this property.
d.
EXHIBIT 7, PAGE 60
Case 2:10-bk-18510-BB
Desc
that on the Petition Date, the Debtors had no funds in their scheduled bank accounts.
e.
f.
e.
Any and all claims and/or causes of action derived from or arising out of
$526,204.00;
assets identified on the Debtors' Schedules not claimed exempt, purchased by the Debtors or
previously al:>anaonecrDy tne Trust'Piee"';__________________________
f.
Any and all proceeds derived from or arising out of assets identified on the
Debtors' Schedules which are not claimed exempt, purchased by the Debtors or previously
abandoned by the Trustee;
g.
Any and all claims and/or causes of action against Edra D. Blixseth;
h.
Any and all claims and/or causes of action against the original lender,
mortgage broker, subsequent loan holder, loan assignee, loan related certificate holder, loan
servicer, mortgage servicer, or similar lender or loan entity associated with the purported loan
and purported security instruments which encumber or use as security for repayment, the Yarrow
Point Property. Such entities may include, but are not limited to, Bank of New York Mellon,
Bank of America, N.A., Countrywide Home Loans, Inc., NV Mortgage, Inc. dba SOMA
Financial, Fannie Mae, Freddie Mac, Mortgage Electronic Registration Systems, Inc.,
Certificateholders CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-17, Mortgage PassThrough Certificates, 2006-17, and all successors and assigns thereto (hereinafter referred to as
"Yarrow Point Claims");
i.
EXHIBIT 7, PAGE 61
Case 2:10-bk-18510-BB
j.
Desc
Any and all claims against Blxware, LLC; Opspring, LLC; Blxware, Inc.;
and Opspring, Inc.
Collectively, the above described assets are hereinafterreferred to as the "Saleable Assets".
15.
All assets to be sold include only those assets which existed on the Debtors'
16-.-'Fhe-'Frustee-will-move-the-Bankrupt(7y-Gourt-for-approval-of'-this-Sale-Agreement.---.- - - - - - -
17.
This Sale Agreement shall become final upon entry of an order of the United
States Bankruptcy Court authorizing the Trustee to enter into it and approving the terms set forth
herein. Absent entry of a final order of the United States Bankruptcy Court approving this Sale
Agreement, this Sale Agreement shall be null and void.
18.
Should any dispute arise regarding this Sale Agreement, the United States
Bankruptcy Court for the Central District of California, Los Angeles Division shall have
jurisdiction to determine the dispute.
19.
Upon execution of the Sale Agreement, the Buyer hereby agrees to remit the sum
of$20,000 for the purchase of the Bankruptcy Estate's interest, if any, in the Saleable Assets.
20.
The Trustee's Motion for approval of this Agreement shall include a request for
approval of an overbid procedure for the purchase of the Saleable Assets as follows:
a.
one who provides a financial statement and such business and banking references as are required
in Trustee's reasonable discretion, sufficient to assure Trustee of the bidder's ability (based on
availability of financing, experience or other conditions) to consummate the purchase of the
7
EXHIBIT 7, PAGE 62
Case 2:10-bk-18510-BB
Desc
Personal Property, AND one who can consummate the purchase of the Saleable Assets on the
same terms and conditions, other than price, as those proposed in the Offer.
b.
Each bid must be received by the Trustee and the Trustee's counsel no
later than three (3) business days prior to the hearing on the Motion.
c.
The initial overbid must exceed the Purchase Price by a minimum of Five
Hundred U.S. dollars ($500.00). For instance, the first bid must be at least Twenty Thousand
--
-----------Five-Hundred-B~S-;--dollars-f$2.0 1500;00);-Each-subsequent-bid-must-then-be-in-inerements-of-Five------
Hundred U.S. dollars ($500.00). For instance, the first subsequent bid must be at least Twenty
One Thousand U.S. dollars ($21,000.00).
d.
Each bid must be all cash, non-contingent, and on the same terms and
Each bidder must match all terms and conditions of the original bid. Thus,
the payment of the full Purchase Price must be made. Said payment must be received by the
Trustee by no later than three (3) business days prior to the hearing on this Motion. Said
Payment must be in cash, cashier's check, certified check or irrevocable letter of credit, and must
be deposited with the Trustee so that the Trustee will have access to said funds no later than three
(3) business days prior to the hearing on the Motion.
21.
Promptly following the executed of the Sale Agreement, the Trustee will file a
motion before the Bankruptcy Court seeking approval of the Sale Agreement with a finding that
the Buyer is a good faith purchaser within the meaning of Section 363(m) of the Bankruptcy
Code and a waiver of the 14-day stay set forth in Bankruptcy Rule 6004(h).
22.
In the event that there is a successful overbidder who is not the proposed Buyer, or
8
EXHIBIT 7, PAGE 63
Case 2:10-bk-18510-BB
Desc
if the Bankruptcy Court fails to approve a sale of the Saleable Assets, the bankruptcy estate will
promptly refund the $20,000 remitted to the estate by the Buyer.
23.
Limitations of Sale: The Parties acknowledge that the operation of the law has
placed the Bankruptcy Trustee in a unique role as the Seller of the Saleable Assets, which are the
subject of this Agreement. Due to the nature of the Trustee's role in administering the
bankruptcy estate, there are limitations as to the extent, type and character of the agreement under
---whieh-the-1'rustee-ean-eenvey-the-Saleable-Assets.-1'he-1'rustee-proposes-to-sell-these-assets
subject to certain limitations. The Parties hereby acknowledge that they understand the terms
under which the Saleable Assets are to be conveyed may vary substantially from the normal
customs and trade within the real estate industry. Except where expressly mandated by operation
of law, the Buyer consents to any such modifications and amendments.
24.
Buyer acknowledges that Buyer is purchasing the Saleable Assets from the
bankruptcy estate subject to any and all liens, secured interests and encumbrances of any kind.
25.
sale of the E~tate's interest in the Saleable Assets, the costs to store the Documents In Storage
immediately becomes the responsibility of the Buyer.
26.
Saleable Assets from the Bankruptcy Estate "AS IS" without warranties of any kind, expressed or
implied, being given by the Trustee, concerning the condition of the property or the quality of the
title thereto, or any other matters relating to the Saleable Assets. Buyer represents and warrants
that he is purchasing the Saleable Assets as a result of his own investigation and is not buying the
Saleable Assets pursuant to any representation made by any Broker, Agent, Accountant, Attorney
9
EXHIBIT 7, PAGE 64
Case 2:10-bk-18510-BB
Desc
or Employee acting at the direction, or on the behalf of the Trustee. Buyer acknowledges that
Buyer has inspected the Saleable Assets, and Buyer forever waives, for himself, his heirs,
successors and assigns, any and all claims against the Debtors, their attorneys, agents and
employees, the bankruptcy estate of Dennis L. Montgomery and Brenda Kathleen Montgomery,
Case No. 2:10-bk18510-BB, Jason M. Rund, as Bankruptcy Trustee and individually, and his
Attorneys, Agents and Employees, arising or which might otherwise arise in the future
----concerning-the-Saleable-Assets.~.----------------------------
27.
Trustee's Liability: Buyer acknowledges that the Trustee is acting in his official
capacity only. No personal liability shall be sought or enforced against the Trustee with regard to
this Agreement, the sale of the Saleable Assets, or the physical condition of the Saleable Assets.
In the event that the Trustee fails or refuses to complete the transaction for any reason, then the
limit of the Trustee's liability is only to return any money paid to the Trustee by the Buyer,
without deduction.
28.
Hold Harmless: Buyer understands the terms and conditions of this entire Sale
Agreement and holds the Estate, its agents, the Law Office of Thomas H. Casey, Inc., attorneys,
agents and employees harmless from any liabilities arising from this contract.
29.
Attorneys Fees and Costs. In the event that any action, suit or other proceeding is
hereafter instituted to remedy, prevent or obtain relief from a breach of this Agreement, arising
out of a breach of this Agreement, the prevailing party shall recover all of such reasonable
attorneys' fees and costs incurred in each and every such action, suit or other proceedings,
including any and all appeals, writs or petitions therefrom.
30.
Buyer is aware that this offer is contingent upon Chapter 7 Bankruptcy Trustee
10
EXHIBIT 7, PAGE 65
Case 2:10-bk-18510-BB
Desc
...
.:
Case No. 2:l0-bk18510-BB; Jason M. Rund, as Bankruptcy Trustee and individually, and his
Attorneys, Agents and Employees, arising or which might otherwise arise in the future concerning
the SaleableAssets.
27.
Trustee's Liability: Buy~r acknowledges that the Trustee is acting in his official
I
I
I
--1-
capacity only. Nopersorial liability shallbe sought 01 enforced against the Trnste.e with regard to
thisAgreem,eht~ the sale of the Saleable Assets, oi: thephysic;9l conditiohofth'e.Saleable Assets.
111 the event that the Trustee fails or refuses to complete the transact~on for any r_e_as_o_n~,t_h_en_th_e_ _ _ __
.I
limit of the Trustee's liability is only to return any money paid to the Trustee by the Buyt}r, without .
deduction.
28.
Hold Hann1ess: Buyer understands the tenns and conditions of this entire Sale
Agl"eement and holds the Estate, its agents, .the l,aw Office of Thomas H. Casey, Inc., attorneys,
agents and'. employees harmless from arty liabilities arising from this contras~t.
29. Attorneys Fees and Costs.
hereafter instituted to remedy, prevent or obtain relief from a breach of this Agreement, arising out
of a breach of this Agreement, the prevailing patty shall recover all of such reasonable attorneys'
fees aiid costs incutTed in etlch and every such action, suit or other proceedings, including any and
all appeals, writs or petitions therefrom.
EXHIBIT 7, PAGE 66
'.
Case 2:10-bk-18510-BB
Desc
f\pprovedJis
to. 01'1n
tlnd 9ontenf
.
...
. . . .
... .
'.
. '
'
DATED: Novernber'la-;-2012
.A PRQFESSIONAL.CQRPORATlON
. ...
_____ ;
By:
---~------~~---;:;;T;;:-fio::;tn=as=.:;:H;.-.:..-;::C,....as=e==y,=Ai":t~to=m-=:e=y;:;;-fo=r4:J=as"='on=:-;::M7~;:;::R"':=un=a:;=,:-';--in===-~----
11
EXHIBIT 7, PAGE 67
Case 2:10-bk-18510-BB
Desc
DATED: November
I ~.2012
By:
und, in
his capacity as Chapter 7 Trustee fl
e estate of
Dennis Lee and Brenda Kathleen Montgomery
11
EXHIBIT 7, PAGE 68
Case 2:10-bk-18510-BB
Desc
1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General
Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On (date)1
-----[)ecember6.-201-21l-checked-the-eM/EeF-docket-forthis-bankruptcy-case-or-adversary-proceeding-and-determined-that----the following persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated
below:
December 6, 2012
Date
Kathy Driggers
Printed Name
Sig
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of C ifornia.
June 2012
F 9013-3.1.PROOF.SERVICE
Case 2:10-bk-18510-BB
Desc
Debtors
Dennis Lee Montgomery
6 Toscana Way
Rancho Mirage, CA 92270
Interested Parties
----RaphaeLO.-Gomez _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ,_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Carlotta P. Wells
Senior Trial counsel
Federal Programs Branch
US Department of Justice
Civil Division - Room 6114
20 Massachusetts Ave., N.W.
P.O. Box 883
Washington, DC 20044
Counsel for Michael Joseph Flynn
Christopher J. Conant
Conant Law LLC
730 1?'h Street, Suite 200
Denver, CO 80202
Michael Joseph Flynn
P.O. Box690
Rancho Santa Fe, CA 92067
Counsel for Scott D. Hill
Craig S. Sternberg
Sternberg Thomson Okrent & Scher, PLLC
500 Union Street, Suite 500
Seattle, WA 98101
Counsel for Scott D. Hill
Craig S. Sternberg
Sternberg Thomson Okrent & Scher, PLLC
600 University Street, Suite 2401
One Union Square
Seattle, WA 98101
Scott D. Hill
3760 Carillon Point
Kirkland, WA 98033
eTreppid Technologies, LLC
755 Trademark Drive
Reno, NV 89521-5920
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012
F 9013-3.1.PROOF.SERVICE