In re Gilman
| Decision Date | 30 September 2022 |
| Docket Number | Case No.: 1:11-bk-11603-VK |
| Citation | 646 B.R. 277 |
| Parties | IN RE: Kevan Harry GILMAN, Debtor. |
| Court | U.S. Bankruptcy Court — Central District of California |
Mark E. Ellis, Ellis Law Group LLP, Sacramento, CA, for Debtor.
Anthony A. Friedman, Levene Neale Bender Yoo & Golubchik LLP, Los Angeles, CA, for Trustee Amy L. Goldman (TR).
The motion seeks the allowance of administrative expenses to movants under 11 U.S.C. § 503(b). The Court has jurisdiction over this issue because it arises under a provision of title 11 of the United States Code. 28 U.S.C. § 1334(b). For the same reason, the Court has the constitutional authority to enter a final order disposing of the motion. See Wellness Int'l Network, Ltd. v. Sharif, 575 U.S. 665, 135 S.Ct. 1932, 191 L.Ed.2d 911 (2015).
On February 7, 2011, Kevan Harry Gilman ("Debtor") filed a voluntary chapter 7 petition, commencing case no. 1:11-bk-11603-VK (the "Case"). Amy L. Goldman was appointed the chapter 7 trustee (the "Trustee"). On June 21, 2011, the Trustee caused to docket the Chapter 7 Trustee's Report of No Distribution (the "First No Asset Report").
When he filed his chapter 7 petition, Debtor resided, with his then-spouse and their daughter, in a house located at 6553 Varna Avenue, Los Angeles, California (the "Residence"). In May 2021, Debtor passed away.
Over more than ten years, Tammy R. Phillips and Tammy R. Phillips, a Prof. Law Corp. (together, "Creditors"), have engaged in extensive litigation and appeals concerning the Case, including, but not limited to, the nondischargeability of their claims, the amount of their claims, Debtor's claims of exemptions, Debtor's receipt of a discharge, motions filed by other parties in interest to obtain relief from the automatic stay, sanctions motions which Creditors filed, the Trustee's employment of professionals and the Trustee's proposed abandonment of assets. Creditors also filed an adversary proceeding against the Trustee, which was dismissed with prejudice. Because of this litigation and Creditors’ related appeals, and irrespective of the denial of Debtor's discharge in November 2016 and his subsequent death in May 2021, the Case has not yet closed.1
In January 2021, the Trustee withdrew the First No Asset Report [doc. 780]. A few days later, the Trustee filed a Notice of Asset Case [doc. 783].
Because of that notice, a bar date for prepetition claims was set for May 3, 2021 [doc. 783]. Only the following proofs of general unsecured claims have been filed:
In the Case, the Court set a deadline of April 15, 2022 by which parties, other than professionals employed at the expense of the estate, must file and serve requests for payment of administrative expense priority claims of the kind described in 11 U.S.C. § 503(b) and entitled to priority under 11 U.S.C. § 507(a)(1) [doc. 860].
On March 3, 2022, Debtor's former spouse Kwei-Shiang Y. Gilman, ("Ms. Gilman") filed a proof of claim for allowance of administrative expenses in the amount of $16,323.09 (Claim No. 5). In April 2022, after Creditors filed an Objection to Ms. Gilman's proof of claim [doc. 876], Ms. Gilman withdrew that claim [doc. 879].
On April 15, 2022, Creditors filed a Motion for Recovery of Administrative Expenses (the " Section 503(b) Motion") [doc. 875]. On June 24, 2022, Creditors filed a supplement to the Section 503(b) Motion, in which they sought an award of additional administrative expenses (the "June 2022 Supplement") [doc. 884]. In these pleadings, Creditors have not clearly set forth the specific amount of the administrative expense they seek to have allowed. Instead, Creditors provide a summary of services provided by their counsel, on certain issues. Based on Creditors’ counsel receiving fees, for these services, in the amount of $500.00 per hour, Creditors request that they be awarded a claim for administrative expenses.
On February 21, 2011, Debtor filed his Schedule A and listed his interest in the Residence [doc. 12]. Debtor originally listed the Residence with a value of $470,000.00. In his Schedule D, Debtor listed claims secured by first and second deeds of trust in the aggregate amount of $329,000.00 [doc. 5].
In his original Schedule C, Debtor claimed a homestead exemption in the amount of $137,000.00. Debtor cited California Code of Civil Procedure ("CCP") § 704.730 as the basis for the exemption; the schedule stated, "Debtor has Cancer
and has not been able to work in his business." [doc. 12].
On June 25, 2011, Creditors objected to Debtor's exemptions [doc. 30]. Because Debtor did not file a timely response to Creditors’ objections, the Court sustained Creditors’ objections [doc. 37]. Debtor subsequently filed a motion to set aside the initial order disallowing his exemptions [doc. 45], which the Court granted [doc. 63].
On August 4, 2011, Debtor filed amended Schedules A and C, stating the value of the Residence was $433,000.00 and claiming a homestead exemption in the amount of $104,000.00 under CCP § 704.730 [doc. 35]. Like the initial Schedule C, the amended Schedule C stated, "Debtor has Cancer
and has not been able to work in his business." [doc. 35].2
On July 17, 2012, Creditors filed a Notice of Motion and Renewed Motion Re: Objection to Debtor's Claim of Homestead Exemption (the "Objection to Exemption") [doc. 73]. On January 6, 2015, the Court overruled the Objection to Exemption, except as to Debtor's claim of a disability enhancement to his homestead exemption (the "Homestead Exemption Order") [doc. 315]. After an evidentiary hearing, the Court sustained Creditors’ objection to Debtor's claim of a $4,000.00 disability enhancement to his $100,000.00 homestead exemption [doc. 433].
On January 20, 2015, Creditors filed a Notice of Motion and Motion for New Trial, to Amend/Alter Judgment, or, Alternatively, for Relief from Judgment of January 6, 2015 (the "Motion for New Trial") [doc. 321]. In April 2015, after a hearing on that motion, the Court entered an order denying the Motion for New Trial [doc. 368].
In 2015, Creditors appealed the Homestead Exemption Order [doc. 361]. The district court affirmed that order [doc. 495]. On August 22, 2016, Creditors appealed the district court's ruling to the Ninth Circuit Court of Appeals [doc. 496]. In 2018, the Ninth Circuit Court of Appeals issued an opinion remanding the Court's original decision for the Court to decide two remaining issues: (1) whether Debtor intended to reside at the Residence when the Case was filed; and (2) whether any equitable theories under California law prevented Debtor from claiming a homestead exemption under CCP § 704.730 [doc. 602].
In January 2019, the Court held an evidentiary hearing regarding Creditors’ objections to Debtor's $100,000.00 homestead exemption. After that hearing, the Court determined that Debtor intended to reside at the Residence when the Case was filed, and that the equitable theories asserted by Creditors did not prevent Debtor from claiming his homestead exemption under CCP § 704.730 [docs. 674 and 692]. Consequently, the Court sustained Debtor's homestead exemption (without the disability enhancement) in the amount of $100,000.00.
Creditors appealed that decision [doc. 697]. In October 2020, the district court affirmed that decision [doc. 756]. Creditors have appealed the district court's order, and Creditors’ appeal of the ruling regarding Debtor's $100,000.00 homestead exemption is pending before the Ninth Circuit Court of Appeals [doc. 764].
On November 26, 2020, Creditors filed a Notice of Motion to Direct Administration and Re-Investigation or, in Alternative, Replace Trustee (the "Estate Administration Motion") [doc. 761]. In that motion, Creditors requested an order directing the Trustee to administer Debtor's estate, including by selling Debtor's real properties and "re-investigating Debtor's malpractice assets for prosecution or sale." Alternatively, Creditors requested an order "replacing the trustee" [doc. 761]. In the Estate Administration Motion, Creditors contended that, "[e]ven with administrative costs the facts show assets sufficient to make distributions to unsecured creditors."
In December 2020, the Trustee filed an application to employ Levene, Neale, Bender, Yoo & Brill L.L.P. as her general bankruptcy counsel (the "LNBY&B Application") [doc. 765]. Creditors filed a response to the LNBY&B Application and requested that it be set for hearing [doc. 767]. Creditors subsequently requested that the Court strike the Trustee's reply and filed other pleadings in...
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