WS-TH Re-Opening of Bankruptcy in 2006

8/2/2019 WS-TH Re-Opening of Bankruptcy in 2006

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avidSeanDufek,Esq.

2655CaminoDelRioNorthSuite203

SanDiego,

CA92108

(619)222-5886Fax(619)222-5486

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In re: WS-TH, Inc. Memorandum of points and authorities inSupport of Motion to Vacate Dismissa

BK. No. 06-00191-JH-11

David Sean Dufek, Esq. SBN 193723Law Office of David Sean Dufek2655 Camino Del Rio North Suite 203San Diego, CA 92108(619) 222-5886 Fax (619) 222-5486

Attorney for Debtor, WS-TH, Inc.

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF CALIFORNIA

In Re:

WS-TH, Inc., a California Corporation,

Debtor.____________________________________WS-TH, Inc., a California Corporation,

Moving Party____________________________________Pacific Horizon Financial, Inc. and PacificHorizon Mortgage Investors, I LLC

Respondents.___________________________________

)))))))))))))))

Bankruptcy No: 06-00191-JH-11

RS NO. DSD-1

MEMORANDUM OF POINTS ANDAUTHORITIES IN SUPPORT OFMOTION TO VACATE DISMISSAL ANDREOPEN CHAPTER 11 CASE

Debtor, WS-TH, Inc. Moves this Court for an Order vacating the dismissal of the Chapter 1

and reopening chapter 11 case based on the following:

Federal Rules of Bankruptcy Procedure, Rule 5010 states:

A case may be reopened on motion of the debtor or other party in interest pursuant to 350(b) of th

Code......

Bankruptcy Code 350(b) states: A case may be reopened in the court in which such case

was closed to administer assets, to accord relief to the debtor, or for other cause.



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avidSeanDufek,Esq.


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In re: WS-TH, Inc. Memorandum of points and authorities inSupport of Motion to Vacate Dismissa

BK. No. 06-00191-JH-11

Rule 60(b) of the Federal Rules of Civil Procedure allow a party relief from an order in certain

instances:

(B) On motion and up-on such terms as are just, the court may relieve a party or a partys

legal representative from a final judgment, order, or proceeding for the following reasons: (1)mistake, inadvertence, surprise, or excusable neglect....The motion shall be made within a

reasonable time, and for reason (1), (2) and (3) not more than one year after the judgment, order, or

proceeding was entered or take. Pursuant to Rule 62, the Court in its discretion may and on such

terms conditions for the party for the security of the adverse party as are proper, may stay the

execution of any proceedings to enforce a judgment pending the disposition of a motion.....for relie

from a judgment or order made pursuant to rule 60.

Dated: 5/4/06 By: /s/ David Sean Dufek

David Sean Dufek



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avidSeanDufek,Esq.


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In re WS-TH, Inc. Declaration of David Sean Dufe

BK. NO. 06-00191-JH-11





In Re:WS-TH, Inc., a California Corporation,



Respondents.___________________________________

)))))))))))))))

Bankruptcy No: 06-00191-JH-11RS NO. DSD-1

DECLARATION OF DAVID SEANDUFEK IN SUPPORT OF MOTION TOVACATE DISMISSAL AND REOPENCHAPTER 11

I, David Sean Dufek, declare as follows:

1. I am an attorney licensed to practice law in the State of California. I have been retained to

serve as counsel for Debtor, WS-TH, Inc. although I have not been appointed, I am waiting

for the Statement of Position from the United States Trustees office. I have personal

knowledge of the facts stated herein, except as to those matters stated to be based upon

information and belief, and as to those matters, I believe them to be true, and would and

could competently testify thereto if called as a witness.

2. On or about April 27, 2006, I was retained by principal for Debtor, to seek an order from th

court to set aside the foreclosure sale of real property located at Warm Springs town homes

(16 units) on Torrey Pines Road in Murrieta, California and legally described as LOT 47 OF



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avidSeanDufek,Esq.


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In re WS-TH, Inc. Declaration of David Sean Dufe

BK. NO. 06-00191-JH-11

TACT NO. 28674, AS SHOWN BY MAP ON FILE IN BOOK 284, PAGES 85 THROUGH

88, OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. I began preparatio

of the application to be appointed counsel for debtor, and having determined that there was

noticed motion set for May 12, 2006, I believed that debtor had sufficient time to move thiscourt for an order setting aside the foreclosure sale, on the grounds that creditor Creditor

Pacific Horizon Financial Inc. & Pacific Horizon Mortgage Investors, 1 LLC had improperl

relied on their relief from stay order to conduct the sale. The Stay appears to be based on a

allegation that there was no insurance on the property and that the State Court litigation

should be allowed to go forward. The order granting relief from stay allowed the litigation

go forward but ordered there shall not be enforcement actions against the property without

further order of the court.

3. On April 28, 2006, I determined from an examination of the online filings that the court had

filed an order dismissing the chapter 11, and that the hearing set for May 12, 2006 was take

off calendar.

4. I believe that the sale was held in violation of the automatic stay and in violation of the Ord

for Relief from Stay.

5. I was in the process of filing to be appointed as counsel for the debtor and bringing a motio

to set aside the sale when creditor Ronald A. Bedell withdrew the motion for hearing and

opposition to dismissal of the chapter 11, thus frustrating my effort to assist the debtor in

setting aside the foreclosure sale and requiring this motion to reopen.

6. I am informed and believe that unless the Court reopens the case, sets aside the foreclosure

sale held in violation of the Courts Order for relief, Debtor will lose all interest in the

property, by way of a subsequent sale to a BFP, and such loss will be irreparable.

I declare under penalty of perjury, under the laws of the United States of America, that the

foregoing is true and correct. Executed this 4th day of May 2006 at San Diego, California.

/s/ David Sean Dufek

David Sean Dufek



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avidSeanDufek,Esq.


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In re WS-TH, Inc. Declaration of Charles McHaff

BK. NO. 06-00191-JH-11








Respondents.___________________________________

)))))))))))))))


DECLARATION OF CHARLESMCHAFFIE IN SUPPORT OF MOTIONTO VACATE DISMISSAL AND REOPENCHAPTER 11 BANKRUPTCY PETITION

I, Charles McHaffie , declare as follows:

1. I am an officer and principal of the debtor herein, WS-TH, Inc. I have personal knowledge

the facts stated herein, except as to those matters stated to be based upon information and

belief, and as to those matters, I believe them to be true, and would and could competently

testify thereto if called as a witness.

2. Acting on behalf of the debtor I attempted to retain counsel for the debtor by hiring the

Pacific Law Center. I met with an attorney there and gave them a retainer of $10,000.00.

Pacific Law center never filed an application to be employed as counsel and although they

were given the motions for relief from stay filed by Pacific Horizon Financial and Dixieline

Lumber Company, no response was ever filed and an order on noncontested motion was



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avidSeanDufek,Esq.


SanDiego,

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(619)222-5886Fax(619)222-5486

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In re WS-TH, Inc. Declaration of Charles McHaff

BK. NO. 06-00191-JH-11

entered.

3. It is my belief that the foreclosure sale was held in violation of the automatic stay and the

violation was wilful. I further believe that the foreclosing lender inflated the amounts due o

its loan in a effort to chill any bidding at the foreclosure sale. The property reverted to thebeneficiary at the sale held April 18, 21006 at 10: a.m.

4. But for the last minute nature of the notice provided to Mr. Warner regarding the foreclosur

I believe that the debtor could have taken steps to cure the arrears and avoid the sale.

5. I was negotiating with David Dufek to be appointed counsel for the debtor and file a motion

to set aside the foreclosure sale when the chapter 11 was dismissed. If the case is not

reopened, the dismissal vacated, and the sale set aside, irreparable damage will occur.


foregoing is true and correct. Executed this 4th day of May, 2006 at San Diego, California.

/s/ Charles McHaffie

Charles McHaffie



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avidSeanDufek,Esq.


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In re WS-TH, Inc. Declaration of James Warner

BK. NO. 06-00191-JH-11








Respondents.___________________________________

)))))))))))))))


DECLARATION OF JAMES WARNER INSUPPORT OF MOTION TO VACATEDISMISSAL OF CASE NUNC PRO TUNCAND REOPEN CHAPTER 11BANKRUPTCY

I, James Warner, declare as follows:

1. I am an attorney licensed to practice law in the State of California. I am counsel for Debtor

WS-TH, Inc. although I do not represent them in connection with the instant Bankruptcy

Case. I have personal knowledge of the facts stated herein, except as to those matters stated

to be based upon information and belief, and as to those matters, I believe them to be true,

and would and could competently testify thereto if called as a witness.

2. On or about April 7, 2006, I received a copy of an order issued on Creditor Pacific Horizon

Financial Inc. & Pacific Horizon Mortgage Investors, 1 LLC for relief from stay. The Stay

appears to be based on an allegation that there was no insurance on the property and that the



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avidSeanDufek,Esq.


SanDiego,

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(619)222-5886Fax(619)222-5486

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BK. NO. 06-00191-JH-11

State Court litigation should be allowed to go forward. The order granting relief from stay

allowed the litigation to go forward but ordered there shall not be enforcement actions

against the property without further order of the court.

3. When I received the Order for relief from stay, I immediately faxed a copy of the proof ofinsurance to attorney Martin McGuinn (Exhibit 1). I had previously faxed a copy of the

proof of insurance to Attorney McGuinn on February 25, 2006, one day after I received it

from the insurance broker (Exhibit 2). When I received no response from Mr. McGuinn, I

called him on Monday, April 10, 2006 at 8:30. He told me he had not received the fax of

February 25, 2006 or April 7, 2006 in spite of the fact of the transmission verification repor

He said the fax may have mistakenly gone to his junk mail repository. I refaxed the

insurance notice (Exhibit 3). In addition to the February 25, 2006 fax, I had previously

mailed and faxed on February 17, 2006 a letter to Mr. McGuinn stating that insurance was i

place and would provide proof of same.

4. On April 10, 2006, I discussed this order with Mr. McGuinn. Mr. McGuinn and I

specifically discussed the portion of the order which states that Movants shall not take

enforcement actions against the debtor or debtors estate without further order of this court,

and that the motion he filed was in error because he had previously received notice of proof

of insurance.

5. Mr. McGuinn indicated to me that he felt that the wording of the order was ambiguous,

and given that, the property would not be sold at foreclosure at that time. We agreed that th

state court litigation would go forward based on the language contained in the order for reli

from stay. (A true and correct copy of the Relief from stay order is attached hereto as

Exhibit 4).

6. Based on this conversation, I advised my client that he had sufficient additional time to 1)

continue to litigate the Riverside Civil Case, case #RIC430931, where the validity of

creditors claims are being tested, and 2) secure bridge funding sufficient to moot the pendin

foreclosure sale.



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avidSeanDufek,Esq.


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BK. NO. 06-00191-JH-11

7. On April 17, 2006, the insurance broker faxed to Mr. McGuinn the declarations page of the

insurance policy, indicating that Mr. McGuinns client was listed as an additional named

insured on the policy.

8. On April 17, 2006, at 3:58 pm my office received a fax from Mr. McGuinn, indicating thatMr. McGuinn had decided that the foreclosure sale would go forward the next morning at

10:00 a.m. Unfortunately, at that time I was out of the office, and was not made aware of th

contents of the fax until approximately 5:30 p.m. on April 17, 2006.

9. I believe that the order issued by this court on April 6, 2006, provided relief from the

automatic stay to Creditors Pacific Horizon Financial, Inc. and Pacific Horizon Mortgage

Investors, 1 LLC of a limited nature, i.e., they had the right to litigate the claims in the

Riverside Court, but not sell the property, or take other enforcement action against the

property. Taking the property to foreclosure sale, and seeking to obtain a trustees deed upo

sale is a violation of the express provisions of Judge Hargroves order, which otherwise

would not make sense to allow a foreclosure of the debtors property but not allow execution

on the state litigation without further Court order.

10. The dismissal of the chapter 11 case: On March 16, 2006 the Court filed a notice of intent t

dismiss involuntary chapter 11 petition. Thereafter a creditor, Ronald A Bedell filed a

request and notice of Hearing of Intent to Dismiss Involuntary Chapter 11 petition. The

notice scheduled a hearing for May 12, 2006. (Exhibit 5) As stated above, the foreclosure

sale occurred on April 18, 2006. The subject property reverted to the foreclosing

beneficiary. One day latter, Ronald A. Bedell withdrew the request and notice of hearing o

Courts Notice of Intent to Dismiss Involuntary Chapter 11 Petition. (Exhibit 6). On April

24, 2006 the Court entered and Order Granting Dismissal of the Case signed that same day.

(Exhibit 7). Notice of Dismissal was mailed April 27, 2006. (Exhibit 8).

11. The dismissal of the Chapter 11 effectively validated the sale without allowing the debtor

to oppose the sale and the dismissal. Debtor believed that the Order granting relief did not

allow the sale to proceed without further Court Order, and that the debtor would have an



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avidSeanDufek,Esq.


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BK NO 06 00191 JH 11

opportunity to oppose the dismissal at the hearing scheduled April 12, 2006.


foregoing is true and correct. Executed this 4nd day of May, 2006 at San Diego, California.

/s/James Warner

James Warner


WS-TH Re-Opening of Bankruptcy in 2006

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Transcript of WS-TH Re-Opening of Bankruptcy in 2006