Richards v. Reggie Bishop (In re Reggie Bishop), Case No. 2:16-bk-16503 RK

In re: REGGIE BISHOP, aka REGGIE LYN BISHOP,

aka REGGIE L. BISHOP, Debtor.

BRENDA MOORE RICHARDS, Individually

and as Trustee of the GWENDOLYN R. MOORE REVOCABLE LIVING TRUST;

FREDERICK F. RICHARDS III, as TRUST BENEFICIARY

OF THE GWENDOLYN R. MOORE REVOCABLE LIVING TRUST;

LAW OFFICES OF A. GEORGE GLASCO, APC., Plaintiffs, v. REGGIE BISHOP, Defendant.

Case No. 2:16-bk-16503 RK

Adv. No. 2-16-ap-01383 RK

UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION

February 22, 2018

NOT FOR PUBLICATION

Chapter 7

STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW ON PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

Pending before this court in this adversary proceeding is the Plaintiffs' Motion for Summary Judgment (Motion), Electronic Case Filing Number (ECF) 57 filed on February 6, 2017 which was originally noticed for hearing before the undersigned United States Bankruptcy Judge on March 28, 2017. After several hearings on the Motion, on October 6, 2017, pursuant to Local Bankruptcy Rule (LBR) 9013-1(j)(3), the court determined that further oral argument on the motion was not necessary, dispensed with further oral argument, vacated the further hearing on October 11, 2017 and took the matter under submission.

Having considered the moving and opposing papers, the oral and written arguments of the parties, and the other papers and pleadings filed in this matter, the court rules upon the motion. Pursuant to LBR 7056-1, Plaintiffs submitted their Second Amended Statement of Uncontroverted Facts and Conclusions of Law in support of their Motion for Summary Judgment (ECF 191) and supported by certified copies of state court orders and documents described below in ECF 62, Exhibits 1 through 12¹. After reviewing Plaintiff's Second Amended Statement of Uncontroverted Facts and Conclusions of Law, the court adopts the following Statement of Uncontroverted Facts and Conclusions of Law on Plaintiffs' Motion for Summary Judgment in support of its ruling on the motion. This Statement of Uncontroverted Facts and Conclusions of Law is based in part on Plaintiffs' version, but the court substantially modified the Statement of Uncontroverted Facts and Conclusions of Law based on its own independent and extensive review of the record and research.

UNCONTROVERTED FACTS

1. Plaintiffs Brenda Moore Richards, Individually and as Trustee of the Gwendolyn R. Moore Revocable Living Trust, Frederick Richards III, as Trust Beneficiary of the Gwendolyn R. Moore Revocable Living Trust (Plaintiffs) and Law Offices of A. George Glasco, APC (Plaintiffs' counsel) commenced this adversary proceeding by filing their complaint on August 29, 2016. ECF 1, Complaint. (Plaintiffs' counsel was listed as a party plaintiff, apparently with respect to his claim for attorneys' fees which were awarded to him on behalf of Plaintiffs against Defendant by the state court.)

2. On September 7, 2016, Plaintiffs filed in this adversary proceeding their First Amended Complaint for Nondischargeability of Debts pursuant to 11 U.S.C. § 523(a)(2)(A), 11 U.S.C. § 523(a)(4) and 11 U.S.C. § 523(a)(6). ECF 9, First Amended Complaint.

3. The First Amended Complaint for Nondischargeability of Debts alleges that it derives from the July 13, 2015 First Amended Judgment for Quiet Title, Cancellation of Deed, Financial Elder Abuse, Fraud, Constructive Fraud, Breach of Fiduciary Duty, Negligence and Constructive Trust rendered against Defendant by the Superior Court of California for the County of Los Angeles, Probate Division (the Superior Court) in Case Number BP120811. First Amended Complaint, ECF 9 at ¶¶1 and 9 and Exhibit 1 attached thereto; Answer to Amended Complaint for Nondischargeability (Answer), ECF 18 at ¶¶1 and 9. 4. Defendant Reggie Bishop (Defendant) has admitted that this court has jurisdiction over this adversary proceeding under 28 U.S.C. §1334 and the reference order of the United States District Court for the Central District of California. ECF 18, Answer at ¶1.

5. Defendant has admitted that this adversary proceeding is a core proceeding pursuant to 28 U.S.C. § 157 which lists dischargeability of debts of the bankrupt debtor as a core proceeding. ECF 9, First Amended Complaint at ¶1; ECF 18, Answer at ¶1.

6. On May 17, 2013, Plaintiffs Brenda Richards and Frederick F. Richards III filed in the Superior Court of California for the County of Los Angeles, Probate Division, in Case Number BP120811, against Reggie L. Bishop and Nancy Willis, Individually and as trustee of the Gwendolyn R. Moore Revocable Trust, their Petition for: 1. Surcharge on Successor Trustee Nancy Willis; 2. Financial Elder Abuse (Welfare & Institutions Code 15610.30); 3. Breach of Fiduciary Duty; 4. Fraud; 5. Conversion; 6. Constructive Trust; 7. Constructive Fraud; 8. Accounting; 9. Negligence per Se; 10. Quiet Title; 11. Cancellation of Deeds (hereafter Petition). ECF 62, Plaintiffs' Request for Judicial Notice, Exhibit 3, Petition.

7. On April 3, 2015, Plaintiffs filed in the Superior Court in Case Number BP120811 their First Amended Petition which alleged that in its order of January 5, 2011, the Superior Court approved the Settlement Agreement which resolved litigation that ensued following the death of the settlor Gwendolyn R. Moore between competing beneficiaries to the Gwendolyn R. Moore Revocable Trust (Trust), including Defendant Reggie Bishop and Plaintiffs Brenda Moore Richards and Frederick F. Richards. ECF 58, Motion for Summary Judgment, Exhibit 10, First Amended Petition, at ¶10.

8. The Superior Court in its January 5, 2011 Order After Hearing incorporated by reference the Settlement Agreement retained jurisdiction for its enforcement and provided that Plaintiffs Brenda Moore Richards and Frederick F. Richards III were each to have 1/6 share of the Trust estate (or 1/3 collectively) and Defendant Reggie Bishop was to have 2/3 share of the Trust estate. ECF 62, Plaintiffs' Request for Judicial Notice, Exhibit 4, Order After Hearing at ¶¶1-2, and 7; ECF 62, Plaintiffs' Request for Judicial Notice, Exhibit 1, First Amended Judgment.

9. The Trust estate consisted of three real estate properties, referred to as: 4572 Mt. Vernon Drive, Los Angeles, CA 90043; (Mt. Vernon Property), 14011 Driftwood Drive, Victorville, CA 92395 (Victorville Property); and 3305 Stocker Street, Los Angeles, CA 90008, (Stocker Property). ECF 62, Plaintiffs' Request for Judicial Notice, Exhibit 3, Petition at ¶¶11-13.

10. The First Amended Petition filed in the Superior Court alleged that the Mt. Vernon Property was sold for $595,000, and that after distribution of $438,500 to certain persons specified in the Order After Hearing, the remainder less escrow costs was to be distributed 2/3 to Defendant Bishop, and 1/3 to Plaintiffs, that is, 1/6 to Plaintiff Brenda Moore Richards and 1/6 to her son, Plaintiff Frederick F. Richards III. ECF 58, Motion for Summary Judgment, Exhibit 10, First Amended Petition at ¶13.

11. Plaintiffs in the First Amended Petition filed in the Superior Court alleged that the defendants in that case, Willis and Bishop, despite agreeing to the Settlement Agreement, defalcated the Trust corpus and appropriated such for their exclusive mutual benefit to thedetriment of Plaintiffs. ECF 58, Motion for Summary Judgment, Exhibit 10, First Amended Petition at ¶42.

12. Plaintiffs in the First Amended Petition filed in the Superior Court alleged: "At all times herein, Defendants [Bishop and Willis] represented explicitly and implicitly to Plaintiffs that they would care for their shares of TRUST assets that Plaintiffs were entitled to, and make proper disbursements. At all times herein, Defendants had no intention of executing said representations, but instead, intended to steal, defalcate, and otherwise wrongfully deprive plaintiffs of their assets. In addition, Defendants represented explicitly and implicitly in the AGREEMENT that they would comply with the terms of the AGREEMENT [Exhibit "3"]. Plaintiffs relied reasonably to their detriment as hereinabove previously shown." ECF 58, Motion for Summary Judgment, Exhibit 10, First Amended Petition at ¶42.

13. Defendant Reggie Bishop was aware of the proceedings initiated by Plaintiffs' original Petition as trust beneficiaries because he made a "Special Appearance" in the Superior Court in Case Number BP120811 on June 26, 2014 to contest the Superior Court's jurisdiction over the matter as he admitted in his Second Amended Statement of Genuine Issues of Material Facts in Opposition to Plaintiffs' Second Amended Motion for Summary Judgment, ECF 193, at 20-21. As reflected in the transcript of proceedings before the Superior Court on June 26, 2014, Defendant Reggie Bishop appeared in the Superior Court on Plaintiffs' motion to compel discovery against him and his co-defendant, Nancy Willis. Reporter's Transcript of Proceedings, Superior Court of California, County of Los Angeles, Case Number BP120811, attached as Exhibit A toDefendant's Notice of Motion and Motion to Dismiss Plaintiffs' Aversary [sic] Proceeding for Perjury to this Court, ECF 172. At the hearing, the Superior Court ordered Defendants Reggie Bishop and Nancy Willis to respond to Plaintiffs' discovery requests without objections. Id. Although Defendant Reggie Bishop argued that he is not a party to the action and that his attorney was not served, the Superior Court granted Plaintiffs' motion to compel discovery and ordered him to respond to Plaintiffs' discovery. Id. Because Defendant argued against Plaintiffs' motion to compel discovery on the merits in the Superior Court in Case Number BP120811, he waived his "Special Appearance" and generally appeared in the probate proceeding, which justifies in terms of the Superior Court exercising jurisdiction over Defendant in its First Amended Judgment to rule for Plaintiffs and against Defendant on their First Amended Petition.

14. Defendant Reggie Bishop was generally aware that Plaintiffs as trust beneficiaries were...