Appeal from the United States Bankruptcy Court for the Eastern District of California Honorable W. Richard Lee, Bankruptcy Judge, Presiding Bk. No. 08-14334 Adv. No. 09-01104
SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
Submitted without Oral Argument on March 22, 2013
Before: DUNN, JURY and MARKELL, Bankruptcy Judges.
Shortly before filing their chapter 7 bankruptcy petition, 2 Francisco Lujan and Liduvina Garcia Garcia ("debtors") paid 3 appellant, J. Tony Serra ("Serra"), in advance for his 4 representation of their son in a criminal case.*fn2 The chapter 7 5 trustee ("Trustee") initiated an adversary proceeding against 6 Serra seeking to avoid the payment as a fraudulent transfer under 7 § 548(a)(1)(B). The bankruptcy court ruled in the Trustee's 8 favor, finding that he met his burden of proof under 9 § 548(a)(1)(B).
On appeal, Serra challenges only the bankruptcy court's 11 determinations as to whether the funds used to pay him were the 12 debtors' property and whether the debtors received "reasonably 13 equivalent value" for the transfer to Serra. We AFFIRM.
On May 1, 2008, the debtors' son, Miguel Angel Garcia, was 17 booked into Madera County jail on an attempted murder charge. On 18 May 15, 2008, the debtors paid $30,000 ("funds") to Serra, an 19 experienced criminal attorney, on their son's behalf to represent 20 him in the criminal case. The debtors paid Serra by personal check from their joint bank account ("transfer").*fn4 Serra cashed the check the next day. He later acknowledged in a letter, dated August 28, 2008, that he received the check from the debtors ("receipt letter").
The debtors filed their chapter 7 bankruptcy petition on July 22, 2008. They did not disclose the transfer in their statement of financial affairs ("SOFA") or their schedules.
The debtors later amended their SOFA to disclose the transfer ("amended SOFA"). They listed the transfer date as May 16, 2008, and Serra as the transferee. They also stated the following:
Debtors' son, Miguel Angel Garcia, was charged with a crime. Friends and family entrusted Debtors with approximately $29,000.00 to pay criminal defense attorney, J. Tony Serra, on son's behalf.
Approx. $1,000.00 was transferred from son, Miguel Angel Garcia, to debtors, to also pay attorney J. Tony Serra.
Total for attorney fees was $30,000. NO VALUE
Notably, the debtors did not amend their schedules to list as creditors the friends and family members who allegedly ...