THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF T v. Ace Gallery New York Corporation, a California cor

[2] FILED & ENTERED [3] DEC 09 2022 [5] CLERK U.S. BANKRUPTCY COURT Central District of California 6 BY b a k c h e l l DEPUTY CLERK 7 UNITED STATES BANKRUPTCY COURT 8 CENTRAL DISTRICT OF CALIFORNIA - LOS ANGELES DIVISION 9 In re District Court Case No. 2:21-cv-06006JWH 10 ART & ARCHITECTURE BOOKS OF THE 21st CENTURY, Bankruptcy Court Case No. 2:13-bk11 Debtor. 14135-RK [12] Chapter 11 [13] Adversary Proceeding No. (“Adv. No.”) 14 2:15-ap-01679-RK SAM LESLIE, PLAN AGENT FOR ART & [15] ARCHITECTURE BOOKS OF THE 21ST Consolidated with: 16 CENTURY, Adversary Proceeding No. 2:15-apPlaintiff, 17 01680-RK and Adversary Proceeding v. No. 2:14-ap-01771-RK [18] 19 ACE GALLERY NEW YORK AMENDED REPORT AND CORPORATION, a California corporation; RECOMMENDATION OF THE 20 ACE GALLERY NEW YORK, INC., a UNITED STATES BANKRUPTCY dissolved New York corporation; ACE COURT THAT THE UNITED STATES 21 MUSEUM, a California corporation; DISTRICT COURT ADOPT THE DOUGLAS CHRISMAS, an individual; 22 JENNIFER KELLEN, an individual; SHIRLEY PROPOSED STATEMENT OF HOLST, an individual, UNCONTROVERTED FACTS AND 23 CONCLUSIONS OF LAW RE: Defendants. MOTION OF RAYMOND PETTIBON 24 FOR SUMMARY JUDGMENT ON HIS COMPLAINT IN INTERVENTION AND 25 GRANT THE MOTION FOR SUMMARY JUDGMENT; ORDER [26] THEREON [27] 400 S. LA BREA, LLC, a California limited Hearing Date and Time: 1 Time: 2:30 p.m. Cross-Claimant, Place: Courtroom 1675 2 v. Roybal Federal Building 255 E. Temple Street, Suite 1682 3 ACE GALLERY NEW YORK CORPORATION, a California corporation; Los Angeles, CA 90012 4 ACE GALLERY NEW YORK, INC., a dissolved New York corporation; ACE Hon. Robert N. Kwan 5 MUSEUM, a California corporation; DOUGLAS CHRISMAS, an individual; SAM 6 LESLIE as, TRUSTEE OF THE PLAN TRUST FOR ART & ARCHITECTURE BOOKS OF 7 THE 21ST CENTURY, 8 Cross-Defendants. 9 DOUGLAS CHRISMAS, an individual, 10 Counter-Claimant, v. [11] ART & ARCHITECTURE BOOKS OF THE 12 21ST CENTURY, 13 Counter-Claim Respondent. [14] 15 TO THE HONORABLE JOHN W. HOLCOMB, UNITED STATES DISTRICT JUDGE, 16 RAYMOND PETTIBON, SAM LESLIE, PLAN AGENT FOR DEBTOR ART & 17 ARCHITECTURE BOOKS OF THE 21st CENTURY, AND DOUGLAS CHRISMAS, AND 18 THEIR COUNSEL OF RECORD: 19 The undersigned United States Bankruptcy Judge issues this amended report and 20 recommendation amending the prior report and recommendation issued on July 21, 2021 21 setting forth findings of fact and conclusions of law pursuant to Federal Rule of 22 Bankruptcy Procedure 9033 and recommending that the United States District Court 23 adopt the following Statement of Uncontroverted Facts and Conclusions of Law1 and [24] 25 1 In adopting this statement of uncontroverted facts and conclusions of law, the United States Bankruptcy Court has independently reviewed the proposed statement of uncontroverted facts and conclusions of law 26 lodged by Richard Pettibon (Adversary Proceeding Docket No. 854, notice of lodgment filed on January 28, 2021) and the statement of genuine issues lodged by Douglas Chrismas (Adversary Proceeding Docket 27 No. 884, notice of lodgment filed on February 23, 2021). The court determines that the statement of genuine issues filed by Chrismas is deficient in that it does not identify each material fact that is disputed 1 grant the motion of Richard Pettibon for summary judgment on his complaint in 2 intervention in this adversary proceeding, Docket No. 853, Adversary Proceeding No. 3 2:15-ap-01679-RK, filed on January 28, 2021. The citations to the record are to case 4 docket of the United States Bankruptcy Court for the Central District of California in the 5 Adversary Proceeding No. 2:15-ap-01679-RK within Bankruptcy Case No. 2:13-bk6 14135-RK as follows: “Adversary Proceeding Docket No. ____.”2 [7] UNCONTROVERTED FACTS [8] No. Uncontroverted Fact Evidence in Support of Uncontroverted Fact 9 1. Raymond Pettibon is a Declaration of Raymond Pettibon, executed renowned, contemporary Jan. 25, 2021 (“Pettibon Declaration.”) ¶ 2-6 10 American visual artist whose (Adversary Proceeding Docket No. 853-2 at drawings have achieved critical 2). 11 and commercial success since the 1990s. [12] 2. In 2017, New York’s New Pettibon Declaration, ¶ 4 (Adversary 13 Museum presented A Pen of All Proceeding Docket No. 853-2 at 2) at; Work, a major Pettibon https://www.davidzwirner.com/artists/raymond14 monographic retrospective pettibon/biography. featuring over 700 hundred 15 Pettibon drawings, in an exhibition that subsequently 16 traveled to The Netherlands and to Moscow. [17] 3. Major museums that hold Pettibon Declaration, ¶ 5 (Adversary 18 Pettibon’s work in their Proceeding Docket No. 853-2 at 2). collections include the Museum 19 of Modern Art and the Whitney Museum of American Art, both 20 in New York; the Los Angeles County Museum of Art; the San 21 Francisco Museum of Art; and the Centre Georges Pompidou 22 in Paris. 23 4. Two leading art galleries Pettibon Declaration, ¶ 7 (Adversary [24] precluding summary judgment or adjudication as required by Local Bankruptcy Rule 7056-1(c)(2); see also, Federal Rule of Civil Procedure 56(c)(1). The plan agent did not lodge a statement of genuine issues [25] pursuant to Local Bankruptcy Rule 7056-1(c)(2). 26 2 The references to the case docket in this amended report and recommendation are to the one adversary proceeding, Adversary Proceeding No. 2:15-ap-01679-RK, within Bankruptcy Case No. 2:13-bk-14135-RK. 27 However, two other adversary proceedings, Adversary Proceeding Nos. 2:14-ap-01771-RK and 2:15-ap01680-RK, have been consolidated into Adversary Proceeding No. 2:15-ap-01679-RK by prior orders of the 1 currently represent Pettibon: the Proceeding Docket No. 853-2 at 2); David Zwirner Gallery in New Declaration of Shaun Regen, executed Jan. 2 York City and Regen Projects in 22, 2021 (“Regen Declaration”), ¶¶ 2, 4 Los Angeles. (Adversary Proceeding Docket No. 853-3 at 3 2); https://www.davidzwirner.com/artists; http://www.regenprojects.com/artists. [4] 5. Defendant-in-intervention Declaration of Gregory A. Clarick, executed 5 Douglas Chrismas is a gallerist Jan. 26, 2021 (“Clarick Declaration”), at 2 with whom Pettibon worked in (Adversary Proceeding Docket No. 853-4 at 6 the late 1980s. 2), Exhibit D, Transcript of Deposition of Douglas Chrismas (“Chrismas Deposition”) at 7 [page:line] 17:23-18:25 (Adversary Proceeding Docket No. 853-4 at 31-32). [8] 6. Chrismas has owned and Chrismas Deposition at 18:5-21:9; 35:169 operated art galleries in Los 36:25 (Adversary Proceeding Docket No. 853Angeles, California, for decades, 4 at 32 and 36). 10 including Ace Gallery, Doug Chrismas Fine Art and Ace 11 Contemporary Exhibitions. 12 7. Chrismas always has owned his Chrismas Deposition at 18:5-21:9 (Adversary entities, despite changing Proceeding Docket No. 853-4 at 32). 13 names and corporate identities several times. [14] 8. Chrismas’s entities Doug Chrismas Deposition at 35:16-36:25 15 Chrismas Fine Art and Ace (Adversary Proceeding Docket No. 853-4 at Contemporary Exhibitions were 36). 16 the same corporate entity (together “Ace Gallery”), with the 17 latter reflecting a name change to the business. [18] 9. Art & Architecture Books of the Chrismas Deposition at 20:19-21:9 (Adversary 19 21st Century, the debtor in this Proceeding Docket No. 853-4 at 32). bankruptcy case (the “Debtor”) 20 is an art gallery previously owned and operated by 21 Chrismas. 22 10. Debtor was an entity separate Chrismas Deposition at 20:19-22 (Adversary and apart from Chrismas’s prior Proceeding Docket No. 853-4 at 32). 23 Ace Gallery, i.e., Doug Chrismas Fine Art and Ace Contemporary 24 Exhibitions. 25 11. Twenty-seven (27) drawings by Clarick Declaration at 2, Exhibit C (email from Pettibon (the “Pettibon Debtor’s counsel attaching list of Pettibon 26 Drawings”) are currently in the Drawings currently in the Debtor’s inventory) possession of Sam Leslie, Plan (Adversary Proceeding Docket No. 853-4 at 27 Agent (the “Plan Agent”) for the 19-25). Debtor's post-confirmation [1] 12. In addition to Pettibon, both Chrismas Deposition at 56:12-22, 57:7-21 2 Chrismas and the Plan Agent (Adversary Proceeding Docket No. 853-4 at claim ownership of the Pettibon 41); Clarick Declaration at 3, Exhibit M (Plan 3 Drawings. Agent Interrogatory Response, No. 1 and Exhibit 1 attached thereto) (Adversary 4 Proceeding Docket No. 853-4 at 172, 176179). [5] 13. In or around 1988, Ace Gallery Chrismas Deposition at 18:12-25 (Adversary 6 held an exhibition of Pettibon’s Proceeding Docket No. 853-4 at 32). artworks. [7] 14. In 1988, Pettibon consigned the Clarick Declaration at 2, Exhibit A 8 Pettibon Drawings to Chrismas’s (Consignment Note) (Adversary Proceeding Ace Gallery. Docket No. 853-4 at 5-6); Clarick Declaration 9 at 2, Ex. B (Consignment Sheets) (Adversary Proceeding Docket No. 853-4 at 7-18); 10 Chrismas Deposition at 34:18-25, 33:3-5 (Adversary Proceeding Docket No. 853-4 at 11 35-36); Pettibon Declaration, ¶ 8 (Adversary Proceeding Docket No. 853-2 at 2). [12] 15. The Pettibon Drawings were Clarick Declaration at 2, Exhibit A 13 among 83 Pettibon artworks (Consignment Note) (Adversary Proceeding identified (by category) in a Docket No. 853-4 at 5-6); Chrismas 14 handwritten list of works Deposition at 33:3-5 (Adversary Proceeding delivered to Ace Gallery by Docket No. 853-4 at 35). 15 Pettibon at or about that time (the “Consignment Note”). [16] 16. The Consignment Note is on Clarick Declaration at 2, Exhibit A 17 Ace Contemporary Exhibitions (Consignment Note) (Adversary Proceeding letterhead, which includes the Docket No. 853-4 at 5-6). 18 gallery address and identifies Chrismas as Director. The 19 Consignment Note reads in relevant part: [20] Received on consignment [21] 23 VAVOOM 22 40 BASEBALL 10 STALIN 23 10 ODDS 24 From Raymond Pettibon 25 … 26 11x14 is 150-200 18x14 is $350.00 retail [27] 17. Chrismas wrote the Clarick Declaration at 2, Exhibit A 1 that the works were received on Docket No. 853-4 at 5-6); Chrismas consignment, and Pettibon Deposition at 29:3-14, 30:2-6 (Adversary 2 signed it during or after the Proceeding Docket No. 853-4 at 34-35). exhibition referenced in 3 paragraph 13 above. 4 18. The potential prices for different Clarick Declaration at 2, Exhibit A sized drawings ($150-$200, (Consignment Note) (Adversary Proceeding 5 $350) listed on the Consignment Docket No. 853-4 at 5-6); Chrismas Note reflects Chrismas and Deposition at 32:2-9 (Adversary Proceeding 6 Pettibon’s conversation “about Docket No. 853-4 at 35). what they possibly could be sold 7 for.” 8 19. A multi-page, internal Ace Clarick Declaration at 2, Exhibit B Gallery list of works by Pettibon (Consignment Sheets) (Adversary Proceeding 9 bearing the header “Accounting, Docket No. 853-4 at 7-18); Chrismas Inventory, & Consignment Sheet Deposition at 34:12-24, 39:14-21 (Adversary 10 – Doug Chrismas Fine Art” (the Proceeding Docket No. 853-4 at 36-37). “Consignment Sheets”) listed 11 specific works Pettibon consigned to Ace Gallery in or 12 about 1988. 13 20. The Consignment Sheets were Chrismas Deposition at 34:12-24 (Adversary a “typical form” for Ace Gallery. Proceeding Docket No. 853-4 at 36). [14] 21. The Consignment Sheets listed Chrismas Deposition at 38:2-15, 39:14-21 15 works that Pettibon had (Adversary Proceeding Docket No. 853-4 at consigned to Ace Gallery and 37). 16 that were located in the Gallery at the time the list was made. [17] 22. The Consignment Sheets list 80 Clarick Declaration at 2, Exhibit B 18 works, for each noting an (Consignment Sheets) (Adversary Proceeding “Asking Price” (ranging from Docket No. 853-4 at 7-18). 19 $200 to $2,700 for each drawing listed) and a “Sale Date & 20 Price”—each of which remains blank. [21] 23. The Consignment Sheets The following 20 works are both included in 22 include at least 20 of the 27 the Pettibon Drawings (Clarick Declaration at 23 Pettibon Drawings. 2, Exhibit C) (Adversary Proceeding Docket No. 853-4 at 19-25) and reflected on the 24 Consignment Sheets (Clarick Declaration at 2, Exhibit B) (Adversary Proceeding Docket No. 25 853-4 at 7-18): Father I Give the Sign Before Every Home Run, 1987 (compare Exhibit C at [26] 1 with Exhibit B at Pettibon 000004 Entry 8); 27 How Did You Like the Opera, 1987 (Set of 8 works) (compare Exhibit C at 1 with Exhibit B 1 After that Swing, 1987 (compare Exhibit C at 1 with Exhibit B at Pettibon 000003 Entry 7); 2 Inexhaustible Russia, 1987 (compare Exhibit C at 2 with Exhibit B at Pettibon 000005 Entry [3] 4); Look Farther and Deeper Into Them #1, 4 #2, and #3, 1988 (3 works) (compare Exhibit C at 2 with Exhibit B at Pettibon 000010 Entry 5 5); Two Hundred Guineas—Is That All #1, #2, #3, 1988 (3 works) (compare Exhibit C at 3 6 with Exhibit B at Pettibon 000010 Entry 7); Vavoom, But Now the Call Is, 1987 (compare [7] Exhibit C at 4 with Exhibit B at Pettibon 8 000005 Entry 1); Vavoom, Now I Return, 1987 (compare Exhibit C at 4 with Exhibit B at 9 Pettibon 000006 Entry 4); Vavoom, Sometimes This Expressive Beauty, 1987 [10] (compare Exhibit C at 5 with Exhibit B at 11 Pettibon 000004 Entry 4). 12 24. Under the consignment Chrismas Deposition at 23:9-16, 17 arrangement, Pettibon retained (Adversary Proceeding Docket No. 853-4 at 13 exclusive title to and ownership 33). of all consigned works unless 14 and until they were sold and title transferred to a buyer. [15] 25. Chrismas did not purchase the Pettibon Declaration, ¶ 9 (Adversary 16 Pettibon Drawings from Proceeding Docket No. 853-2 at 2). Pettibon. [17] 26. No documents show that Chrismas Deposition at 61:13-17 (Adversary 18 Chrismas purchased the works Proceeding Docket No. 853-4 at 42); Clarick from Pettibon after Pettibon Declaration at 3, Exhibits E & F (Chrismas 19 consigned them to Ace Gallery. Interrogatory Response, No. 3.) (Adversary Proceeding Docket No. 853-4 at 90-106). [20] 27. No documents show that Chrismas Deposition at 66:13-15 (Adversary 21 Chrismas paid Pettibon or Ace Proceeding Docket No. 853-4 at 44). Gallery for the Pettibon 22 Drawings. 23 28. No documents show that Chrismas Deposition at 61:18-20 (Adversary Chrismas owned the Pettibon Proceeding Docket No. 853-4 at 42). 24 Drawings at any time. 25 29. During the Raymond Pettibon Chrismas Deposition at 23:21-24 (Adversary exhibition, Ace Gallery sold Proceeding Docket No. 853-4 at 33). 26 “very few pieces.” 27 30. After the 1988 Ace Gallery Regen Declaration, ¶ 4 (Adversary Proceeding exhibition, Pettibon never had Docket No. 853-3 at 2); Pettibon Declaration, 1 and Ace Gallery and, in or about 853-2 at 2). the early 1990s, Shaun Regen 2 and her gallery Regen Projects began to represent Pettibon as 3 his art dealer in Los Angeles. 4 31. Chrismas and Ace Gallery Chrismas Deposition at 52:10-18 (Adversary returned some of Pettibon’s Proceeding Docket No. 853-4 at 40); Pettibon 5 works, but they did not return Declaration, ¶8 (Adversary Proceeding Docket the Pettibon Drawings. No. 853-2 at 2); Clarick Declaration at 2, 6 Exhibit C (email from Debtor’s counsel attaching list of Pettibon Drawings currently in 7 the Debtor’s inventory) (Adversary Proceeding Docket No. 853-4 at 19-25); Chrismas 8 Deposition at 56:12-22, 57:7-21 17 (Adversary Proceeding Docket No. 853-4 at 41); Clarick 9 Declaration at 2, Exhibit M (Plan Agent Interrogatory Response, No. 1) (Adversary 10 Proceeding Docket No. 853-4 at 172, 176179). [11] 32. In the years after 1988, Ace Chrismas Deposition at 71:10-14 (Adversary 12 Gallery sold “a few” (“not a lot”) Proceeding Docket No. 853-4 at 45). of the Pettibon artworks listed 13 among the 83 works on the Consignment Note. [14] 33. Ace Gallery sold the works and Chrismas Deposition at 110:15-21 (Adversary 15 collected the sale proceeds. Proceeding Docket No. 853-4 at 55). 16 34. Invoices for such sales were set Clarick Declaration at 3, Exhibits G through J forth on Ace Gallery letterhead (invoices for sales by Ace Gallery of drawings 17 and indicate the sales were by Pettibon) (Adversary Proceeding Docket made directly by Ace Gallery to No. 853-4 at 107-116). 18 various collectors, without mentioning Chrismas in the 19 provenance for the works or otherwise. [20] 35. No documentation shows that Chrismas Deposition at 75:10-13; 108:2-24; 21 Chrismas ever transferred 110:22-111:13; 123:11-14 (Adversary ownership of any Pettibon Proceeding Docket No. 853-4 at 46, 54-55); 22 drawings from himself to Debtor, see also, Chrismas Deposition at 123:11-14, dba Ace Gallery by sale or gift. 134:13-18 (Adversary Proceeding Docket No. 23 853-4 at 58, 61) (no documentation showing transfer from Chrismas to Ace Gallery of 24 drawings sold by Ace Gallery to Elizabeth Kellen); at 127:16-20, 131:7-22 (Adversary 25 Proceeding Docket No. 853-4 at 59-60) (same concerning sales to Greg Econn). [26] 36. In December 2004, in his Clarick Declaration at 3, Exhibit K (2004 27 personal bankruptcy case, Schedule B) (Adversary Proceeding Docket Chrismas filed a sworn No. 853-4 at 117-120). [1] 37. In the sworn 2004 Schedule B in Clarick Declaration at 3, Exhibit K (2004 2 his personal bankruptcy case, Schedule B) (Adversary Proceeding Docket Chrismas did not list the No. 853-4 at 117-120). 3 Pettibon Drawings as personal assets. [4] 38. In the sworn 2004 Schedule B in Clarick Declaration at 3, Exhibit K (2004 5 his personal bankruptcy case, Schedule B) (Adversary Proceeding Docket Chrismas identified his personal No. 853-4 at 117-120); Chrismas Deposition 6 property comprising “books, at 88:23-89:12 (Adversary Proceeding Docket pictures and other art objects, No. 853-4 at 49). 7 antiques, stamp, coin, record, tape, compact disc, and other 8 collections or collectibles” as valued, all together, at less than 9 $5,000. 10 39. In 2004, the Pettibon Drawings Regen Declaration, ¶ 6 (Adversary Proceeding were worth in excess of Docket No. 853-3 at 2) (in 2004, six Pettibon 11 $200,000. drawings of approximately 9x12 inches from the 1980s were sold for $8,000 each and 12 drawings of approximately 18 x 24 inches from the 1980s would have been valued at least 13 that much. 27x$8,000=$216,000). 14 40. In the Debtor’s Schedules of Clarick Declaration at 3, Exhibit L (Debtor’s Assets and Liabilities and Schedules of Assets and Liabilities and 15 Statement of Financial Affairs, Statement of Financial Affairs, Bankruptcy signed by Chrismas under Case No. 2:13-bk-14135-RK, Docket No. 50) 16 penalty of perjury in this (Adversary Proceeding Docket No. 853-4 at bankruptcy case on March 5, 121-167). 17 2013, Chrismas did not identify the Pettibon Drawings as 18 property held by the Debtor on Chrismas’s behalf. [19] 41. In or about 2017, Pettibon Regen Declaration, ¶ 7 (Adversary Proceeding 20 learned that the Pettibon Docket No. 853-3 at 2); Pettibon Declaration, Drawings remained with ¶ 10 (Adversary Proceeding Docket No. 853-2 21 Chrismas and Ace Gallery, and at 2). ultimately were in the Debtor’s 22 inventory. 23 42. Through his counsel, Pettibon Pettibon Declaration, ¶ 10 (Adversary promptly demanded the return of Proceeding Docket No. 853-2 at 2). 24 the Pettibon Drawings. 25 43. The Plan Agent has no Clarick Declaration at 3, Exhibit M (Plan Agent documents supporting the claim Interrogatory Response, No. 2) (Adversary 26 that Chrismas owns the Pettibon Proceeding Docket No. 853-4 at 171-172). Drawings. [27] 1 CONCLUSIONS OF LAW 2 1. The United States Bankruptcy Court has jurisdiction over the complaint in 3 intervention of Richard Pettibon in this adversary proceeding pursuant to 28 U.S.C. §§ 4 157(b)(1), 1334(a) and (b) and 1367(a). See also, “Order Granting Motion of Raymond 5 Pettibon for Leave to Intervene as a Plaintiff and for Authorization to File Complaint in 6 Intervention,” Adversary Proceeding Docket No. 578, filed on May 14, 2019. 7 2. The United States Bankruptcy Court determines that it may not enter a final 8 judgment on Pettibon’s motion for summary judgment (Adversary Proceeding Docket No. 9 853, filed on January 28, 2021) on his complaint in intervention (Adversary Proceeding 10 Docket No. 579, filed on May 15, 2019) and Chrismas’s related counterclaims pertaining 11 to the Pettibon Drawings (Adversary Proceeding Docket No. 640, filed on July 30, 2019) 12 based on the following circumstances. The complaint in intervention asserts claims 13 under California law to quiet title to personal property, for declaratory relief that Pettibon 14 is the owner of the Pettibon Drawings and for recovery of specific personal property, 15 California Code of Civil Procedure §§ 1060, 760.020 and 761.020; Aerotek, Inc. v. 16 Johnson Group Staffing Co., Inc., 55 Cal.App.5th 670 , 687-688 (2020), citing, Berry v. 17 Bank of Bakersfield, 177 Cal. 206, 209 (1918), which claim are noncore state law claims. 18 See 28 U.S.C. § 157 (b)(2). The complaint in intervention relates to the counter-complaint 19 of Douglas Chrismas (Adversary Proceeding Docket No. 497, filed on January 31, 2019) 20 that was filed in response to the plan agent’s Fifth Amended Consolidated Complaint on 21 behalf of the Debtor (Adversary Proceeding Docket No. 465, filed on November 16, 22 2018), and in his counter-complaint Chrismas sought similar claims for declaratory relief 23 claiming title to art works being held by the Debtor, including the Pettibon Drawings, for 24 related injunctive relief, conversion and replevin to recover his claimed art works. 25 Chrismas alleged that jurisdiction over his counter-complaint arose under Federal Rule of 26 Civil Procedure 13 made applicable to this adversary proceeding by Federal Rule of 27 Bankruptcy Procedure 7013. Chrismas later filed a First Amended Counter-Complaint 1 claims.3 2 3. Chrismas’s claims in his counter-complaints are permissive, not 3 compulsory, counterclaims because his claims of title to certain art assets held by the 4 plan agent from the bankruptcy estate in Debtor’s bankruptcy case do not arise of the 5 same transaction or occurrence as the plan agent’s Fifth Amended Consolidated 6 Complaint against Chrismas asserting claims for avoidance of transfers of assets, fraud, 7 conversion and breach of fiduciary duty relating to property transferred out of the Debtor. 8 See Federal Rule of Civil Procedure 13(a) and (b). Pettibon argues that the court may 9 enter a final judgment on his complaint in intervention as to Chrismas based on his filing 10 of permissive counterclaims in his counter-complaints in this adversary proceeding. In 11 support of this position, Pettibon cites In re Professional Facilities Management, Inc., [12] 2015 WL 6501231 (Bankr. M.D. Ala. 2015); In re Danley, 552 B.R. 871 ((Bankr. M.D. Ala. 13 2015); In re Perkins, 553 B.R. 242 (Bankr. W.D. Mich. 2015). 14 4. The United States Bankruptcy Court has subject matter jurisdiction over 15 Chrismas’s claims of his counter-complaints and Pettibon’s claim in his complaint in 16 intervention under its jurisdiction of 28 U.S.C. § 1334 (b) over matters related to a 17 bankruptcy case under the Bankruptcy Code, 11 U.S.C., because such claims are 18 competing claims to what is asserted to have been property of the bankruptcy estate as 19 the plan agent on behalf of the Debtor claims title to the art assets. The bankruptcy court 20 may enter final judgment on noncore claims within its related to jurisdiction if such claims 21 relate to the claims allowance process or when the parties consent to the bankruptcy 22 court jurisdiction. Wellness International Network, Ltd. v. Sharif, 575 U.S. 665 , 674-686 23 (2015). The plan agent and Pettibon have expressly consented to bankruptcy court 24 jurisdiction in this adversary proceeding by their statements of consent in at least one 25 status report filed in this adversary proceeding (Docket No. 625, filed on July 10, 2019). [26] 27 3 The First Amended Counter-Complaint deleted a claim asserted on behalf of Ace Museum, a separate legal entity owned by Chrismas. Also, the plan agent’s Fifth Amended Consolidated Complaint has been 1 Chrismas in the same status report and in his counter-complaints expressly stated that 2 he did not consent to the jurisdiction of the bankruptcy court to enter a final judgment. 3 5. The United States Bankruptcy Court does not find that Chrismas impliedly 4 consented to bankruptcy court jurisdiction to enter a final judgment by filing permissive 5 counterclaims as argued by Pettibon as none of the cases cited by Pettibon actually held 6 that filing a permissive counterclaim is implied consent to the jurisdiction of the 7 bankruptcy court. Pettibon’s argument is contradicted by Stern v. Marshall, 564 U.S. 462 8 (2011), in which the Supreme Court noted that the bankruptcy court lacked jurisdiction 9 over Vickie Marshall’s counterclaim, which the bankruptcy court had determined to be 10 compulsory, but the Supreme Court found to be permissive, and that the 11 permissive/compulsory distinction did not affect its analysis that the bankruptcy court did 12 not have jurisdiction to enter a final judgment on the counterclaim. Stern v. Marshall, 564 13 U.S. at 498-500. Absent consent of all of the parties to Pettibon’s claims in his complaint 14 in intervention and Chrismas’s counterclaims relating to the Pettibon Drawings, this 15 United States Bankruptcy Court lacks jurisdiction to enter a final judgment on these 16 claims. 17 6. The United States Bankruptcy Court, however, does have jurisdiction to 18 hear Pettibon’s complaint in intervention and Chrismas’s counterclaims relating to the 19 Pettibon Drawings, which are noncore claims under its “related to” jurisdiction pursuant to [20] 28 U.S.C. § 1334 (b) and issue proposed findings of fact and conclusions of law for de 21 novo review by the United States District Court. 28 U.S.C. § 157 (c)(1); Executive 22 Benefits Insurance Agency v. Arkison, 573 U.S. 25 , 39-40 (2014). Accordingly, the 23 United States Bankruptcy Court determines that it may issue proposed findings of fact 24 and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 9033 in 25 submitting its ruling on the motion as a report and recommendation to the United States 26 District Court for the Central District of California for de novo review. 27 7. Venue for this proceeding is proper in this federal judicial district pursuant to 1 8. There are no genuine disputes of material facts. 2 9. First, the uncontroverted facts establish that Pettibon consigned the 3 Pettibon Drawings to Ace Gallery, that ownership of the Pettibon Drawings remained with 4 Pettibon at all times, and that Pettibon is the owner of the Pettibon Drawings today. 5 These uncontroverted facts are based on the testimony of Pettibon and Chrismas and the 6 documentary evidence, including the Consignment Note in Chrismas’s handwriting 7 stating that he received Pettibon’s artwork, including the Pettibon Drawings, on 8 consignment, and the absence of any documentation of a sale of the Pettibon Drawings 9 by him to Chrismas or Ace Gallery, and show a consignment of the Pettibon Drawings 10 from Pettibon to Chrismas and his business, Ace Gallery. 11 10. Second, the “Schedules of Assets and Liabilities and Statement of Financial 12 Affairs” signed by Chrismas for the Debtor and filed under penalty of perjury in this 13 bankruptcy case on March 5, 2013 constitute an uncontroverted evidentiary, if not 14 judicial, admission that Chrismas does not own the Pettibon Drawings in that Debtor’s 15 schedules did not list the Pettibon Drawings as assets held by Debtor for others, such as 16 Chrismas on his personal behalf. See In re Rolland, 317 B.R. 402, 421-422 (Bankr. C.D. 17 Cal. 2004 ) (“Statements in bankruptcy schedules are executed under penalty of perjury 18 and, when offered against a debtor, are eligible for treatment as judicial admissions.”).4 19 11. Third, Chrismas is judicially estopped from asserting ownership of the 20 Pettibon Drawings by the absence of the drawings from the Debtor’s “Schedules of 21 Assets and Liabilities and Statement of Financial Affairs” filed under penalty of perjury in 22 this bankruptcy case on March 5, 2013. Hamilton v. State Farm Fire & Casualty Co., 270 23 F.3d 778, 785 (9th Cir. 2001). 24 12. Fourth, the absence of the Pettibon Drawings from the list of assets [25] 26 4 The judicial admissions that Chrismas made in signing the bankruptcy schedules of the Debtor in the main bankruptcy case are binding on him since he signed them and at the time, he was the president and 27 sole owner of the Debtor, thus he was in privity with the Debtor. Russell, Bankruptcy Evidence Manual, §801.16 (online edition October 2020 update), citing inter alia, Federal Rule of Evidence 807 (“At common 1 Chrismas included on “Schedule B,” filed under penalty of perjury on December 22, 2004 2 in a personal bankruptcy case before the Honorable Barry Russell in Case No. 2:04-bk3 35276-BR (Bankr. C.D. Cal.) constitutes an uncontroverted evidentiary admission that 4 Chrismas does not own the Pettibon Drawings in that he failed to list the Pettibon 5 Drawings as his assets.5 6 13. Fifth, Chrismas has produced no evidence to dispute the material facts. 7 Pettibon’s direct evidence shows that Pettibon consigned the Pettibon Drawings to Ace 8 Gallery and that Pettibon never sold the Drawings to Ace Gallery, Chrismas, and/or the 9 Debtor. Chrismas has produced no documents showing a sale or other transfer of 10 ownership to himself, or his entities, Ace Gallery, and/or the Debtor. Chrismas’s 11 uncorroborated and self-serving assertion of ownership is flatly contradicted by his prior 12 sworn admissions and the remainder of the record, and no reasonable jury could believe 13 him. Kennedy v. Applause, Inc., 90 F.3d 1477, 1481 (9th Cir. 1996). 14 14. Sixth, the Plan Agent has produced no evidence to dispute the material 15 facts. The Plan Agent has produced no evidence that the Debtor owns the Pettibon 16 Drawings. 17 15. “In California, a consignment transaction ‘is one in which the merchant 18 takes possession of goods and holds them for sale with the obligation to pay the owner 19 for the goods from the proceeds of a sale by the merchant.” Sun Valley Farms, LLC. v. 20 Western Veg Produce, Inc., Case No. 1:20-CV-1665 AWI JLT (E.D. Cal. Oct. 27, 2022), 21 slip op. at *10, citing and quoting, Fariba v. Dealer Services Corp., 178 Cal.App.4th 156 , 22 164-165 (1997); and Bank of California v. Thornton-Blue Pacific, Inc., 53 Cal.App.4th 23 841, 847 (1997). “In a consignment sale agreement, ‘title to the goods generally remains 24 with the original owner.’” Id. “That is, a consignment of goods for sale is a form [of] [25] 26 5 The court disagrees with Pettibon’s contention that Chrismas’s admissions in his 2004 personal bankruptcy case constitute judicial admissions since judicial admissions are limited to those in the case at 27 bar, and such admissions were made in a different case, though such admissions may be considered as evidentiary admissions. Russell, Bankruptcy Evidence Manual, § 801.22, citing, In re Webster Place 1 bailment that does not effect a sale or passage of title between the consignor and the 2 consignee.” Id., citing, Martini E Ricci Iamino S.P.A.- Consortile Societa Agricola v. 3 Trinity Fruit Sales Co., 30 F.Supp.3d 954, 966 (E.D. Cal. 2014). The uncontroverted 4 facts establish that Pettibon is the consignor who consigned the Pettibon Drawings to 5 Chrismas as the consignee to sell them, and the transaction between them was a 6 consignment, not a sale, so title did not pass from Pettibon as the original owner to 7 Chrismas or his business entitles, including the Debtor, and that title to the Pettibon 8 Drawings remains with Pettibon. 9 16. Accordingly, Raymond Pettibon is entitled to (a) a declaratory judgment that 10 he is the sole owner of each of the Pettibon Drawings and (b) injunctive relief awarding 11 him possession of each of the Pettibon Drawings. 12 17. Pettibon’s claims in his complaint and intervention and Chrismas’s 13 counterclaims relating to the Pettibon Drawings are discrete claims separate and apart 14 from the other claims in this adversary proceedings, and therefore, the bankruptcy court 15 expressly determines that there is no just reason for delay and that therefore, the 16 bankruptcy court recommends that the United States District Court may and should direct 17 entry of final judgment on these claims pursuant to Federal Rule of Civil Procedure 54(b) 18 made applicable to this adversary proceeding by Federal Rule of Bankruptcy Procedure 19 7054. 20 18. To the extent that any of the foregoing Uncontroverted Facts are instead 21 Conclusions of Law, they shall be deemed to be Conclusions of Law instead of 22 Uncontroverted Facts, and to the extent that any of the foregoing Conclusions of Law are 23 instead Uncontroverted Facts they shall be deemed Uncontroverted Facts. 24 19. IT IS THEREFORE RECOMMENDED by the undersigned United States 25 Bankruptcy Judge that for the foregoing reasons, the United States District Court (the 26 Honorable John W. Holcomb, United States District Judge, presiding) accept this 27 Amended Report and Recommendation, adopt the above-stated statement of 1 in favor of Raymond Pettibon on his complaint-in-intervention and enter a final judgment 2 || on Pettibon’s claims in his complaint-in-intervention pursuant to Federal Rule of Civil 3 || Procedure 54(b), applicable in this adversary proceeding through Federal Rule of 4 || Bankruptcy Procedure 7054. 5 IT |S SO ORDERED. 6 Hitt [22] (Yee 4 Date: December 9, 2022 Oe Robert Kwan 25 United States Bankruptcy Judge