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Timothy L. McCandless, Esq., SBN 147715
LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553
Telephone:
Facsimile:
Email:
(925) 957-9797
(925) 957-9799
legal@prodefenders.com
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Attorney for Debtor(s): Farnaz Farahani
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UNITED STATES BANKRUPTCY COURT
LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553
Telephone (925) 957-9797/ Facsimile (925) 957-9799
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NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION
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In re:
CASE NO: 2:12-bk-56674-ASW
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FARNAZ FARAHANI,
Chapter 13
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Debtor(s),
OPPOSITION TO Motion to Prohibit Use of Cash
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Collateral Segregate Cash Collateral; Obtain an
Accounting and Turn Over Cash Collateral to Creditor
Filed byCreditor Ronald
A. Floria, MEMORANDUM OF POINTS AND
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AUTHORITIES
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[Filed concurrently with: Declaration of Fred F.
Farahani in Support of Opposition to Motion to
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Prohibit Use of Cash Collateral Segregate Cash
Collateral; Obtain an Accounting and Turn Over Cash
Collateral to Creditor Filed byCreditor Ronald A.
Floria]
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Hearing Date: 11/6/2012
Time: 2:30 PM
Courtroom: 3020
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Debtor Farnaz Farahani respectfully submits her Motion to Prohibit Use of Cash Collateral
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___________________________ 1-6 __________________________
OPPOSITION TO NOTICE OF PERFECTION OF SECURITY INTEREST
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Segregate Cash Collateral; Obtain an Accounting and Turn Over Cash Collateral to Creditor Filed
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byCreditor Ronald A. Floria as follows:
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///
///
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I.
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INTRODUCTION
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First and foremost, Movant is not the owner of the Subject Property, for which perfection is
being sought. Movant conducted a non-judicial foreclosure sale of the Subject Property after the
LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553
Telephone (925) 957-9797/ Facsimile (925) 957-9799
filing of the within bankruptcy and in violation of the automatic stay in that case.
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Movant blatantly states that the Subject Property was sold on September 11, 2012, and that the
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Trustee’s Deed Upon Sale was recorded in the County of Santa Clara on September 14, 2012.
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However, the instant bankruptcy was filed September 10, 2012, voiding the sale in the first
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instance. This debtor never consented to this loan and under California law neither this debtor’s
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Community property interest nor this property are subject to this loan. As I survey the movants
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actions as against the debtor and the debtor’s husband Fred Farahani it is clear that they never
intended to make a loan but to acquire a property which is by definition a predatory loan. Each
motion by the Movants they do not address the criminality of their actions but instead claim that
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Fred Farahani is stealing from them.
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This Debtor’s Community Property Interest is Unencumbered
This debtor never consented to this loan and never signed the loan documents now being
presented for perfection and enforcement. Her community property interest is unencumbered. It is
our contention that during the existence of the community, the nonconsenting spouse should be
fully protected against efforts by the other spouse to transfer community real property in
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contravention of Family Code section 1102. In such cases, the attempted transfer is subject to a
timely action during the marriage to avoid it. A transfer of the community real property without
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both spouses consent adversely affects the nonconsenting spouse’s interests and the dissolution
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Court’s ability to make an equitable division of the community property. Allowing the transfer to
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stand against a challenge by the nonconsenting spouse could have the effect of partitioning the
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___________________________ 2-6 __________________________
OPPOSITION TO NOTICE OF PERFECTION OF SECURITY INTEREST
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community property during the marriage, an event the Legislature has expressly sought to avoid.
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(See Code Civ. Proc., § 872.210, subd. (b).) The effect of enforcing one-spouse transfers would
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be to make community property more like property held as tenants in common and could result in
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the nonconsenting spouse being forced to become a tenant in common with a stranger.
We believe the Britton , Britton v. Hammell, 4 Cal. 2d 690, 52 P.2d 221, 1935 Cal. LEXIS 602
LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553
Telephone (925) 957-9797/ Facsimile (925) 957-9799
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(Cal. 1935), and Andrade Andrade Development Co. v. Martin, 138 Cal. App. 3d 330, 187 Cal.
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Rptr. 863, 1982 Cal. App. LEXIS 2239 (Cal. App. 4th Dist. 1982) line of cases to be consistent
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with the nature of community property in California today. Both spouses hold equal undivided
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one-half interests in the property. Joint ownership of the property requires that during an ongoing
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marriage both spouses must consent before such property is leased for a period longer than one
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year, sold, conveyed, or encumbered. Family Code (§ 1102.) Community property principles of
equal management and shared responsibility mandate that the nonconsenting spouse is entitled to
invalidate in its entirety the other spouse’s transfer of community real property.
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§ 1102. Management and control of community real property
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(a) Except as provided in Sections 761 and 1103, either spouse has the management and
control of the community real property, whether acquired prior to or on or after January 1,
1975, but both spouses, either personally or by a duly authorized agent, must join in
executing any instrument by which that community real property or any interest therein is
leased for a longer period than one year, or is sold, conveyed, or encumbered.
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II.
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HISTORICAL PERSPECTIVE
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On or about, August 28, 2007, Movant Ronald Floria made a usurious loan to Fred Farmahin
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Farahani, which demanded thirteen and nine/tenths (13.9%) percent interest on a sum of
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$1,235,000.00 (hereinafter “Loan”). At that time, Debtor Farnaz Farahani had a community
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property interest in the Subject Property and lived in the residence located thereon.
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Beginning after January 28, 2009, Debtor Fred Farmahin Farahani made interest payments n
payments totaling $242,633.37, as against the Loan. Movant has submitted the note with a
request for Judicial notice the interest rate is clearly usurious at 13.99%. Total costs attributable to
the Ronald Floria loan see attached closing statement is 66, 470.00. These factors raise the interest
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OPPOSITION TO NOTICE OF PERFECTION OF SECURITY INTEREST
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rate for the first year to 13.99 and the costs of the loan of 5.4 percent for an effective of 18.4
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percent.
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Because the loan called for interest which exceeded the limit on interest California Civil Code
section 1917 et seq., and because Movant Ronald Floria is not exempt under said section, the loan
is usurious. As such, any amounts which might be due and owning could not have created an
LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553
Telephone (925) 957-9797/ Facsimile (925) 957-9799
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indebtedness for interest. Movant makes no mention of the terms and conditions of the Loan.
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Additionally, Debtor is entitled to treble damages based on all of the interest payments made to
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Movant. To be certain, any amounts owed to Movant would be offset by Debtor’s interest
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payments. The element of intent in usury is narrow. The essential elements of usury are: (1) The
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transaction must be a loan or forbearance; (2) the interest to be paid must exceed the statutory
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maximum;(3) the loan and interest must be absolutely repayable by the borrower; and (4) the
lender must have a willful intent to enter into a usurious transaction. That willful intent does not
require a conscious attempt, with knowledge of the law, to evade it. The conscious and voluntary
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taking of more than the legal rate of interest constitutes usury and the only intent necessary on the
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part of the lender is to take the amount of interest which the lender receives; if that amount is
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more than the law allows, the offense is complete. Intent takes on greater significance when the
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question is whether the transaction is one to which the usury law applies. But absent a dispute as
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to whether the usury law applies, when the transaction violates the usury law, the intent of neither
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of the parties is material. Creative Ventures, LLC v. Jim Ward & Associates, 195 Cal. App. 4th
1430, 126 Cal. Rptr. 3d 564, 2011 Cal. App. LEXIS 666, 74 U.C.C. Rep. Serv. 2d (Callaghan)
641 (Cal. App. 6th Dist. 2011)
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CREDITORS SHOULD NOT VIOLATE THE STAY,
AND FACE CONSEQUENTS IF THEY DO.
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This Court has previously noted that “the stay is one of the fundamental debtor protections
under the Code, and that it ‘stops all collection efforts.’ “ In re Aughenbaugh, 02.4 I.B.C.R. 157,
158 (Bankr.D.Idaho 2002) (quoting Franchise Tax Bd. v. Roberts (In re Roberts), 175 B.R. 339,
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343 (9th Cir. BAP 1994)).”
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The reach of the automatic stay is broad. It prohibits any act taken against the debtor or to
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recover a claim against the debtor. The stay requires the creditor to maintain the status quo ante
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OPPOSITION TO NOTICE OF PERFECTION OF SECURITY INTEREST
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and to remediate acts taken in ignorance of the stay. Id. (quoting Roberts supra.); see also
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Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210, 1214 (9th Cir.2002) (“The scope of protections
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embodied in the automatic stay is quite broad, and serves as one of the most important protections
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in bankruptcy law.”); In re Wiersma, 03.1 I.B.C.R. 42, 44 (Bankr.D.Idaho 2003) (“Respect by all
involved for the automatic stay is critical to the fair and effective functioning of the reorganization
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LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553
Telephone (925) 957-9797/ Facsimile (925) 957-9799
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process.”).
Under the case law, it is clear that once a creditor or actor learns or is put on notice of a
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bankruptcy filing, any actions intentionally taken thereafter are “willful” within the contemplation
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of §362(h). Eskanos & Adler, 309 F.3d at 1215; In re Jacobson, 03.2 I.B.C.R.119 (Bankr D.
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Idaho 2003). The question is thus whether the actor intended the action, not whether the actor
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intended to violate the stay. Eskanos & Adler, 309 F.3d at 1214-15. Associated Credit Servs.,
Inc. v. Campion (In re Campion), 294 B.R. 313 (9th Cir. BAP 2003), states:
There need be no proof of specific intent to violate the stay or to injure. To the contrary, a good
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faith belief that the stay is not being violated “is not relevant to whether the act was ‘willful’ or
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whether compensation must be awarded.” 294 B.R. at 316 (footnote omitted); see also Jacobson,
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03.2 I.B.C.R. at 121 (“Specific intent to violate the stay is not a required element in finding a
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willful violation.”) (citing Goichman v. Bloom (In re Bloom), 875 F.2d 224 (9th Cir.1989));
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Aughenbaugh, 02.4 I.B.C.R. at 163.
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Here, it appears rather clear that the intent to violate the automatic stay in the instant pending
bankruptcy, and the continuation thereof may constitute a willful violation on the part of Movant.
They also violated the stay in causing Fred Farahani to sign a forbearance agreement without
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Mr. Farahani’s lawyer and without approval of the court and took action in violation of the stay to
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dismiss Mr. Farahani’s usury case in state court. Even now they are relying on the dismissal to
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avoid the state court action.
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CONCLUSION: What is Happening here is a Crime
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These lenders have violated the California “loan-sharking” statute (Usury Law, §3, subd. (b);
Deering’s Ann. Uncod. Measures 1919-1 (1973 ed.) p. 78), which makes it a felony to charge
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interest on a loan of money “in excess of that amount by law,” See People v. Asuncio, 152 Cal.
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App. 3d 422, 199 Cal. Rptr. 514, 1984 Cal. App. LEXIS 1673 (Cal. App. 2d Dist. 1984).
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To allow perfection or to allow relief from stay or deem this cash collateral would be a
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OPPOSITION TO NOTICE OF PERFECTION OF SECURITY INTEREST
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furtherance of said crime. Civil Code Section 1916-3 imposes civil and criminal liability for
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usurious transactions. A borrower or debtor who paid interest on a usurious transaction is entitled
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to damages equal to treble the amount of money paid or the value delivered. In addition, the
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lender/creditor can be prosecuted for “loan sharking” which is a felony punishable by
imprisonment for up to 5 years.
LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553
Telephone (925) 957-9797/ Facsimile (925) 957-9799
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In consideration of a crime being committed the court should provide the Movants all the
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protections afforded a criminal defendant. F.J. Hanshaw Enters., Inc. v. Emerald River Dev., Inc.,
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244 F.3d 1128, 1137-38 (9th Cir. 2001). In this case a bribe was offered to a court appointed
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receiver and it was to be determined if criminal action should be taken. Judge Taylor did refer the
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matter to the FBI before proceeding to determine a sanction in the amount of 500,000.00. The
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ninth circuit determined that this sanction of 500,000.00 to be criminal in nature and set aside that
portion of the sanction; it reasoned that the Penelope of due process rights should be afforded a
criminal sanction such as this; a presumption of innocence, a trial by jury, right to take the 5thect..
(As an aside: My client Gordon R. Hanshaw was affirmed a 200,000.00 surcharge for his
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brothers’ bad faith attempt to bribe the receiver). See also International Union, UMW v. Bagwell,
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512 U.S. 821, 827-34, 129 L. Ed. 2d 642, 114 S. Ct. 2552 (1994).
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Respectfully submitted;
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DATED: October 29, 2012
LAW OFFICES OF TIMOTHY L. MCCANDLESS
By:
/s/ Timothy L. McCandless
Timothy L. McCandless, Esq.
Attorney for Debtor(s): Farnaz Farahani
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OPPOSITION TO NOTICE OF PERFECTION OF SECURITY INTEREST