In re: Artem Koshkalda
NC-19-1235-BTaF NC-19-1255-BTaF
9th Cir. BAPMay 26, 2020Background:
- Seiko Epson sued Artem Koshkalda and his entities in Nevada for trademark infringement; district court issued TROs and Freeze Orders, seized business records, and entered a $12 million default judgment after discovery abuses.
- Koshkalda filed chapter 11 (converted to chapter 7); Seiko Epson filed an adversary complaint objecting to his discharge under 11 U.S.C. § 727(a)(2)(A), (a)(3), (a)(5), and (a)(7) and pursuing related § 523 claims (some stayed).
- Key undisputed facts: in August 2017 (while aware of the TRO/Freeze Orders) Koshkalda opened a new bank account, sold the Giacomo property, deposited $380,506.48 into that account, and soon transferred most of the funds to third parties; he commingled personal and entity funds and admitted poor recordkeeping.
- Seiko Epson’s summary judgment evidence included the sale and transfers, Koshkalda’s deposition admissions (opened account to keep funds from “vanishing”), wide commingling among ~118 accounts, and a forensic accountant’s opinion that post-seizure records were inadequate.
- Bankruptcy court granted Seiko Epson’s partial summary judgment on § 727(a)(2)(A), (a)(3), and § 727(a)(7) (as tied to (a)(3)), denied Koshkalda’s motion in full, and entered judgment for Seiko Epson; the court denied costs without permitting Seiko Epson to file a bill of costs.
- Panel disposition: affirmed summary judgment holdings, but vacated/ remanded the denial of costs so Seiko Epson may submit a bill of costs and Koshkalda may object.
Issues:
| Issue | Plaintiff's Argument (Seiko Epson) | Defendant's Argument (Koshkalda) | Held |
|---|---|---|---|
| Adequacy of records under § 727(a)(3) | Debtor failed to keep/preserve sufficient post-seizure records, making ascertainment of financial affairs impossible | Seizure of pre-2016 records by Seiko Epson and Freeze Orders prevented him from producing records; produced >10,000 pages | Court: grant for Seiko Epson — records were inadequate; summary judgment affirmed |
| Insider liability under § 727(a)(7) (acting for an insider) | Koshkalda acted for his wholly-owned entities (ART, Renoca, etc.); conduct triggering § 727(a)(3) within the relevant period supports relief under (a)(7) | Koshkalda disputed characterization of entities as statutory insiders and relevance | Court: grant for Seiko Epson — ART and other entities were insiders (statutory/nonstatutory); summary judgment affirmed |
| Fraudulent intent transfer under § 727(a)(2)(A) | Sale of Giacomo property, opening secret account, and rapid transfers show intent to hinder/delay/defraud Seiko Epson | Payments (e.g., mortgages) were necessary to avoid default interest/encumbrances and to comply with Freeze Orders; TRO gap argument | Court: grant for Seiko Epson — debtor’s admissions and surrounding facts permit inference of fraudulent intent; summary judgment affirmed |
| Costs under Rule 7054(b) / local Rule 54-1 | As prevailing party Seiko Epson is entitled to submit a bill of costs and have costs taxed; court should permit filing | Koshkalda notes Seiko Epson did not seek fees in PSJ and court denied costs in judgment | Court: vacated denial of costs and remanded — prevailing party must be allowed to file bill of costs and court must state reasons if denying costs |
Key Cases Cited
- Thrifty Oil Co. v. Bank of Am. Nat'l Tr. & Sav. Ass'n, 322 F.3d 1039 (9th Cir. 2003) (summary judgment standard)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (definition of genuine issue of material fact)
- In re Adeeb, 787 F.2d 1339 (9th Cir. 1986) (§ 727 construed liberally for debtor; intent to hinder toward a creditor)
- In re Caneva, 550 F.3d 755 (9th Cir. 2008) (§ 727(a)(3) requires records sufficient to ascertain financial condition)
- In re Retz, 606 F.3d 1189 (9th Cir. 2010) (standard of review for § 727 findings)
- In re Woodfield, 978 F.2d 516 (9th Cir. 1992) (intent to hinder may be inferred from circumstances)
- United States v. Hinkson, 585 F.3d 1247 (9th Cir. 2009) (abuse of discretion standard)
- In re Aubrey, 111 B.R. 268 (9th Cir. BAP 1990) (transfer to avoid garnishment establishes prima facie case under § 727(a)(2)(A))