Elbar Invs., Inc. v. Okedokun (In re Okedokun)

Jeff Bohm, United States Bankruptcy Judge

I. INTRODUCTION

The adversary proceeding pending before this Court was filed due to an unscrupulous attorney's theft of $2.4 million. This attorney has no moral compass whatsoever, and his perfidy has resulted in litigation among his former clients, friends, and various third parties who did not have the displeasure of knowing him. While he deservedly spends time behind bars-he has recently been sentenced to six years in prison for his illegal greed-the individuals and entities he deceived and cheated are left duking it out over who has a superior claim to the remaining proceeds that he stole but was prevented from spending.

This Court conducted a multi-day trial in this adversary proceeding, and then took the matter under advisement. The Court now issues this Memorandum Opinion explaining *483 why it has decided to deny all relief requested by the plaintiff except for one of its claims against the dishonest attorney. Set forth below are this Court's Findings of Fact and Conclusions of Law, which this Court makes pursuant to Federal Bankruptcy Rule 7052. To the extent that any finding of fact is construed as a conclusion of law, it is adopted as such; and to the extent that any conclusion of law is construed as a finding of fact, it is adopted as such. The Court reserves the right to make additional findings and conclusions as it deems appropriate or as any of the parties may request.

II. FINDINGS OF FACT

A. The Parties

1. Elbar Investments, Inc.

Elbar Investments, Inc. (" Elbar "), the sole plaintiff in this adversary proceeding, is a privately-held company based in Houston, Texas, that buys properties at public foreclosure sales in Harris County, Texas and resells them for a profit. [ See Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 53:9-11; TransWorld's Ex. JJ, Klaimy Dep. 5:20-6:5].

2. Oluyemisi Omokafe Okedokun

Oluyemisi Omokafe Okedokun is the debtor in the main Chapter 7 case (the " Debtor "). [ See Main Case Doc. No. 1].

3. Felix Amos

Felix Amos (" Amos ") is the Debtor's husband. [ See Main Case Doc. No. 197 at 1-2 of 20, ¶ 2 1 ].

4. United Sentry Mortgage Investment # 1, LLC

United Sentry Mortgage Investment # 1, LLC (" United Sentry ") is a private lender based in Spring, Texas, that provided financing to an entity owned by the Debtor and Amos-namely, Triple Gate Investment LLC (" Triple Gate "). [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 44:21-22, 46:10-13, 47:2-8; Pl.'s Ex. 13].

5. Donald Anthony MacKenzie

Donald Anthony MacKenzie (" MacKenzie ") is the president and owner of United Sentry. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 44:10-20].

6. TransWorld Leasing Corporation

Transworld Leasing Corporation (" Transworld ") is a privately-held leasing company based in San Antonio, Texas. [ Id. at 28:23-30:6].

7. Industry Drive Partners, Ltd.

Industry Drive Partners, Ltd. (" Industry Drive ") is a privately-held entity headquartered in San Antonio, Texas. [ Id. at 111:7-10, 112:6-14].

8. Todd A. Prins

Todd A. Prins (" Prins ") is a San Antonio-based attorney-now no longer licensed to practice law and, instead, confined in a federal prison-who was the principal of the Prins Law Firm (the " Prins Law Firm "). [ See Main Case Doc. No. 197 at 2 of 20, ¶ 3].

*484 9. Eva S. Engelhart, Chapter 7 Trustee

Eva S. Engelhart is the Chapter 7 Trustee in the Debtor's main Chapter 7 case (the " Trustee ").

B. Relevant Pre-Bankruptcy Events Concerning TransWorld and Prins

1. Transworld is a leasing company headquartered in San Antonio, Texas, that leases a myriad of items, including automobiles, medical equipment, airplanes, bulldozers, and even a brewery. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 28:23-29:8]. Lenny Cash (" Mr. Cash ") founded TransWorld in 1979. [ Id. at 28:25-29:10]. Mr. Cash and Peggy Cash (" Ms. Cash ") (collectively, the " Cashes ") were married in 1996; shortly thereafter, Ms. Cash became the 100% shareholder of TransWorld. [ Id. at 29:11-30:3]. Ms. Cash is presently the president of TransWorld. [ Id. at 30:7-9]. TransWorld currently has 12 full-time employees, [ id. at 30:10-14]; at one point, TransWorld had as many as 30 employees, as well as an office in Dallas, Texas, [ id. at 30:15-18].

2. Prins, who was licensed to practice law in 1991, 2 was referred to the Cashes by a friend and client of the Cashes. [ Id. at 33:8-12]. Prins began providing legal services to the Cashes and to TransWorld in approximately 1999. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 17:14-18, 33:16-23; TransWorld's Ex. HH, Prins Dep. 93:5-13]. Aside from Prins representing the Cashes and TransWorld, Prins and his wife, Paula Prins (" Ms. Prins "), were personal friends of the Cashes. [TransWorld's Ex. HH, Prins Dep. 225:17-22].

3. In 2005 or 2006, a tax issue arose with certain of TransWorld's taxes due to the misdeeds of a TransWorld employee. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 31:8-32:16]. Eventually, a tax suit was commenced by the Bexar County Tax Assessor-Collector in Bexar County, Texas (the " Tax Assessor ") and a default judgment against TransWorld was entered on December 21, 2006, in the amount of $230,853.66. [TransWorld's Ex. K; TransWorld's Ex. HH, Prins Dep. 98:2-9]. On February 4, 2008, TransWorld wrote a check in the amount of $230,853.66 payable to the order of the IOLTA account of the Prins Law Firm (the " IOLTA ") 3 at BBVA Compass Bank (" BBVA ") for the past due taxes related to the tax suit commenced by the Tax Assessor. 4 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 16:25-17:4; Pl.'s Ex. 46, Ex. D; TransWorld's Ex. D]. At this time, Prins told Ms. Cash she needed to make the check payable to the IOLTA, and that he would then write a check to Linebarger, 5 and that Linebarger would then apply the money to the accounts for the county. [Adv. Doc. No. 221, Feb. 7, *485 2018, Trial Tr. 35:16-24]. Ms. Cash initially questioned why she could not make the check directly payable to Sylvia Romo (" Romo ") 6 or to Linebarger, instead of to the IOLTA, as it was "kind of, you know, a long chain of everybody," [ id. at 35:20-36:6], and Prins replied that this was the way things were done in order for the Tax Assessor to avoid receiving a bad check from the taxpayer, [ id. at 36:6-8]. In reliance upon Prins' advice, Ms. Cash thus wrote the check payable to the order of the IOLTA instead of to the Tax Assessor directly because she believed "that's the way things are done." [ Id. at 36:11-13]. Prins subsequently told the Cashes that TransWorld's debt to the Tax Assessor had been paid and was resolved. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 16:25-17:8; TransWorld's Ex. D, Prins Dep. 116:17-117:5, 118:2-5]. At his deposition, Prins asserted that he did in fact pay these monies to the Tax Assessor, [TransWorld's Ex. D, Prins Dep. 98:12-19, 99:1-19, 117:1-8], but TransWorld is currently in a half million dollar lawsuit with the Tax Assessor over the payment of these monies, interest, and legal fees, 7 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 13:23-14:4, 23:20-24:15, 36:14-37:1].

4. In 2011, Mr. Cash was diagnosed with cancer. [ Id. at 17:9-13].

5. Sometime around the beginning of January 2014, Ms. Cash was reviewing TransWorld's 2014 tax statement regarding its 2013 taxes when she learned that TransWorld owed delinquent taxes in the amount of $496,198.52. 8 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 19:7-12; TransWorld's Ex. U at 2]. Ms. Cash contacted Prins regarding the 2014 tax statement from the Tax Assessor, as she believed that TransWorld did not owe any taxes and had already settled the matter back in 2008 when it gave Prins $230,853.66 to pay to the Tax Assessor. [ See Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 19:7-15]. Prins assured Ms. Cash that TransWorld did not owe any taxes, that everything had been settled and paid previously, and that Prins would "take care of it." [ Id. at 19:7-15]. Ms. Cash did not hear anything else about this tax dispute issue until a TransWorld customer called her in 2016 to let her know that TransWorld was on a delinquent tax list in a newspaper article. [ Id. at 19:15-17].

*486 6. At his deposition, Prins testified that in late 2015 or early 2016, he, as the attorney for TransWorld, was negotiating with the Tax Assessor over monies allegedly owed by TransWorld. [TransWorld's Ex. HH, Prins Dep. 77:2-7]. In addition to the amounts allegedly in dispute, Prins testified that the Tax Assessor stated that there were also monies due that were not in dispute. [ Id. at 77:2-7]. Thus, in January 2016-without TransWorld's (i.e., the Cashes') knowledge or permission-Prins claims that he paid the Tax Assessor approximately $143,000.00 for TransWorld's alleged tax obligations that were not in dispute. 9 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 18:19-19:1; TransWorld's Ex. HH, Prins Dep. 77:17-25, 83:19-23, 223:13-21].

7. At or around this point in time (i.e., late 2015 to early 2016), Mr. Cash was suffering from terminal cancer. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 11:17-22, 17:9-13].

8. In January of 2016, Ms. Cash learned from a TransWorld customer that TransWorld was listed on a delinquent tax list for Bexar County, Texas, in a local newspaper article. [ Id. at 17:23-18:2, 19:15-17, 38:7-17]. The Cashes contacted Prins about TransWorld's taxes being listed as delinquent, as the Cashes believed that TransWorld had paid all delinquencies and the matter had been settled back in 2008. [ Id. at 19:18-20]. In response, Prins told the Cashes that the Tax Assessor had likely "misapplied" the $230,853.66 that TransWorld had paid to the IOLTA in 2008 (and that Prins was then to have paid to the Tax Assessor on TransWorld's behalf) and that the Tax Assessor needed to research the issue and straighten out its records. [Id. at 19:21-25, 37:14-25].

9. Even though Prins allegedly paid approximately $143,000.00 to the Tax Assessor in January 2016 (without the Cashes' knowledge or consent), in approximately April 2016, he told the Cashes that the Tax Assessor wanted TransWorld to deposit into his IOLTA a percentage of the taxes it owed as "good faith" money in the amount of $169,807.29 while he and the Tax Assessor worked out the disputed tax issues. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 19:21-20:1; TransWorld's Ex. HH, Prins Dep. 78:2-10, 78:19-25]. To convince TransWorld to place the $169,807.29 into his IOLTA, Prins created a false letter dated April 6, 2016, from Linebarger (using this law firm's letterhead), stating that TransWorld owed delinquent taxes in the amount of $169,807.29. [Pl.'s Ex. 46, Ex. A; TransWorld's Ex. A; TransWorld's Ex. HH, Prins Dep. 93:23-95:4, 114:3-13, 223:22-224:5]. Ms. Cash questioned Prins as to why she needed to put the disputed money into the IOLTA, as she did not believe that TransWorld owed any taxes. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 20:2-11]. Prins told Ms. Cash that it was "just a formality," and then Ms. Cash questioned whether she could obtain a bond, instead of placing the alleged disputed money into the IOLTA. [ Id. at 20:3-6]. Prins told Ms. Cash that she could procure a bond, but that she would have to put down 125% of the money that was in dispute. [ Id. at 20:7-8].

10. Based on the representations from Prins that TransWorld needed to deposit a percentage of the taxes in dispute as "good faith" money to be held in the IOLTA so *487 that TransWorld's tax issues could be resolved-and not wanting to post a bond, as Ms. Cash did not want to put down 125% of the disputed amount-on May 17, 2016, TransWorld (i.e., Ms. Cash as its president) "reluctantly" delivered a check in the amount of $169,807.29 to Prins for deposit into the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 19:16-20:14; Pl.'s Ex. 12; TransWorld's Ex. G].

C. Relevant Pre-Bankruptcy Events Concerning United Sentry, MacKenzie, the Debtor, Amos, and Prins

11. On June 16, 2015, Triple Gate, in order to obtain financing from United Sentry, executed that one certain promissory note in the original principal amount of $1,537,500.00 (the " Note "). [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 46:10-47:4; Pl.'s Ex. 13]. Triple Gate (through its authorized representatives, the Debtor and Amos) executed the Note to obtain financing for its purchase of certain residential real property-namely, 5506 Holly Springs Drive, Houston, Texas 77056-which is located in the very toney west Houston neighborhood of Tanglewood (the " Property "). [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 46:10-13, 47:2-8; Pl.'s Ex. 13]. Twelve individual investors, including MacKenzie, plus United Sentry, contributed funds to United Sentry in order for this entity to finance the loan to Triple Gate. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 47:9-19, 49:13-16, 93:21-94:4, 219:12-220:6]. At the time of the filing of the Debtor's Chapter 7 petition, the Debtor and Amos, plus their children, were residing at the Property.

12. In addition to executing the Note, Triple Gate also executed a deed of trust on June 16, 2015, naming MacKenzie as the trustee on the Property (the " Deed of Trust "). [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 51:25-52:11; Pl.'s Ex. 14]. The Deed of Trust secures repayment of the Note and contains the following language: 10

Beneficiary's Rights

...

4. If Grantors default on the note, fails to perform any of Grantors' obligations, or fails on demand to reimburse Beneficiary for the sums advanced, and such failure or default continues after Beneficiary gives Grantors written notice of the failure or default and twenty (20) days to cure in the event of a monetary failure, or thirty (30) days to cure all other matters, the Beneficiary may:

...

b. Request Trustee to foreclose this lien, in which case Beneficiary or Beneficiary's agent shall give notice of foreclosure sale as provided by the Texas Property Code as then amended; and

...

Trustee's Duties

If requested by Beneficiary to foreclose this lien, Trustee shall:

1. Either personally or by agent give notice of the foreclosure sale as required by the Texas Property Code as then amended;

2. Sell and convey all or part of the Property to the highest bidder for cash with a general warranty binding Grantor, subject to prior liens and to other exceptions to conveyances and warranty; and

3. From the proceeds of the sale, pay, in this order:

*488 a. expenses of foreclosure, including a normal hourly fee to the Trustee;

b. to Beneficiary, the full amount advanced, or the full amount of the principal, interest, attorney's fees, and other charges due and unpaid;

c. any amounts required by law to be paid before payment to Grantor; and to Grantor, any balance.

General Provisions

...

5. No sale under this Deed of Trust shall extinguish the lien created by this instrument.

[Pl.'s Ex. 14].

13. MacKenzie has known Prins since approximately 1998 or 1999, or for approximately 20 years. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 49:17-18; TransWorld's Ex. HH, Prins Dep. 204:19-22]. Prins has periodically done legal work for MacKenzie since 1999. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 49:22-24; TransWorld's Ex. HH, Prins Dep. 204:19-205:5].

14. United Sentry had to make several demands to Triple Gate for late payment of the Note. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 50:13-16]. MacKenzie made the decision on behalf of United Sentry for Prins to represent it for collection of the Note after Triple Gate fell into default. [ Id. at 50:15-22]. Prins sent out several demand letters on behalf of United Sentry, demanding payment of the late payments. [ Id. at 50:17-22]. Triple Gate failed to make payment.

15. On December 30, 2015-unbeknownst to United Sentry (as the holder of the lien on the Property)-the Debtor, in her capacity as the Manager of Triple Gate, executed a general warranty deed conveying the Property to herself and Amos in their individual capacities. [Pl.'s Ex. 16].

16. Because Triple Gate had defaulted under the Note, United Sentry, through the Prins Law Firm, posted the Property for a foreclosure sale to be held on October 4, 2016. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 50:3-5, 56:5-6, 57:13-15]. MacKenzie hired the Prins Law Firm to handle the foreclosure sale on the Property. [ Id. at 56:5-6].

17. On October 3, 2016, MacKenzie, as manager for United Sentry, appointed Prins or Victoria Shum (" Shum "), an associate at the Prins Law Firm, as substitute trustee under the Deed of Trust. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 81:20-82:5; Pl.'s Ex. 17].

D. Relevant Pre-Bankruptcy Events Concerning Industry Drive and Prins

18. G5 Property Holdings, LLC (" G5 ") is a San Antonio family-owned business that sells liquor, wine, and beer on a wholesale and retail basis. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 112:6-10]. Industry Drive is the entity that owns G5's corporate office. [ Id. at 111:7-10, 112:11-14]. Industry Drive collects rents from G5 and maintains the property on which G5's corporate office is located. [ Id. at 112:15-24].

19. Inez Cindy Gabriel (" Gabriel ") is one of the general partners for Industry Drive. [ Id. at 110:15-20]. Gabriel and each her siblings, to some degree, help manage and run the family business-i.e., G5. 11 [ Id.

*489 at 111:9-15, 158:14-19]. James Pfirrmann (" Pfirrmann ") is married to one of Gabriel's sisters, Eleanor Gabriel (" Eleanor "). [ Id. at 111:23-112:2]. In October of 2015, Pfirrmann was a co-managing partner of Industry Drive; Gabriel was the other managing partner. [ Id. at 114:13-16]. Both Gabriel and Pfirrmann had signature authority on Industry Drive's bank account. [ Id. at 123:16-22]. Disputes arose between Pfirrmann and the Gabriel Family regarding the family's businesses. [ Id. at 113:11-114:3].

20. Prins was Pfirrmann's personal attorney. [ Id. at 115:14-15]. Neither Industry Drive nor G5 were clients of Prins, nor was there any business conducted between Industry Drive and Prins. [ Id. at 115:10-18].

21. On October 7, 2015, Pfirrmann withdrew $200,000.00 from Industry Drive's bank account and tendered it to Prins to deposit into the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 114:13-115:3; Industry Drive's Ex. 4; Pl.'s Ex. 47 at Ex. A]. On October 16, 2015, Pfirrmann withdrew $100,000.00 from Industry Drive's bank account and again tendered it to Prins for deposit into the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 114:13-115:3; Pl.'s Ex. 47 at Ex. B; Industry Drive's Ex. 4]. Prins did, in fact, deposit into the IOLTA the entire $300,000.00 given to him by Pfirrmann. [Industry Drive's Ex. 4].

22. Once Gabriel became aware that Pfirrmann had withdrawn the above-referenced $300,000.00 from Industry Drive's account, she made demands on Pfirrmann and Eleanor that the funds be returned. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 123:23-124:3, 159:16-160:13; TransWorld's Ex. HH, Prins Dep. 29:18-23].

23. On December 16, 2015, the Gabriel Family and Industry Drive filed a lawsuit against Pfirrmann in Bexar County, Texas, seeking return, among other things, of the $300,000.00 Pfirrmann took from the Industry Drive account, and bringing claims for judicial dissolution of Industry Drive under the Texas Business Organization Code, breach of fiduciary duty, conversion, and breach of partnership agreement (the " Pfirrmann Lawsuit "). 12 [Pl.'s Ex. 47; Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 115:19-25].

24. On or around October 4, 2016, the Gabriel Family, Eleanor, Pfirrmann, and Prins held a meeting in an effort to resolve the Pfirrmann Lawsuit. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 118:3-19, 119:9-11; TransWorld's Ex. HH, Prins Dep. 31:20-24]. There is conflicting testimony regarding whether the issue of Prins personally filing for bankruptcy arose at this meeting on October 4, 2016: Gabriel testified that Prins filing for personal bankruptcy was not raised at the meeting, while Prins testified that the issue did arise. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 119:16-22; TransWorld's Ex. HH, Prins Dep. 31:18-24]. Because-as discussed more in depth infra in the Credibility of Witnesses Section-the Court finds Gabriel to be a very credible witness and Prins not to be a credible witness, the Court finds that the issue of Prins' personal bankruptcy was not mentioned or discussed at the meeting on October 4, 2016. As a result of the settlement meeting, the Gabriel Family, Eleanor, and Pfirrmann negotiated an agreement in which the Gabriel Family agreed to buy out Eleanor *490 and Pfirrmann's interest in Industry Drive. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 120:4-9]. The agreement, however, due to the need to obtain financing for the purchase of Eleanor and Pfirrmann's interests, was not completely finalized until approximately September 2017. [ Id. at 120:12-121:16]. At the settlement meeting, Prins never gave any indication to Pfirrmann or Gabriel that the $300,000.00 was at risk. [TransWorld's Ex. HH, Prins Dep. 33:7-12].

E. Additional Relevant Pre-Bankruptcy Events Concerning Prins

25. In addition to the IOLTA, the Prins Law Firm also had an operating account at BBVA (the " BBVA Operating Account ") 13 and another operating account at Wells Fargo (the " Wells Fargo Operating Account "). 14 [Main Case Doc. No. 197 at 3 of 20, ¶ 7].

26. On or around September 29, 2016, Prins and Ms. Prins personally filed a Chapter 7 petition in the United States Bankruptcy Court for the Western District of Texas, San Antonio Division (the " Prins' Bankruptcy "). [TransWorld's Ex. HH, Prins Dep. 71:6-7; Pl.'s Ex. 42]. The Prins' Bankruptcy was assigned to Bankruptcy Judge Craig A. Gargotta (" Judge Gargotta "). [ See Todd A. Prins and Paula R. Prins , Case No. 16-52187-cag, Bankr. W.D. Tex.].

27. On October 1, 2016, the balance of the IOLTA was $2,041.17. [Pl.'s Ex. 2].

F. The Debtor's Filing for Bankruptcy and Relevant Post-Bankruptcy Events

1. The Filing of the Debtor's Petition

28. On October 4, 2016 (the " Petition Date "), the Debtor filed a Chapter 7 petition that initiated the Main Chapter 7 case. [Main Case Doc. No. 1]. The Debtor's petition was filed at approximately 8:20 a.m. [Main Case Doc. No. 197 at 1 of 20, ¶ 1].

29. At approximately 8:59 a.m. on October 4, 2016, the Debtor's original bankruptcy counsel, Kyle Payne (" Payne "), faxed a notice of the Debtor's Chapter 7 petition to Prins. [Main Case Doc. No. 197 at 2 of 20, ¶ 4; TransWorld's Ex. HH, Prins Dep. 145:21-25; Pl.'s Ex. 33]. Despite being on notice of the Debtor's bankruptcy case, Prins made the unilateral decision to proceed with the foreclosure sale because he believed that the Property was owned by Triple Gate and, therefore, was not property of the Debtor's Chapter 7 bankruptcy estate that was protected by the automatic stay. [Main Case Doc. No. 197 at 2 of 20, ¶ 4]. Prins and the Prins Law Firm undertook no efforts to determine whether the Property was owned by the Debtor or Triple Gate as of October 4, 2016. [ Id. ].

2. The Details of the Foreclosure Sale

30. At Prins' direction, Shum conducted the foreclosure sale, which resulted in a purchase price of $2.4 million. [ Id. at 2 of 20, ¶ 5]. The purchasers of the Property were Elbar, Vincent Bustamante (" Bustamante "), Osama Abdullatif (" Abdullatif "), and Jean Jabbour (" Jabbour ") (collectively, the " Purchasers "). 15 [Adv. Doc. No. 220, *491 Feb. 6, 2018, Trial Tr. 57:17-58:14; Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 166:5-9, 170:20-171:1; TransWorld's Ex. II, Bustamante Dep. 105:23-106:1, 110:3-10, 110:25-111:4]. Bustamante testified that Jabbour, Abdullatif, and he purchased the Property as its beneficial owners, and that Elbar acquired legal title to the Property. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 91:2-10; TransWorld's Ex. II, Bustamante Dep. 142:5-145:5]. Elbar is a company that buys properties at public foreclosure sales in Harris County, Texas, and thereafter resells them. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 53:9-11; TransWorld's Ex. II, Bustamante Dep. 9:16-20]. Elias Klaimy formed Elbar in approximately 1984 and he is the president and owner of Elbar. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 52:25-53:1; TransWorld's Ex. JJ, Klaimy Dep. 5:20-6:5]. Bustamante is a vice president of Elbar and has been with the company for approximately 20 to 30 years. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 52:24-53:1; TransWorld's Ex. II, Bustamante Dep. 9:10-15]. Bustamante is also an attorney by training, having received his law degree from the University of Houston and an LLM from New York University. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 51:12-15]. Bustamante has been a real estate investor since 1975 and attended every foreclosure sale on the first Tuesday in Harris County, Texas, from 1975 to March 2015. [ Id. at 52:2-7]. Bustamante has personally purchased in excess of 2,000 properties at foreclosure sales, and on behalf of clients has purchased "thousands" of properties at foreclosure sales. [ Id. at 52:13-17].

31. Abdullatif is an individual who participates with Elbar in buying properties at foreclosure sales. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 165:13-16; TransWorld's Ex. II, Bustamante Dep. 105:23-106:1]. Abdullatif, however, has no formal role or title at Elbar. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 166:5-9, 168:13-19]. Likewise, Jabbour is an individual who participates with Elbar in buying properties at foreclosure sales, but he also has no formal role at Elbar. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 170:15-23; TransWorld's Ex. II, Bustamante Dep. 105:23-106:1, 137:17-21].

32. Jerel Twyman (" Twyman ") is an attorney and a vice president of Elbar. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 57:11; TransWorld's Ex. II, Bustamante Dep. 10:25-11:5]. Twyman attended the foreclosure sale on behalf of Elbar. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 114:1-7; TransWorld's Ex. II, Bustamante Dep. 10:25-11:5]. The purchase price for the Property was paid at the foreclosure sale with eleven cashier's checks from Abdullatif, Jabbour, and Bustamante. 16 [TransWorld's *492 Ex. II, Bustamante Dep. 137:12-138:8; Plaintiff's Ex. 20]. The eleven cashier's checks were drafted payable to the order of the following: (1) Osama Abdullatif in the amount of $500,000.00; (2) Osama Abdullatif in the amount of $300,000.00; (3) Elbar Investments, Inc. in the amount of $250,000.00; (4) Elbar Investments, Inc. in the amount of $50,000.00; (5) Elbar Investments, Inc. in the amount of $250,000.00; (6) Elbar Investments, Inc. in the amount of $250,000.00; (7) Jean Jabbour in the amount of $100,000.00; (8) Jean Jabbour in the amount of $100,000.00; (9) Jean Jabbour in the amount of $100,000.00; (10) Jean Jabbour in the amount of $400,000.00; and (11) Jean Jabbour in the amount of $100,000.00. [Pl.'s Ex. 20]. Even though four of the cashier's checks were paid to the order of Elbar, Bustamante clearly testified at his deposition that the $2.4 million paid in cashier's checks was comprised of $800,000.00 each from himself, Abdullatif, and Jabbour. [TransWorld's Ex. II, Bustamante Dep. 137:12-138:8].

33. Bustamante, Abdullatif, and Jabbour each put up $800,000.00 to purchase the Property, thus giving them each a one-third ownership interest in the Property. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 166:5-9, 170:20-171:1; TransWorld's Ex. II, Bustamante Dep. 110:3-10, 110:25-111:4]. Bustamante testified, however, that he has an agreement with Elbar in which he advances the purchase money and Elbar has a 25% percent cut of Bustamante's portion; Elbar then pays Bustamante back later. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 82:13-23]. Here, Elbar paid Bustamante $200,000.00 for 25% of Bustamante's 1/3 portion of the Property, thus making Elbar's stake in the Property $200,000.00. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 82:24-83:12, 93:24-94:3; TransWorld's Ex. II, Bustamante Dep. 143:8-12; TransWorld's Ex. JJ, Klaimy Dep. 9:12-19, 10:1-3, 10:21-22]. Bustmanate does not know on what date Elbar paid him the $200,000.00 for Elbar's 25% share of Bustamante's one-third interest in the Property. 17 [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 83:2-8]. Thus, according to Bustamante, the ownership interest in the Property was "one-third Osama [Abdullatif], one-third Vincent and Elbar, and one-third Jean Jabbour." 18 [ Id. at 57:17-58:14].

34. Bustamante testified that he hoped for a 20% return on the investment on the Property after all costs were paid, or a $480,000.00 aggregate total return for all parties. 19 [Adv. Doc. No. 220, Feb. 6, 2018, *493 Trial Tr. 135:7-24; TransWorld's Ex. II, Bustamante Dep. 234:14-21]. Bustamante also testified that Elbar has previously purchased properties when it knew the owner was in bankruptcy. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 134:11-14]. Additionally, Elbar has been involved in other lawsuits involving the automatic stay. 20 [ Id. at 118:5-120:1].

35. After the foreclosure sale, Shum returned from Houston (where the foreclosure sale was held) to San Antonio (where the Prins Law Firm was located) with the cashier's checks; however, Prins testified that his bank, BBVA, would not negotiate the cashier's checks. [Main Case Doc. No. 197 at 2 of 20, ¶ 5]. Shum therefore called Twyman to inform him that the cashier's checks would not suffice as payment. [ See Pl.'s Ex. 21]. In response, at 5:43 p.m. on October 4, 2016, Twyman, on behalf of Elbar, emailed Shum, stating that he would be happy to pay the funds for the Property with either one check or by a wire transfer. [ Id. ]. On October 5, 2016, at 9:03 a.m., Shum replied to Twyman's email, providing wiring instructions for the IOLTA. [Pl.'s Ex. 22].

3. Giving Notice to Prins and Elbar of the Debtor's Bankruptcy and Her Claim to the Property

36. On October 5, 2016, at 10:15 a.m., Payne sent to Prins the following: (a) a copy of the recorded deed from December 30, 2015, evidencing the transfer of the Property from Triple Gate to the Debtor and Amos; and (b) records from the Harris County Appraisal District showing that the Debtor and Amos claimed the Property as their homestead. [Main Case Doc. No. 197 at 3 of 20, ¶ 6]. As of the morning of October 5, 2016, Prins admitted to having knowledge that the Property had been transferred to the Debtor. [ Id. at 3 of 20, ¶ 6]. Thus, at the moment in time when Prins admittedly was aware that the Property was claimed as property of the bankruptcy estate, he had not received any good funds from Elbar. 21 [ Id. at 3 of 20, ¶ 6].

*494 37. On October 5, 2016, at 2:35 p.m., Shum emailed Twyman, copy to Prins, informing him that the Prins Law Firm had received notice that one of the representatives from Triple Gate had declared personal bankruptcy and was asserting that the Property was deeded in the name of the individual who declared bankruptcy, not Triple Gate. [Pl.'s Ex. 26; TransWorld Ex.'s HH, Prins Dep. 154:5-17]. Shum also stated that Prins and she believed the warranty deed from Triple Gate to Amos and the Debtor was a fraudulent transfer. [Pl.'s Ex. 26]. At 2:53 p.m. that same afternoon, Twyman replied to Shum, copy to Prins, thanking her for the information and stating that he would pass along the information to his client-i.e., to Elbar. [Pl.'s Ex. 27; TransWorld's Ex. HH, Prins Dep. 154:18-25]. Thus-at the latest-as of 2:53 p.m. on October 5, 2016, Elbar was aware (through Twyman, its vice president and attorney) that an individual who claimed to own the Property had filed for bankruptcy. [ See Pl.'s Ex. 27]. Bustamante did not remember taking any steps-except to perhaps check PACER 22 -to verify the information about the Debtor's bankruptcy after he learned about her bankruptcy, [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 85:19-86:7, 100:17-21]; Bustamante further testified that learning about the Debtor's bankruptcy did not change his mind about wire-transferring the $2.4 million to the substitute trustee (i.e., to Prins), [ id. at 87:12-19].

4. Elbar's Violation of the Automatic Stay

38. At some point after learning that the Debtor was claiming that she owned the Property and thus the automatic stay was in effect, Bustamante, on behalf of Elbar and the Purchasers, decided to go forward with the purchase of the Property and to send a wire of $2.4 million to the substitute trustee-i.e., to the Prins Law Firm. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 87:12-88:8; Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 165:8-9, 166:21-167:4, 167:8-15, 170:15-18, 173:19-22].

39. On October 6, 2016, at 11:53 a.m., Bustamante emailed Abdullatif, requesting that the wire of the $2.4 million (the " Proceeds ") show Elbar Investments, Inc. as the sending party. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 63:12-16; Pl.'s Ex. 31]. At 12:53 p.m., Twyman emailed Shum, copy to Prins, requesting that Shum send a copy of the notice confirming the bankruptcy filing. [Pl.'s Ex. 29]. At 12:58 p.m., Prins sent an email to Twyman, stating that he had received notice from the Debtor's bankruptcy attorney that the Debtor, not Triple Gate, had filed for personal bankruptcy; that subsequent to the foreclosure *495 sale, the Debtor's bankruptcy attorney sent a deed that was executed six months after the execution of the Note and the Deed of Trust whereby the Debtor and Amos had transferred the Property from Triple Gate to themselves personally; 23 and that he (i.e., Prins) was going to file a motion for relief from stay since this was a "fraudulent transfer." [Pl.'s Ex. 30].

40. Despite learning that the Property had been deeded to the Debtor personally and that the Debtor had filed for bankruptcy-and, thus, that the automatic stay was in effect-on October 6, 2016, at approximately 1:13 p.m., at Bustamante's direction, 24 Abdullatif's bank wire-transferred the Proceeds to the IOLTA. 25 [Pl.'s Ex. 31; Pl.'s Ex. 2, at 6]. At 1:13 p.m. on October 6, 2016, Abdullatif received an email from his bank, informing him that the wire of $2.4 million had been sent. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 63:24-64:8; Pl.'s Ex. 31]. Shortly thereafter, at 1:17 p.m. that same day, Abdullatif forwarded the email from his bank confirming the successful wire to Bustamante. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 64:10-15; Pl.'s Exs. 31-32]. At trial, Bustamante admitted that Elbar had notice of the Debtor's bankruptcy and of the automatic stay at the time the Proceeds were wire-transferred. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 64:16-24].

41. According to Bustamante, Elbar has previously paid a purchase price at a foreclosure sale knowing of a bankruptcy approximately ten (10) times out of thousands of foreclosure sales-in other words, to pay the purchase price after learning about a bankruptcy is "unusual." 26 [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 116:14-17; TransWorld's Ex. II, Bustamante Dep. 124:15-125:4]. In Bustamante's own words: "We paid the money knowing about the bankruptcy. It doesn't get more complicated than that." 27 [TransWorld's Ex. II, Bustamante Dep. 228:17-20]. Bustamante testified that he instructed that the $2.4 million be wire transferred after learning about the Debtor's bankruptcy because he wanted the replace the cashier's checks that were rejected, that he "committed to send the wire" and he "was just completing what I committed," that if he did not "send the wire, then I have not made my bid good, I have no right to anything," so that the Purchasers "would have standing as the highest bidder of the *496 sale," and that one of his goals was to acquire the Property. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 88:19-89:1, 89:17-25, 133:13-134:10]. Bustamante also testified unequivocally that Elbar had previously purchased properties when it knew the owner was in bankruptcy. [ Id. at 134:11-14].

5. Post-Foreclosure Events

42. Upon receipt of the $2.4 million that Elbar wired to the IOLTA, Prins did not provide Elbar with title to the Property. [Main Case Doc. No. 197 at 3 of 20, ¶ 8].

43. On October 11, 2016, Prins filed a motion for relief from stay on behalf of United Sentry in order to "allow movant to complete foreclosure of the Property" (" Motion for Relief "). [Main Case Doc. No. 7]. The Motion for Relief was set for hearing on November 8, 2016. Shum, the lawyer who actually conducted the foreclosure sale, drafted the Motion for Relief, but it was signed by Prins. [Main Case Doc. No. 197 at 3-4 of 20, ¶ 10].

44. On October 13, 2016, Prins, on behalf of United Sentry, filed an amended motion for relief from stay (the " Amended Motion for Relief "). [Main Case Doc. No. 9]. The Amended Motion for Relief contains additional legal authorities compared to the Motion for Relief, but essentially requests the same relief as the Motion for Relief.

45. As of October 17, 2016, the closing balance of the Wells Fargo Operating Account was $13,414.57. [Pl.'s Ex. 7].

46. On October 18, 2016, Prins transferred $2.0 million from the IOLTA to the Wells Fargo Operating Account. [Main Case Doc. No. 197 at 4 of 20, ¶ 11; Pl.'s Exs. 2, 7; TransWorld's Ex. HH, Prins Dep. 18:10-15]. Prins was the only person who was authorized to make withdrawals from and charges to the Wells Fargo Operating Account. [Main Case Doc. No. 121, Jan. 9, 2017, Hrg. 28:11-29:5]. Prins did not advise United Sentry, or anyone else, of the $2.0 million transfer. [Main Case Doc. No. 197 at 4 of 20, ¶ 11; Main Case Doc. No. 121, Jan. 9, 2017, Hrg. 38:11-19].

47. Between October 19, 2016, and December 12, 2016, 28 Prins freely spent the Proceeds, which were by that time in the Wells Fargo Operating, for his own personal and business needs. Prins' expenditures from the Wells Fargo Operating Account, which are directly traceable to the Proceeds, [ see TransWorld's Ex. HH, Prins Dep. 125:11-19], include, but are in no way limited to, the following:

A. On October 20, 2016, Prins purchased four plane tickets on United Airlines, each in the amount of $1,868.90. [Pl.'s Ex. 7; Main Case Doc. No. 197 at 4 of 20, ¶ 12]. Prins' testimony regarding the timing of his decision to take a trip overseas has been contradictory. Prins testified that when he transferred the $2.0 million into the Wells Fargo Operating Account on October 18, 2016, he did not yet have the intention to leave for an overseas vacation. [TransWorld's Ex. HH, Prins Dep. 20:11-19]. Prins later testified that as of October 19, 2016, he was contemplating the trip overseas. [ Id. at 23:14-22, 24:21-25]. Later still, Prins testified that as of October 21, 2016, he had not made the decision to travel overseas but had made the decision to "shut down the practice and leave." 29 [ Id. at 40:1-4].

*497 B. On October 21, 2016, Prins cut a number of severance checks from the Wells Fargo Operating Account to the employees of the Prins Law Firm because Prins had decided to shut down his law firm. [Pl.'s Ex. 7; TransWorld's Ex. HH, Prins Dep. 39:13-25].

C. On or around October 25, 2016, Prins charged over $5,000 at hotels.com. [Pl.'s Ex. 7; Main Case Doc. No. 197 at 4 of 20, ¶ 14].

D. On October 26, 2016, an automatic payment to the IRS in the amount of $18,411.19 cleared the Wells Fargo Operating Account related to the payroll taxes for the severance checks Prins had paid his employees on October 21, 2016. [Pl.'s Ex. 7; TransWorld's Ex. HH, Prins Dep. 41:3-11].

E. On October 27, 2016, Prins made a charge to the Wells Fargo Operating Account in London, England. [Pl.'s Ex. 7; Main Case Doc. No. 197 at 4 of 20, ¶ 15]. In subsequent weeks, Prins continued to charge tens of thousands of dollars to the Wells Fargo Operating Account for recreational purchases in (i) London, England, (ii) Edinburgh, Scotland, and (iii) Copenhagen, Denmark, with the last of the international charges occurring on November 28, 2016. [Pl.'s Exs. 7-8; Main Case Doc. No. 197 at 4 of 20, ¶ 15]. Upon returning from his month-long trip to Europe, Prins immediately traveled to Portland, Oregon, based on further recreational charges on the Wells Fargo Operating Account in Portland between November 29, 2016, and December 5, 2016. [Pl.'s Exs. 8-9; Main Case Doc. No. 197 at 4 of 20, ¶ 15].

F. On November 17, 2016, Prins paid Martin Seidler (" Seidler ")-the attorney representing Prins in the Prins' Bankruptcy-$10,000.00 from the Wells Fargo Operating Account for Seilder's representation of Prins. [Pl.'s Ex. 8; TransWorld's Ex. HH, Prins Dep. 43:1-22]. At Prins' deposition (taken approximately one year later on November 15, 2017), he testified that this $10,000.00 was "Elbar's money." [TransWorld's, Ex. HH, Prins Dep. 44:4-6].

G. On November 21, 2016, Prins paid Hilley & Solis-the law firm representing Prins in his criminal matters 30 -$10,000.00, which represented a portion of the retainer Prins was to pay Hilley & Solis, from the Wells Fargo Operating Account. [Pl.'s Ex. 8; TransWorld's Ex. HH, Prins Dep. 44:10-16].

H. On November 23, 2016, a check cleared the Wells Fargo Operating Account to Carlos Pumarejo in the amount of $66,000.00. [TransWorld's *498 Ex. HH, Prins Dep. 46:15-21; see Pl.'s Ex. 8]. Pumarejo was a client of Prins and had previously given $66,000.00 to Prins to hold, [TransWorld's Ex. HH, Prins Dep. 46:15-25], but Prins spent these funds and therefore used a portion of the Proceeds to return the funds to this client that the client had previously given Prins to hold.

I. On November 30, 2016, Prins paid Hilley & Solis another $5,000.00 from the Wells Fargo Operating Account, representing the remainder of the retainer Prins was required to pay Hilley & Solis for that law firm to represent him in the criminal prosecution that was inevitably going to be brought against him. [Pl.'s Ex. 8; TransWorld's Ex. HH, Prins Dep. 49:21-50:3].

J. In addition to the large expenditures of funds Prins made from the Wells Fargo Operating Account detailed above, Prins also made a number of smaller purchases, the funds of which are all directly traceable to the Proceeds: (1) multiple purchases from the iTunes store; (2) parking fees, Uber rides, and charges for executive car service; (3) charges to efile TX.gov, which are ostensibly related to the Prins Law Firm; (4) purchases from Office Depot, Brookstone, Central Market grocery store, and Gamestop; (5) Humana insurance payments related to the Prins Law Firm; and (6) payments to AT & T, CPS Energy, Time Warner Cable, and Godaddy.com. [ See Pl's Exs. 7-9].

48. On October 19, 2016, Prins made four wire transfers out of the IOLTA totaling $82,373.28 to the Internal Revenue Service to pay his own personal taxes. [Pl.'s Ex. 2; TransWorld's Ex. HH, Prins Dep. 17:3-5, 23:8-17].

49. Mr. Cash was keen to resolve all outstanding disputes regarding TransWorld-including the tax issue with the Tax Assessor-because of his extremely poor health. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 20:22-21:13; TransWorld's Ex. HH, Prins Dep. 238:24-239:1]. Mr. Cash did not want to leave Ms. Cash saddled with a major tax problem for TransWorld upon his death. Hence, between May 2016 and October 2016, Mr. Cash followed up with Prins regarding the tax issue. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 20:15-21:14].

50. On October 20, 2016-due to increasing pressure from Mr. Cash and because of a sense of duty to "do right" by the Cashes 31 -Prins issued a check to TransWorld in the amount of $164,807.29, which cleared the Wells Fargo Operating Account on October 21, 2016. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 27:19-28:4; Main Case Doc. No. 197 at 4 of 20, ¶ 13; Pl.'s Exs. 7, 11; TransWorld's Ex. HH, Prins Dep. 37:9-25, 38:18-25, 83:24-84:8, 231:17-20, 239:2-13]. Prins told the Cashes that he had settled the tax dispute with the Tax Assessor for $5,000.00. [TransWorld's Ex. HH, Prins Dep. 96:2-97:3]. The Cashes believed that the $164,807.29 check the Prins Law Firm issued to TransWorld represented TransWorld recovering the "good faith" money of $169,807.29 it had given Prins to deposit into the IOLTA, less the $5,000.00 settlement amount. 32

*499 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 22:2-12; Pl.'s Ex. 46]. Prins, however, lied to the Cashes about the $5,000.00 settlement with the Tax Assessor: he did not, in fact, negotiate any $5,000.00 settlement with the Tax Assessor. [TransWorld's Ex. HH, Prins Dep. 79:19-80:3, 99:20-25, 109:24-25].

51. On or around October 24, 2016, MacKenzie, on behalf of United Sentry, requested proof of funds in the IOLTA and Prins therefore sent MacKenzie a screenshot of the IOLTA, showing a balance of $3,787,183.01. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 239:20-240:20; United Sentry's Ex. 9; TransWorld's Ex. HH, Prins Dep. 184:15-185:6]. The screenshot Prins sent to MackKenzie was not an accurate screenshot of the funds in the IOLTA on October 24, 2016; instead, Prins used editing software on his computer to create a screenshot that would appear to show that the IOLTA still held all of the Proceeds. [TransWorld's Ex. HH, Prins Dep. 184:15-185:6, 173:20-23].

52. On October 28, 2016, this Court held an emergency status conference in the Main Chapter 7 case at the request of the Chapter 7 Trustee regarding the Debtor's failure to timely file schedules and a statement of financial affairs. The Court entered its Order Requiring Debtor to Personally Appear and Show Cause Why She Should not be Sanctioned for Failing to Timely File Schedules of Assets and Liability and Statement of Financial Affairs (" Debtor Show Cause Order "). [Main Case Doc. No. 22]. The Debtor Show Cause Order was set for hearing at the same time as the Amended Motion for Relief-i.e., for November 8, 2016. 33

53. Also on October 28, 2016, the Estate of Jose Oleszcovski Wasserteil (the " Wasserteil Estate ") filed a motion for relief from stay pursuant to 11 U.S.C. § 362 (d) in the Prins' Bankruptcy, alleging that the IOLTA held funds belonging to the Wasserteil Estate and that Prins had refused to release those funds. [Pl.'s Ex. 37].

54. As of October 31, 2016, the balance of the IOLTA was $295,167.89. [Pl.'s Ex. 2]. Thus, from October 6, 2016, when the IOLTA's balance was $2,402,041.17, the balance had declined by $2,106,873.28. [ See index="1" url="https://cite. case.law/citations/?q=11%20U.S.C.%20%C2%A7%20362">id. ]. This decline was due entirely to Prins' transfer of the funds in the IOLTA-virtually all of which were comprised of the Proceeds-to the Wells Fargo Operating Account and to the Internal Revenue Service.

55. As of November 3, 2016, the closing balance of the BBVA Operating Account was $30.34. [Pl.'s Ex. 5]. Thus, as of this date, this particular account had virtually no funds on hand.

56. On or about November 4, 2016, William and Karen Ozer (the " Ozers "), former clients of Prins, filed an original complaint to determine dischargeability objection to discharge in the Prins' Bankruptcy. [Pl.'s Ex. 38]. In their complaint, the Ozers alleged that when Prins was representing them in a lawsuit, Prins repeatedly lied to them about and misrepresented the status of their lawsuit. [ Id. ]. The Ozers also alleged that Prins forged judges' orders on court documents and fabricated numerous communications from various elected and appointed officials. [ Id. ].

57. On November 4, 2016, Gabriel learned from one of the partners at the law firm utilized by the family's businesses-Pulman, *500 Cappuccio, Pullen, Benson & Jones (the " Pulman Law Firm ")-that Prins had "an issue." [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 126:2-4, 126:13-25]. Once Gabriel learned about Prins' "issue," 34 she again demanded that Pfirrmann return the $300,000.00 that he had placed into the IOLTA. [ Id. at 126:5-12, 130:5-11 ]. After receiving pressure from Gabriel, Pfirrmann contacted Prins to request the transfer of the $300,000.000 back to Industry Drive. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 130:9-16; TransWorld's Ex. HH, Prins Dep. 28:24-29:12]. On November 4, 2016, Prins transferred $300,000.00 from the IOLTA to the BBVA Operating Account. 35 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 130:15-16; Pl.'s Ex. 3, 5; TransWorld's Ex. HH, Prins Dep. 27:25-28:8]. On that same day, Prins delivered a check to Industry Drive in the amount of $300,000.00 from the Prins Law Firm, i.e., from the BBVA Operating Account. [ See Pl.'s Exs. 5, 10].

58. On November 8, 2016, at approximately 10:20 a.m., the Court held a hearing on the Motion for Relief and the Debtor Show Cause Order. Prins did not personally appear at the hearing. An associate attorney from the Prins Law Firm named Travis Parks (" Parks ") made a telephonic appearance on behalf of United Sentry. [Main Case Doc. No. 197 at 5 of 20, ¶ 18]. Parks stated that United Sentry desired to move forward on the Motion for Relief. [ Id. at 5 of 20, ¶ 19]. However, Prins had sent an email to the Court's case manager in the early hours of November 8, 2016, stating:

Along with the Show Cause Hearing and the Continued Status Conference, I have filed and sent an Amended Motion for Relief from Stay on behalf of United Sentry Mortgage that is set on the Docket for 9:30 a.m. I have fallen very ill and cannot make the trip into Houston, so I would respectfully request that my hearing be dropped at this time so that I may appear in person at a later date.

[ Id. ].

Parks had not spoken with Prins about the hearing and believed that Prins was out of the country at the time, likely in Germany. [ Id. at 5-6 of 20, ¶ 20]. Parks further stated that Prins had left the country on October 22, 2016, and had told his associates that he would be retiring. [ Id. ]. Parks also alluded to the firm undergoing a "unique set of circumstances" and said that he was doing his "best to keep the wheels from falling off." [ Id. ]. However, at this time, Parks disclosed no specifics about Prins' recent frequent use of the *501 Proceeds. 36 At the Court's request, Parks provided Prins' cell phone number, which allowed the Court's case manager to contact Prins and inform him that the Court wanted him to immediately appear at the hearing by telephone. [ See Main Case Doc. No. 117, Nov. 8, 2016, Hrg. 13:9-14:23, 24:12-13]. Prins complied and then called in to appear by telephone. [Main Case Doc. No. 117, Nov. 8, 2016, Hrg. 24:12-13; Tape Recording, Nov. 8, 2016, Hrg. at 10:48:10 A.M.]. Upon questioning from the Court, Prins reiterated the statement in his email that he was ill and stated that he was dialing in from San Antonio, Texas. [Main Case Doc. No. 197 at 6 of 20, ¶ 22]. Prins claimed that he was not retiring but instead "cutting back" on the number of his clients in order to spend more time with his family. [ Id. ]. Critically, Prins was asked by Elbar's counsel whether the $2.4 million Elbar had wired on October 6, 2016, was still held in the IOLTA. [Main Case Doc. No. 117, Nov. 8, 2016, Hrg. 44:8-11; Tape Recording, Nov. 8, 2016, Hrg. at 11:11:45 A.M.]. Prins answered "Yes, it is" and he confirmed that he was continuing to maintain the IOLTA. [Main Case Doc. No. 197 at 6 of 20, ¶ 23]. Prins' response was a blatant lie, as by this time, he had already transferred at least $2.3 million of the $2.4 million out of the IOLTA. [ See Finding of Fact Nos. 46, 57].

59. On November 8, 2016, when Prins told this Court that he was in San Antonio and too ill to appear at the hearing, the Wells Fargo Operating Account showed several charges that Prins was making on this same date in London, England. [Pl.'s Ex. 8; Main Case Doc. No. 197 at 6 of 20, ¶ 24]. Thus, Prins' response that he was too ill to appear at the hearing and was in San Antonio was another blatant lie-as he actually was in London freely spending some of the Proceeds that he had transferred from the IOLTA to the Wells Fargo Operating Account. Indeed, the balance in the Wells Fargo Operating Account on November 8, 2016, was $1,757,348.78. [Pl.'s Ex. 8; Main Case Doc. No. 197 at 6 of 20, ¶ 24].

60. On November 8, 2016, at 3:03 p.m., (i.e., after the hearing on the Motion for Relief and the Debtor Show Cause) Richard Battaglia (" Battaglia "), counsel for Elbar, emailed Prins and requested-for the first time-that the Proceeds be returned to Elbar. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 101:8-16, 118:1-4; Pl.'s Ex. 40; TransWorld's Ex. HH, Prins Dep. 106:10-19]. Between the dates of October 6, 2016, and November 8, 2016, Elbar did not ask for the deed to the Property because, as stated by Bustamante, "there was a bankruptcy estate, we're [i.e., Elbar] not entitled to a deed." [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 101:17-23].

61. Also on November 8, 2016, an article was published in the San Antonio Express-News stating that Prins was being accused by former clients (the Ozers) of fabricating court documents. [Pl.'s Ex. 39].

62. At least by November 8, 2016, MacKenzie, on behalf of United Sentry, requested that Prins return the $2.4 million to Elbar. [Main Case Doc. No. 197 at 6 of 20, ¶ 25].

63. Sometime after the November 8, 2016, hearing, the Chapter 7 Trustee's counsel became aware that (i) Prins had filed a personal Chapter 7 bankruptcy case in the United States Bankruptcy Court for the Western District of Texas on September 29, 2016, and (ii) there was an adversary *502 proceeding filed against Prins on November 4, 2016, alleging that Prins had misappropriated funds from his IOLTA and that he had perpetuated a fraud on former clients by forging court orders. [Main Case Doc. No. 197 at 6-7 of 20, ¶ 26; see Main Case Doc. No. 34].

64. On November 9, 2016, at 11:46 a.m., Prins emailed Battaglia, inquiring whether or not Elbar still wanted to buy the Note. 37 [United Sentry's Ex. 3]. Battaglia responded to Prins via email that same day at 5:40 p.m., stating that Elbar might "still have an interest but would need to see all the loan documents." [ Id. ].

65. Also on November 9, 2016, MacKenzie emailed Prins at 3:44 p.m., asking that Prins move the Proceeds to another account and referenced the article that appeared in the San Antonio Express-News. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 233:1-8, 233:24-234:13, 235:19-236:1; United Sentry's Ex. 7].

66. On November 10, 2016, MacKenzie emailed Prins, requesting a screenshot of the funds in the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 233:9-11; United Sentry's Ex. 7]. MacKenzie wanted Prins to send him a screenshot showing the amount of the funds in the IOLTA "to see that the funds were available and that ... they were available for everybody involved, security." [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 233:12-15]. In response, Prins sent a falsified screenshot of the IOLTA balance to MacKenzie, showing a balance of $3.3 million in the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 241:4-15; TransWorld's Ex. HH, Prins Dep. 186:25-187:18]. Subsequently, at his deposition (taken on November 15, 2017), Prins admitted that the IOLTA did not have $3.3 million in it at that time and that he had manufactured the screenshot. [TransWorld's Ex. HH, Prins Dep. 186:25-187:18].

67. On November 10, 2016, at 5:56 p.m., Battaglia emailed Seidler and stated that he "literally found out about Mr. Prin's BK within the last 30 minutes and am extremely concerned as to the safekeeping of those funds." [Industry Drive's Ex. 7].

68. On November 11, 2016, Twyman emailed Prins and requested that Prins wire the Proceeds from his account (i.e., the IOLTA) to Abdullatif's account. [United Sentry's Exs. 4, 6]. Prins responded, stating that he would try to wire the funds the next day. 38 [United Sentry's Ex. 4]. On November 12, 2016, Twyman replied, in which he stated that he would like Prins to immediately wire the Proceeds. [ Id. ]. On November 14, 2016, Prins emailed Twyman and attached a release of escrow funds for execution by Elbar and United Sentry. [ Id. ]. In the same email, Prins stated that he had received conflicting instructions about to whom to wire the Proceeds-one instruction to wire the Proceeds to Elbar and another instruction to wire the Proceeds to Abdullatif. 39 [ Id. ].

*503 69. On November 18, 2016, MacKenzie once again emailed Prins and requested a screenshot of the funds in the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 241:16-22; United Sentry's Ex. 8]. Prins-continuing his deceit-once again sent MacKenzie a falsified screenshot of the IOLTA, showing a balance of $3,144,000.00. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 241:23-242:10; United Sentry's Ex. 11].

70. Also on November 21, 2016, Twyman emailed Prins and stated that Elbar would not execute any release prior to receiving funds, as this was Elbar's standard procedure. [United Sentry's Ex. 4]. Twyman asked Prins whether he would be willing to wire the funds into this Court's registry in Houston. [ Id. ]. Prins replied to Twyman on November 22, 2016, stating that he would be willing to consider interpleading the funds. 40 [ Id. ].

71. On November 27, 2016, MacKenzie again asked Prins to send him a screenshot of the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 242:11-20; United Sentry's Ex. 12; TransWorld's Ex. HH, Prins Dep. 189:20-190:8]. In his email, MacKenzie wrote the following to Prins: "I must admit I am very Concerned about this matter another case you have against you With a estate matter of roughly 360,000 has popped up people Are losing there patience and trust Do not let me down Todd. I have Used your services since 1999 With out problems." 41 [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 242:21-243:3; United Sentry's Ex. 12]. In response, Prins sent MacKenzie a screenshot of the IOLTA showing a balance of $3.14 million; Prins, however, like the previous responses to MacKenzie's requests for screenshots of the IOLTA, edited the screenshot in order to deceive MacKenzie. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 243:4-13; United Sentry's Ex. 12; TransWorld's Ex. HH, Prins Dep. 189:20-190:8]. In fact, Prins had already transferred most of the Proceeds out of the IOLTA into the Wells Fargo Operating Account and the BBVA Operating Account. [ See Finding of Fact Nos. 46, 57].

*504 72. On or around November 30, 2016, MacKenzie again requested a screenshot of the IOLTA to confirm the amount of funds in it. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 243:14-25]. In reply, Prins sent MacKenzie another falsified screenshot of the IOLTA, once against showing a balance of $3,144,000.00. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 243:14-244:3; United Sentry's Ex. 13].

73. On December 2, 2016, MacKenzie and United Sentry's counsel 42 contacted the FBI regarding MacKenzie's suspicions that Prins was sending him doctored screenshots of the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 104:11-105:18, 245:8-17].

74. On December 3, 2016, MacKenzie again requested another screenshot of the IOLTA from Prins. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 244:4-24; United Sentry's Ex. 14]. Prins responded to MacKenzie's email on December 4, 2016, and once again attached a falsified screenshot showing a balance of $3,144,000.00 in the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 245:18-24; United Sentry's Ex. 14]. This was at least the sixth time since October 24, 2016, that MacKenzie had requested that Prins send him a screenshot of the IOLTA as proof of the amount of funds in the account. In Prins' own words: "Mr. MacKenzie expressed to me a great deal of concern about this money. Mr. MacKenzie was-for lack of a better term-like a dog on a bone on it and contacted me more than anybody, yes." [TransWorld's Ex. HH, Prins Dep. 190:16-20].

75. On December 5, 2016, pursuant to yet another request from MacKenzie for verification of the amount of funds in the IOLTA, Prins, with MacKenzie listening in on the call, impersonated a BBVA employee-one "Levon Martin"-in order to falsely confirm the balance in the IOLTA as $3,144,000.00. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 246:9-18, 247:10-14, 248:17-20; United Sentry's Ex. 16; TransWorld's Ex. HH, Prins Dep. 192:15-20, 201:20-204:13; Tape Recording, Feb. 7, 2018, Tr. at 5:11:00-5:13:32 P.M.]. MacKenzie tape recorded this phone call. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 246:14-15]. On the same day, Prins also created a false email from "Levon Martin," confirming the balance of the IOLTA as $3,144,000.00. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 248:3-16; United Sentry's Ex. 15; TransWorld's Ex. HH, Prins Dep. 191:18-192:8]. Prins then forwarded this email to MacKenzie to continue attempting to deceive MacKenzie into believing that all of the Proceeds were still in the IOLTA. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 248:11-16; United Sentry's Ex. 15; TransWorld's Ex. HH, Prins Dep. 191:18-192:8].

76. Around the beginning of December of 2016, because of MacKenzie's concerns about Prins based on news articles in San Antonio newspapers and the security of the Proceeds in the IOLTA, MacKenzie hired two ex-Texas Rangers to watch Prins and Ms. Prins 24 hours a day, so that MacKenzie would be alerted if Prins or Ms. Prins attempted to leave the country. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 252:22-253:24]. MacKenzie believed this "was the right thing to do for the whole situation." [ Id. at 253:14-17 ].

77. On December 6, 2016, this Court held a status conference at the request of the Chapter 7 Trustee. At this hearing, the *505 respective attorneys for the Chapter 7 Trustee, United Sentry, and Elbar raised very troubling concerns about Prins' misappropriation of funds from his IOLTA. [Main Case Doc. No. 197 at 7 of 20, ¶ 27]. Specifically, United Sentry's counsel stated that he had learned from communications with the FBI that Prins had transferred funds out of his IOLTA on October 18, 2016, which would make his statements on the record at the hearing held on November 8, 2016, that he was still holding all of the $2.4 million in the IOLTA blatantly false. 43 [ Id. ].

78. On December 7, 2016, based upon the statements made by the attorneys who appeared at the status conference on December 6, 2016, this Court entered its Order (1) Requiring Todd Prins to Wire Transfer $2.4 million to the Chapter 7 Trustee by No Later than 5:00 P.M. on December 12, 2016; and (2) Requiring Todd Prins to Personally Appear in Court and Show Cause Why He Should Not be Sanctioned (" Prins Show Cause Order "). 44 [Main Case Doc. No. 52]. The Prins Show Cause Order provided that in the event Prins failed to wire the $2.4 million to the Chapter 7 Trustee by the deadline of 5:00 p.m. on December 12, 2016, the Court would hold a hearing on December 14, 2016, at 11:30 a.m. at which Prins was ordered to personally appear and show cause why he should not be held in contempt for failing to turn over the $2.4 million to the Chapter 7 Trustee. [Main Case Doc. No. 52]. The Prins Show Cause Order further provided that, regardless of whether the $2.4 million was transferred, the Court would hold a hearing on January 9, 2017, at which Prins was ordered to personally appear and show cause why he should not be sanctioned for:

A. violating the automatic stay on October 4, 2016 by conducting a foreclosure sale on 5506 Holly Springs Drive, Houston, Texas 77056 (the " Property "), which is property of the Debtor's bankruptcy estate;

B. violating the automatic stay on October 6, 2016 by accepting a wire of the Proceeds from Elbar Investments, Inc., which monies represent the funds attributable to the foreclosure sale of the Property; and

C. making a specific representation on the record via his telephonic appearance at the status conference held in this case on November 8, 2016 regarding the Proceeds: to wit, that on that day, the Proceeds were on deposit in his law firm's IOLTA account.

[ Id. ].

79. On December 7, 2016, the Chapter 7 Trustee served Prins with a copy of the Prins Show Cause Order by email and facsimile. [Main Case Doc. No. 53]. The Chapter 7 Trustee also served a courtesy copy of the Prins Show Cause Order on Prins' bankruptcy counsel, Seidler. [ Id. ]. There is no question that Prins received notice of the Prins Show Cause Order.

80. Prins did not wire transfer $2.4 million to the Chapter 7 Trustee by 5:00 *506 p.m. on December 12, 2016, as required by the Prins Show Cause Order. [Main Case Doc. No. 60; Main Case Doc. No. 197 at 8 of 20, ¶ 33].

81. On December 9, 2016, Prins' license to practice law was placed on an interim suspension by the State Bar of Texas. [Main Case Doc. No. 197 at 8 of 20, ¶ 32].

82. On December 12, 2016, the United States (through the Department of Justice) seized the entirety of the funds in the Wells Fargo Operating Account, which amounted at that time to $1,601,542.14. [Pl.'s Ex. 9; TransWorld's Ex. HH, Prins Dep. 50:12-51:8].

83. On December 14, 2016, Prins filed his response to the Prins Show Cause Order (the " Response "), [Doc. No. 63], in which he asserted that (a) he did not violate the automatic stay because he believed the Property was owned by Triple Gate and was not property of the Debtor's estate, and (b) it was "impossible for him to effectuate the Court's [Prins Show Cause] [O]rder [because] [t]he United States, through the Department of Justice, has seized the account of Respondent rendering it impossible for him to transfer any funds or even afford transportation to Houston, Texas from San Antonio, Texas." [Main Case Doc. No. 63 at 3 of 5, ¶ 11]. In the Response, Prins admitted that by no later than 10:15 a.m. on October 5, 2016, he had knowledge that the Property was titled in the name of the Debtor and her non-debtor spouse, i.e., Amos. 45 [Main Case Doc. No. 63-2].

84. On December 14, 2016, this Court held a hearing on the Prins Show Cause Order (the " Show Cause Hearing "). Prins failed to appear at the Show Cause Hearing as required by the Prins Show Cause Order. [Main Case Doc. No. 197 at 9 of 20, ¶ 37]. Counsel for United Sentry also informed the Court at this hearing about the United States' seizure of funds in Prins' accounts. [ Id. ]. On December 14, 2016, this Court entered its Order (1) Holding Todd A. Prins in Contempt of this Court's Order of December 7, 2016; and (2) Requiring the U.S. Marshals Service to Take Todd A. Prins Into Custody and Produce Him in Court (the " Contempt Order "). [Main Case Doc. No. 64]. In the Contempt Order, the Court found that (a) Prins had received adequate notice of the Prins Show Cause Order, (b) Prins failed to turn over the $2.4 million as required by the Prins Show Cause Order, and (c) Prins failed to appear before the Court at a hearing on the Prins Show Cause Order held on December 14, 2016, at 11:30 a.m. [ Id. ]. As a result, the Court held Prins in civil contempt of the Prins Show Cause Order and required the U.S. Marshals Service to take him into custody and produce him in court. [ Id. ].

85. On December 15, 2016, Prins voluntarily appeared at the Bob Casey Federal Courthouse, 515 Rusk, Houston, Texas, 77002 and turned himself into the custody of the U.S. Marshals. 46 [Main Case Doc. No. 197 at 9-10 of 20, ¶ 39]. The Marshals then brought Prins to the undersigned judge's courtroom; the Court then immediately held the Show Cause Hearing; and Prins proceeded to give testimony about the Prins Show Cause Order and the Response. One day after representing in the Response that he lacked funds to come to the scheduled Show Cause Hearing, Prins admitted that: (a) he was able to come to Houston on the bus for $10 after receiving *507 the Contempt Order; and (b) the statement in his Response regarding his inability to appear was false. [ Id. ]. At the Show Cause Hearing held on December 15, 2016, Prins admitted receiving notice of the December 14, 2016, Show Cause Hearing. [ Id. at 10 of 20, ¶ 40]. The Court then asked Prins why he did not appear at the Show Cause Hearing to which Prins responded: "Inability to answer questions, pursuant to the Fifth Amendment[.]" [ Id. ]. At the Show Cause Hearing held on December 15, 2016, Prins asserted the Fifth Amendment privilege and refused to answer questions posed by the Chapter 7 Trustee's counsel regarding transfers of the $2.4 million out of the IOLTA. [ Id. at 10-11 of 20, ¶ 41]. Prins also asserted the Fifth Amendment privilege to questions regarding the statements made in the Response regarding the seizure of his accounts by the Department of Justice. [ Id. at 11 of 20, ¶ 42]. 47 The Court continued the Show Cause Hearing to December 19, 2016, and released Prins from the custody of the U.S. Marshals. 48 [Main Case Doc. No. 197 at 11 of 20, ¶ 45; Main Case Doc. No. 69].

86. At the continued Show Cause Hearing on December 19, 2016, the parties made further oral arguments about the testimonial and documentary Fifth Amendment privilege issues raised at the Show Cause Hearing held on December 15, 2016. After listening to these oral arguments, the Court requested the parties to file written briefs on the privilege issues raised at the December 15 hearing. [ See Main Case Doc. Nos. 74 (Prins' brief) and 75 (Trustee's brief) ]. The Court therefore recessed the Show Cause Hearing for approximately six hours. After considering the parties' written submissions, the Court went back on the record and ruled that Prins did not have a Fifth Amendment privilege over his bank statements and, therefore, had to produce them to the Chapter 7 Trustee. [Main Case Doc. No. 197 at 12 of 20, ¶ 47; see also Main Case Doc. No. 77]. The Court further ruled that Prins had waived his Fifth Amendment privilege and was required to answer questions regarding the status of the $2.4 million wired by Elbar and into the IOLTA. [Main Case Doc. No. 197 at 12 of 20, ¶ 47]. Thus, counsel for the Trustee was allowed to resume examining Prins. Prins admitted that, even if the IOLTA had not been seized by the United States, he would not have been able to comply with the Show Cause Order because all $2.4 million had been transferred out of the IOLTA and several hundred thousand dollars of the $2.4 million was no longer in the Wells Fargo Operating Account-i.e., he had spent many of the Proceeds. [ Id. at 12 of 20, ¶ 48]. Prins further admitted that he had no justification or basis for transferring the $2.4 million from the IOLTA to the Wells Fargo Operating Account. [ Id. ]. Prins also admitted to transferring substantial sums to two entities, TransWorld and Industry Drive. 49 [ See id. at 12 of 20, *508 ¶ 49]. Prins also told the Court that the rest of depleted funds from the $2.4 million were used for "operating expenses of the practice." 50 [ Id. at 12 of 20, ¶ 50]. The Court continued the Show Cause Hearing until January 9, 2017, in order to afford the Trustee time to review bank statements that the Court decided to require Prins to produce to the Trustee.

87. On December 21, 2016, the Court entered an order requiring Prins to produce to the Chapter 7 Trustee bank statements for September to December 2016, for the IOLTA, the BBVA Operating Account, and the Wells Fargo Operating Account. [ See Main Case Doc. No. 77]. The Court gave Prins until noon on January 6, 2017, to comply with the order. [ Id. ].

88. On January 2, 2017, Elbar filed the instant adversary proceeding against the Debtor, Amos, the Trustee, Prins, United Sentry, MacKenzie, TransWorld, and Industry Drive. [Adv. Doc. No. 1]. 51

89. On January 3, 2017, Elbar filed a lis pendens on the Property. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 126:8-23; Industry Drive's Ex. 10]. Elbar filed this lis pendens knowing that the Debtor claimed an interest in the Property and that therefore the Property was property of her Chapter 7 estate and protected by the automatic stay. [ See Pl.'s Exs. 26-27; Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 126:8-23; TransWorld Ex.'s HH, Prins Dep. 154:5-25]. Elbar did not seek relief from the automatic stay from this Court before filing the lis pendens. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 126:11-13].

90. On January 9, 2017, this Court held the continued Show Cause Hearing. The Chapter 7 Trustee introduced the bank statements Prins had produced for the Wells Fargo Operating Account and the BBVA Operating Account discussed above. 52 [Main Case Doc. No. 197 at 13 of 20, ¶ 52]. During this hearing, Prins testified that he did not believe he was in violation of the automatic stay when he transferred approximately $700,000 to $800,000 of the $2.4 million to Industry Drive and Transworld. 53 [ Id. at 13 of 20, ¶ 53].

91. On January 27, 2017, Mr. Cash died. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 11:17-22].

92. In late February of 2017, when she (as president of TransWorld) was served with a lawsuit, Ms. Cash learned for the first time that the check in the amount of $230,853.66 that TransWorld had made to the order of the IOLTA on February 4, 2008, for the purpose of Prins settling TransWorld's tax dispute with the Tax Assessor, *509 may not have in fact been paid to the Tax Assessor. [ Id. at 23:20-24:1 ].

93. On March 7, 2017, Prins submitted a resignation of his law license in lieu of discipline. 54

94. On March 13, 2017, Elbar filed a proof claim in the Debtor's Chapter 7 case, setting forth that its claim totals $1,594,424.17 and that it believes the Property is worth $3,500,000.00. [Proof of Claim, Case No. 16-35021, Claim 11, at 2].

95. On March 27, 2017, this Court, having completed the Show Cause Hearing on the Prins Show Cause Order, entered Findings of Fact and Conclusions of Law Regarding Order (1) Requiring Todd Prins to Wire Transfer $2.4 Million to the Chapter 7 Trustee By No Later Than 5:00 P.M. on December 12, 2016; and (2) Requiring Todd Prins to Personally Appear in Court and Show Cause Why He Should Not Be Sanctioned. [Main Case Doc. No. 197]. The Court then entered an order imposing sanctions against Prins, which ordered the following:

[1] [Prins] is liable to Elbar for sanctions in the amount of $800,000.00, representing [the] approximate difference between the $2.4 million paid by Elbar at the foreclosure sale and the funds frozen by the United States; [and]

[2] Prins is liable for sanctions in the following amount of attorneys' fees to the following parties:

[A] The Trustee in the amount of $20,485.00;

[B] Elbar in the amount of $13,350.00 for Richard A. Battaglia and $2,820.00 for Jerel S. Twyman; and

[C] United Sentry in the amount of $19,808.11.

[Main Case Doc. No. 198]. This Court ordered that Prins was immediately liable for all sanctions set forth in the order and that Prins was to immediately pay all sanctions. [ Id. ]. Prins has failed to comply with any portion of this order.

96. On March 29, 2017, the Trustee filed a motion requesting this Court to approve the sale of the Property, [Main Case Doc. No. 199], which this Court granted. [Main Case Doc. No. 200]. Pursuant to the Court's order granting approval of the sale of the Property, as amended, the amount of proceeds necessary to pay off United Sentry's mortgage on the Property was to be placed into the Court's registry. [Main Case Doc. Nos. 200, 209].

97. On April 5, 2017, the Debtor and Amos were indicted for conspiracy to commit health care fraud, health care fraud, and engaging in monetary transactions in property derived from specified unlawful activity, in the Southern District of Texas, Houston Division. 55 [ United States v. Amos , Crim. No. 4:17-cr-00197, S.D. Tex., ECF. No. 21].

98. On April 27, 2017, in the adversary proceeding at bar, this Court granted the Trustee's motion to dismiss and dismissed all claims asserted by Elbar against the Trustee. [Adv. Doc. No. 45]. Elbar did not file any opposition to the Trustee's motion to dismiss all of the claims against the Trustee.

*510 99. On May 26, 2017, the Trustee closed on the sale of the Property. [Main Case Doc. Nos. 218, 219].

100. On May 30, 2017, pursuant to the Court's order approving the sale of the Property, $1,719,062.93, was placed into the Court's registry. [ See docket entry in Main Case dated 05/30/2017]. This action was taken because prior to the sale, Elbar had filed the instant adversary proceeding and, among other relief requested, asserts that it should receive some or all of these sale proceeds in order to be made whole before United Sentry receives any portion of these proceeds. [Adv. Doc. No. 1 at 6-7 of 9, ¶¶ 27-28]. 56

101. On June 7, 2017, Prins entered into a plea agreement with the U.S. Attorney for the Western District of Texas regarding the matter of United States of America v. Todd A. Prins (" Prins' Criminal Case "). [ See Pl.'s Ex. 1; United States v. Todd A. Prins , Crim. No. 5:17-cr-00482-DAE-1, W.D. Tex., ECF. No. 3]. In the plea agreement, Prins stated that he "well knew and believed[ ] the true balance of the IOLTA account was less than $1,000, having been $2,041.17 prior to the receipt of the $2,400,000 transfer from E[lbar] I[nvestments], Inc." [Pl.'s Ex. 1; United States v. Todd A. Prins , Crim. No. 5:17-cr-00482-DAE-1, W.D. Tex., ECF. No. 3 at 7-8 of 17]. Pursuant to the plea agreement, Prins is to make restitution to Elbar in the amount of $2.4 million. [Pl.'s Ex. 1; United States v. Todd A. Prins , Crim. No. 5:17-cr-00482-DAE-1, W.D. Tex., ECF. No. 3 at 17 of 17]. Under the plea agreement, Prins is also to make restitution to other individuals; however, neither Industry Drive nor TransWorld are included in Prins' plea agreement. 57 [Pl.'s Ex. 1; United States v. Todd A. Prins , Crim. No. 5:17-cr-00482-DAE-1, *511 W.D. Tex., ECF. No. 3 at 17 of 17].

102. Because Triple Gate defaulted under the Note, the 13 investors who invested in United Sentry's loan to Triple Gate have not received any return on their investments in the form of interest payments by Triple Gate. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 77:6-24]. However, since July of 2017, MacKenzie himself has been making interest payments to the 11 investors (minus United Sentry and himself), in the amount of approximately $13,000.00 a month, as he believes that it is the "right thing to do." [ Id. at 77:6-24, 94:7-14 ].

103. On July 6, 2017, Elbar filed a first amended complaint in this adversary proceeding, asserting the following claims: (1) equitable subrogation as to Prins, United Sentry, and MacKenzie; (2) fraud in real estate transactions as to Prins, United Sentry, and MacKenzie; (3) common law fraud as to Prins, United Sentry, and MacKenzie; (4) Texas Theft Liability Act as to Prins, United Sentry, and MacKenzie; (5) theft as to Prins; and (6) money had and received, unjust enrichment, theft, and conversion against TransWorld and Industry Drive. [Adv. Doc. No. 68].

104. On August 10, 2017, Elbar, Bustamante, Abdullatif, and Jabbour filed a petition in the Prins' Criminal Case, claiming that they are entitled to recover the entire $1,601,542.14 that the United States government seized from the IOLTA. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 77:9-15; Pl.'s Ex. 49].

105. On August 11, 2017, Elbar filed a proposed order approving dismissal of Elbar's theft claim against Industry Drive. [Adv. Doc. No. 114]. The Court subsequently signed the proposed order later that same day, thereby dismissing Elbar's theft claim against Industry Drive. [Adv. Doc. No. 116].

106. On February 6, 2018, a three-day trial commenced in the instant adversary proceeding. 58 At the conclusion of the trial: (1) Elbar's counsel represented to the Court that Elbar had decided to dismiss all of Elbar's claims against the Debtor, Amos, and MacKenzie; 59 (2) this Court granted United Sentry and MacKenzie's motion to dismiss the cross-claims brought against them by the Debtor and Amos; 60 and (3) Elbar's counsel represented to the Court that Elbar was dismissing Elbar's claim of theft against TransWorld. 61

*512 107. Thus, the only causes of action asserted by Elbar remaining in this adversary proceeding are the following:

A. As to United Sentry: causes of action for equitable subrogation, fraud in real estate transaction, common law fraud, and the Texas Theft Liability Act; 62

B. As to TransWorld: causes of action for money had and received, unjust enrichment, and conversion;

C. As to Industry Drive: causes of action for money had and received, unjust enrichment, and conversion; and

D. As to Prins: causes of action for fraud in real estate transaction, common law fraud, and the Texas Theft Liability Act. 63

108. Ms. Cash estimated that she has paid approximately $20,000.00 for counsel to represent her in the instant adversary proceeding. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 40:24-41:1].

109. Industry Drive has paid $44,000.00 in legal fees for this suit, not including the trial itself. [ Id. at 150:24-25 ].

110. On February 22, 2018, in the Prins' Bankruptcy, Bankruptcy Judge Gargotta entered an Order Granting Motion of the United States of America, Internal Revenue Service, to Approve Compromise Pursuant to Federal Rule of Bankruptcy Procedure 9019. [ Todd A. Prins and Paula R. Prins , Case No. 16-52187-cag, Bankr. W.D. Tex., ECF. No. 135]. Judge Gargotta found that (1) the $82,373.28 paid to the IRS by Prins on October 19, 2016, from the IOLTA is the sole property of Elbar; and (2) the $82,373.28 is not part of the bankruptcy estate of Prins and Ms. Prins. [ Id. ]. On that same day, Judge Gargotta approved an Agreed Final Judgment in the adversary proceeding that the U.S. Internal Revenue Service had filed in the Prins' Bankruptcy. [ United States of America, Internal Revenue Service v. Prins , Adv. Pro. No. 17-05063-cag, Bankr. W.D. Tex., ECF. No. 38]. The Agreed Final Judgment ordered, in relevant part, that (1) the $82,373.28 paid to the IRS on October 19, 2016, is the sole property of Elbar; and (2) the IRS is directed to turn over the $82,373.28 to Elbar within 30 days of the date of the order. [ Id. ].

111. On March 20, 2018, Elbar received a check from the United States Treasury in the amount of $82,373.28, in accordance with the Agreed Final Judgment signed by Judge Gargotta in the Prins' Bankruptcy. [Adv. Doc. No. 237].

112. On May 15, 2018, Prins was sentenced in the Prins' Criminal Case to 72 months imprisonment, three years of supervised release, and was ordered to pay $2,975,264.00 in restitution (of which, $2.4 million is restitution to Elbar). [ United States v. Todd A. Prins , Crim. No. 5:17-cr-00482-DAE-1, W.D. Tex., ECF. Nos. 58, 59]. Also on May 15, 2018, the District Court in the Prins' Criminal Case granted *513 the United States' motion to set aside the preliminary order of forfeiture in lieu of restitution, [ id. at ECF No. 62], essentially meaning that the government would not seek the funds and would allow the funds to be returned to Elbar.

113. On June 7, 2018, the United States Attorney for the Western District of Texas filed a "Process Receipt and Return" in the Prins' Criminal Case, requesting that the Clerk of the Court in the Western District of Texas, San Antonio Division, transfer funds in the amount of $1,601,542.14 to Elbar for the purpose of payment as restitution. [ United States v. Todd A. Prins , Crim. No. 5:17-cr-00482-DAE-1, W.D. Tex., ECF. No. 63]. On July 2, 2018, Elbar in fact received a check from the United States Treasury in the amount of $1,601,542.14. [Adv. Doc. No. 237].

114. Of the $2.4 million that it initially sought to recover by initiating the instant adversary proceeding, Elbar has now received a total of $1,683,915.42: $82,373.28 from the IRS in the Prins' Bankruptcy plus $1,601,542.14 from the Prins' Criminal Case. [Adv. Doc. No. 237]. Thus, in this adversary proceeding, Elbar now seeks the return of $716,084.58 in order to be made whole (i.e., $2,400,000.00 minus $1,683,915.42 equals $716,084.58). Additionally, Elbar seeks to recover attorneys' fees for the prosecution of this adversary proceeding.

115. For their part, United Sentry, TransWorld, and Industry Drive seek to recover from Elbar all of the attorneys' fees that they have incurred in defending themselves against the claims brought by Elbar.

III. CREDIBILITY OF WITNESSES

A. Vincent Bustamante

Bustamante gave testimony both as a fact witness and as an expert witness. With respect to serving as a fact witness, the Court finds that Bustamante, for the most part, forthrightly answered the questions posed to him, and therefore the Court finds that he is a credible witness and gives some measure of weight to his testimony. The Court wants to emphasize, however, that this finding is not to be construed as this Court condoning Bustamante's apparent belief that it is acceptable to violate the automatic stay by: (1) wiring funds to Prins with the knowledge that the Property was protected by the automatic stay, [ see Finding of Fact Nos. 38-41]; and (2) filing a lis pendens against the Property with the knowledge that the Property was protected by the automatic stay, [ see Finding of Fact No. 89].

With respect to serving as an expert witness, the Court does not find Bustamante to be credible when he suggests that it is acceptable to consummate any foreclosure sale knowing that the automatic stay is in place. 64 Indeed, it is no mean *514 point that Bustamante was a party in the case of Bustamante v. Cueva ( In re Cueva) , 371 F.3d 232 (5th Cir. 2004), where he purchased property at a foreclosure sale that was subject to the automatic stay. The Fifth Circuit held that the foreclosure sale was void because this sale had been held in violation of the stay-and that therefore Bustamante was not entitled to a deed-and this ruling was issued despite the fact that Bustamante, at the time he purchased the property, was himself unaware of the bankruptcy filing. If the Fifth Circuit can hold that a foreclosure sale is void because of the automatic stay and deny Bustamante's request for a deed even though Bustamante was unaware of the bankruptcy's existence, then assuredly the Fifth Circuit would hold that the foreclosure sale in the suit at bar is void because of the automatic stay and Elbar is not entitled to a deed when Bustamante knew that the stay was in effect . Essentially, Bustamante's expert testimony at the trial was an attempt to convince this Court to disregard controlling Fifth Circuit law. Such circumstances render his expert testimony valueless, and the Court gives it no weight whatsoever.

B. Todd Prins

The Court finds that Prins is a dishonest individual whose credibility is sorely lacking. After all, Prins, among other despicable acts, did the following: (1) he improperly transferred the Proceeds from the IOLTA to the IRS, to the Wells Fargo Operating Account, and to the BBVA Operating Account, and used many of these funds for his own personal benefit, [Finding of Fact Nos. 46-50, 57, 59]; (2) he lied at the hearing held on November 8, 2016, when he stated-in response to a question by Elbar's counsel-that the $2.4 million was still in the IOLTA when in fact he had already transferred these funds out of the IOLTA and had begun using them, [Finding of Fact No. 58]; (3) he lied at the hearing held on November 8, 2016, when he stated-in response to a question by this Court-that he was ill at home in San Antonio when in fact he was in London, England with his wife and two children on a trip that was made possible through his use of a portion of the Proceeds that he had stolen, [Finding of Fact Nos. 58-59]; (4) on April 6, 2016, he fabricated a letter on the letterhead of Linebarger (outside counsel for the Tax Assessor) setting forth that TransWorld owed taxes of $169,807.29 in order to trick Ms. Cash into delivering a check for this amount to Prins, which he deposited into the IOLTA, and thereafter spent for his own purposes, [Finding of Fact Nos. 9-10]; and (5) on December 5, 2016, he impersonated an employee of BBVA Compass Bank on a conference call with MacKenzie in an effort to convince MacKenzie that Prins had not spent the Proceeds and that these funds were still in the IOLTA, [Finding of Fact No. 75]. These five examples by no means represent the universe of Prins' skullduggery-there are many more. However, for purposes *515 of this credibility section, these five examples underscore his lack of trustworthiness; and because he is not trustworthy, this Court does not give much weight to Prins' testimony.

Indeed, given his outrageous behavior this Court would ordinarily give no weight whatsoever to any of his testimony. However, there is one reason to give at least some weight to portions of his testimony, much of which was given by deposition in this adversary proceeding on November 15, 2017. 65 It is this: on June 7, 2017, Prins entered into a plea agreement with the United States Attorney for the Western District of Texas, [Finding of Fact No. 101]; therefore, it behooved him thereafter to cooperate in all matters involving the Proceeds-as he believed that his cooperation (or lack thereof) might affect the length of the prison sentence to be imposed by the U.S. District Court in the Prins' Criminal Case. This Court has reviewed the transcript of Prins' deposition and finds that, in some instances, his testimony on certain discrete issues appears to be truthful. Thus, in rendering its findings of fact and conclusions of law for this adversary proceeding this Court does give some weight to certain portions of Prins' testimony-being careful of course to take even this testimony with a grain of salt.

C. Peggy Cash

The Court finds that Ms. Cash testified forthrightly and the Court finds her testimony to be very credible. The Court therefore gives her testimony substantial weight.

D. Donald "Tony" MacKenzie

The Court finds that MacKenzie testified forthrightly and the Court finds his testimony to be very credible. The Court therefore gives his testimony substantial weight.

E. Inez Cindy Gabriel

The Court finds that Gabriel testified forthrightly and the Court finds her testimony to be very credible. The Court therefore gives her testimony substantial weight.

F. Osama Abdullatif

The Court has reviewed Abdullatiff's deposition testimony and finds it be credible; thus, the Court gives Abdullatif's testimony substantial weight.

G. John Jabbour

The Court has reviewed Jabbour's deposition testimony and finds it be credible; thus, the Court gives Jabbour's testimony substantial weight.

H. Elias Klaimy

The Court has reviewed Klaimy's deposition testimony and finds it be credible; thus, the Court gives Klaimy's testimony substantial weight.

IV. CONCLUSIONS OF LAW

A. Jurisdiction, Venue, and Constitutional Authority to Enter a Final Judgment

1. Jurisdiction

The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 1334 (b). Section 1334(b) provides that "the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11 [ (the Bankruptcy Code) ], or arising in or related *516 to cases under title 11." District courts may, in turn, refer these proceedings to the bankruptcy judges of that district. 28 U.S.C. § 157 (a). In the Southern District of Texas, General Order 2012-6 (entitled General Order of Reference) automatically refers all eligible cases and proceedings to the bankruptcy courts.

This adversary proceeding is a core proceeding pursuant to 28 U.S.C. § 157 (b)(2)(A), because its resolution concerns the administration of the Debtor's Chapter 7 estate. Specifically, both Elbar and United Sentry have filed claims against this estate, and there is $1,719,062.93 in the registry of the Court that will be distributed, one way or the other, to these two entities as a result of this lawsuit. 66 Further, this adversary proceeding is a core proceeding pursuant to 28 U.S.C. § 157 (b)(2)(B) because both Elbar and United Sentry have filed claims against the Debtor's estate, and the resolution of this lawsuit will determine whether Elbar's claim is paid in full or United Sentry's claim is paid in full, as the $1,719,062.93 in the registry of the Court is insufficient to pay both claims in full. Finally, this adversary proceeding is a core proceeding pursuant to 11 U.S.C. § 157 (b)(2)(O) because the resolution of this lawsuit affects the relationship between the Debtor and her creditors; specifically, one of the Debtor's creditors (i.e., United Sentry) will be paid as a result of the resolution of this lawsuit.

2. Venue

Venue is proper pursuant to 28 U.S.C. § 1409 (a) because Elbar commenced this adversary proceeding in this Court, which is where the Main Case was pending at the time this adversary proceeding was initiated.

3. Constitutional Authority

Having concluded that this Court has jurisdiction over this dispute, the Court nevertheless notes that Stern v. Marshall , 564 U.S. 462 , 131 S.Ct. 2594 , 180 L.Ed.2d 475 (2011), sets forth certain limitations on the constitutional authority of bankruptcy courts to enter final orders and judgments. Therefore, this Court has a duty to inquire into its constitutional authority to enter a final order or judgment for any matter brought before this Court.

In the suit at bar, this Court concludes that it does indeed have the authority to enter a final judgment. All of the parties have consented, either expressly or impliedly, to adjudication of this dispute by this Court. Wellness Int'l Network, Ltd. v. Sharif , --- U.S. ----, 135 S.Ct. 1932 , 1947, 191 L.Ed.2d 911 (2015) ("Sharif contends that to the extent litigants may validly consent to adjudication by a bankruptcy court, such consent must be expressed. We disagree. Nothing in the Constitution requires that consent to adjudication by a bankruptcy court be expressed. Nor does the relevant statute, 28 U.S.C. § 157 , mandate express consent ...."). Indeed, the parties filed a Joint Pretrial Order in this Court, [Adv. Doc. No. 189], and also attended and participated at a multiday trial, *517 and at no time did any of the parties object to this Court's constitutional authority to enter a final judgment. If these circumstances do not constitute consent, then nothing does.

B. Elbar's Standing to Seek to Recover $2.4 Million

Although none of the defendants, in any of their respective answers or in the pretrial statement, pleaded that Elbar lacked standing to prosecute this lawsuit, the defendants began raising this issue at trial. TransWorld, Industry Drive, and United Sentry argue that if this Court is to find in Elbar's favor on any of Elbar's claims, the most Elbar can recover is $200,000.00, as that is the amount of money Elbar itself contributed to the purchase price of the Property, [ see Adv. Doc. No. 216 at 15 of 43; Adv. Doc. No. 227 at 8-9 of 13; Adv. Doc. No. 219 at 1-2 of 16; Adv. Doc. No. 222, Feb. 8, 2018, Trial Tr. 170:11-12]; Elbar, on the other hand, argues that Federal Rule of Civil Procedure (" FRCP ") 17(a)(1)(F), made applicable to this adversary proceeding through Bankruptcy Rule 7017, allows it to bring suit on behalf of all Purchasers, because the Purchasers are third party beneficiaries. [Adv. Doc. No. 217 at 28 of 35, ¶ 60; Adv. Doc. No. 228 at 12-13 of 19, ¶¶ 33-35; Adv. Doc. No. 230 at 9-10 of 19, ¶¶ 23-24]. Without identifying the contract it alleges was made, Elbar argues that "[t]he evidence is uncontroverted that Elbar made a contract in its name to purchase the Property for the benefit of those who provided the funds." [Adv. Doc. No. 217 at 28 of 35, ¶ 60]. In their post-trial briefs, neither United Sentry, TransWorld, nor Industry Drive address Elbar's argument regarding FRCP 17.

The Court first considers whether Elbar has standing to bring this adversary proceeding. Article III of the Constitution limits the jurisdiction of federal courts to "cases" and "controversies." U.S. Const. art. III, § 2. One element of the case-or-controversy requirement is the doctrine of standing. Lujan v. Defenders of Wildlife , 504 U.S. 555 , 560, 112 S.Ct. 2130 , 119 L.Ed.2d 351 (1992). Notably:

Over several decades of jurisprudence, the Supreme Court has formulated a two-component test to enable the federal courts to determine the standing of complainants before them. Such parties must demonstrate both constitutional and prudential standing.

...

To meet the requirement of constitutional standing, [a party] must show that it has suffered an "injury in fact" that is: concrete and particularized and actual or imminent; fairly traceable to the challenged action of the [opposing party]; and likely to be redressed by a favorable decision. The party must have such a personal stake in the outcome of the controversy as to assure ... concrete adverseness. The injury-in-fact must be palpable, though this requirement is not onerous. The injury need not be current; even a "threatened" injury will suffice.

Once a party has met these constitutional requirements, its standing may yet be challenged on three "prudential" grounds .... A complainant's bid for standing may be defeated if: (a) it is asserting a third party's rights; (b) it alleges a generalized grievance rather than an injury particular to it; or (c) it asserts an injury outside the zone of interest the statute was designed to protect.

In re Cypresswood Land Partners, I , 409 B.R. 396 , 416-17 (Bankr. S.D. Tex. 2009) (quoting In re A.P.I. Inc. , 331 B.R. 828 , 857-58 (Bankr. D. Minn. 2005) ).

*518 1. Elbar's Constitutional Standing

In the suit at bar, Elbar meets the requirements for constitutional standing: (1) Elbar has suffered an injury-in-fact in the form of monetary damage: namely, at a minimum, Prins stole $200,000.00 of its money, [Finding of Fact Nos. 33, 46-50, 57]; (2) there is a "fairly traceable" connection between Elbar's asserted injury and the alleged actions of the defendant(s): Prins (one of the defendants) himself stole all of the Proceeds (including Elbar's $200,000.00 pro rata share), and the $300,000.00 Prins distributed to Industry Drive (one of the defendants) and the $164,807.29 Prins distributed to TransWorld (one of the defendants) can be traced to these Proceeds, [Finding of Fact Nos. 33, 46-50, 57]; and (3) there is a non-speculative likelihood that Elbar's injury can be remedied by Elbar's requested relief. There is no doubt that if this Court grants the relief requested by Elbar, Elbar will recover all of the $200,000.00 from the Proceeds presently in the registry of this Court. Thus, there is no question that Elbar has constitutional standing to bring this suit and to recover a judgment for up to its $200,000.00 share of the Proceeds.

The question therefore is whether Elbar may prosecute this adversary proceeding in order to recover a judgment for not only its own $200,000.00, but also for the $2.2 million contributed by the other Purchasers. 67 In fact, Elbar's expert witness, Bustamante, testified that Elbar's share of the $2.4 million that was wired to Prins was only $200,000.00; 68 he further testified that of the Proceeds wire transferred to the IOLTA, $800,000.00 was contributed by Abdullatif, another $800,000.00 was contributed by Jabbour, and the remaining $800,000.00 was contributed by himself. [Finding of Fact No. 53]. Yet, none of these individuals are plaintiffs in the suit at bar; Elbar is the only plaintiff here. The Court therefore must consider Elbar's prudential standing to bring this adversary proceeding: that is, whether Elbar-as the sole plaintiff-can obtain a judgment for the full amount paid by all of the Purchasers, as opposed to just the $200,000.00 paid by Elbar.

2. Elbar's Prudential Standing

Elbar easily meets two of the prudential standing grounds. First, the injury Elbar is alleging is a particular injury, as opposed to a general grievance that is shared in equal measure by all or a large class of citizens. See In re A.P.I. Inc. , 331 B.R. 828 , 859 (Bankr. D. Minn. 2005). Specifically, Elbar alleges that it, and the other Purchasers, have suffered a particular injury-namely, loss of their funds-due to Prins' theft of the Proceeds. Second, the interest sought to be protected by Elbar is within the "zone of interests" to be protected by the statutes at issue in this adversary proceeding. See ids="8919927" index="22" url="https://cite. case.law/br/331/828/#p857">id. Here, Elbar is prosecuting several claims that are expressly based upon statutes promulgated under Texas law-namely, the Texas Theft Liability Act and fraud in real estate transactions. Moreover, Elbar's injuries involve the type of interests that have traditionally been protected by the common law of Texas. See *519 Servicios Azucareros de Venez., C.A. v. John Deere Thibodeaux, Inc. , 702 F.3d 794 , 801 (5th Cir. 2012) (noting that plaintiff's breach of contract claim was not barred by any aspect of the prudential standing doctrine, as the plaintiff's "injuries involve the type of interests that have traditionally been protected by the common law of contracts or, in Louisiana, by a similar body of law, the Louisiana Civil Code articles on conventional obligations or contracts"); Jordan v. Pugh , 504 F.Supp.2d 1109 , 1116 (D. Colo. 2007) ("For prudential standing ... (3) the plaintiff's injury must be within the zone of interests the statute or common law claim intends to protect.").

As to the third prudential standing ground, generally, a complainant's assertion of a third party's rights will defeat a complainant's bid for prudential standing. See In re Cypresswood Land Partners, I , 409 B.R. at 416 -17 . However, there are exceptions to this general rule. Federal Rule of Civil Procedure 17(a)(1)(F) expressly sets forth the following:

An action must be prosecuted in the name of the real party in interest. The following may sue in their own names without joining the person for whose benefit the action is brought: ... a party with whom or in whose name a contract has been made for another's benefit[.]

Thus, the question is whether Elbar, in seeking to recover a judgment for the $2.2 million contributed by the other Purchasers, can establish that a contract was made for their benefit. 69

a. Third Party Beneficiary Status Under FRCP 17(a)(1)(F)

Elbar essentially argues that it is a real party in interest and that it can prosecute the instant adversary proceeding on behalf of all Purchasers because Elbar made a contract in its name to purchase the Property for the benefit of those who provided the funds (i.e., the Purchasers). As stated above, FRCP 17(a)(1)(F) specifically addresses third-party beneficiary contracts by providing that "a party with whom or in whose name a contract has been made for another's benefit" "may sue in [its] own name[ ] without joining the person for whose benefit the action is brought." See also Drew Hardware, L.L.C. v. Hartford Fire Ins., Co. , No. Civ-14-845-R, 2015 WL 13573970 , at *2 (W.D. Okla. Jan. 12, 2015) (" Fed. R. Civ. P. 17(a)(1)(F) states that 'a party with whom or in whose name a contract has been made for another's benefit' may sue in its own name without joining the T[hird] P[arty] B[eneficiary]. The Advisory Committee Notes to Rule 17 further state that the rule 'does not say, because it is obvious, that the third-party beneficiary may sue (when the applicable law gives him that right).' "); 6A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1543 (3d ed. 1998, 2018 update) ("Under Rule 17(a)(1)(F), a party to a contract for the benefit of another person may sue in his own name."). As noted above, Elbar argues that it can sue in its own name without *520 joining the other Purchasers because a contract was made with Elbar, or in Elbar's name, for the Purchasers' benefit. Elbar, however, does not identify the contract that was made for another's (i.e., the Purchasers') benefit. The Court will first consider whether such contract exists.

Whether a third party beneficiary contract exists is governed by Texas law. See Farrell Const. Co. v. Jefferson Parish, La. , 896 F.2d 136 , 140 (5th Cir. 1990) ; New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co. , 732 F.2d 452 , 466 (5th Cir. 1984). In order for the Purchasers to be third party beneficiaries to a contract, a contract must first exist. Elbar, however, does not specifically point to any contract, let alone a contract that indicates that the Purchasers are third party beneficiaries. 70 Even though there is no explicit written contract regarding the purchase of the Property, 71 the Court has found one Texas case where the notice of sale, the deed of trust, and the buyer's tender of the purchase money "provide all essential terms of [a] contract and satisf[y] the statute of frauds" such that the sale of the property in question was enforceable. Key v. Pierce , 8 S.W.3d 704 , 708 (Tex. App.-Fort Worth 1999, pet. denied). The Court finds this case persuasive.

In Key , the homeowners defaulted on their mortgage obligation and the mortgage company requested that the substitute trustee, Kevin Key (" Key ") post the property for a nonjudicial foreclosure sale. 8 S.W.3d at 706 . Key posted a notice under the terms of the deed of trust that stated that the property would be sold to the highest bidder for cash on a date and place certain. Id. At the subsequently held foreclosure sale, a real estate investor, Stewart Pierce (" Pierce "), was the highest bidder. Id. After Key accepted Pierce's bid, Key gave Pierce approximately one half hour to return with the money. Id. While Pierce was absent retrieving the purchase money, Key's employer told Key that the homeowners had declared bankruptcy and that the foreclosure sale was invalid. Id. When Pierce timely returned with the purchase money, Key told Pierce that the homeowners had filed for bankruptcy and that he would not accept Pierce's check. Id. The next day, Key learned that the homeowners had not filed for bankruptcy. Id. Approximately one week later, Key filed another notice that the property would be sold at a nonjudicial foreclosure sale at a date certain. Id. At this second nonjudicial foreclosure sale, before the bidding began, Pierce again tried to tender his check to Key; the mortgage company, however, had authorized Key to bid well beyond the price of Pierce's winning bid from the first nonjudicial foreclosure sale. Id. Thus, the mortgage company's bid was the highest bid at the second nonjudicial foreclosure sale and Key executed a deed conveying the property to the mortgage company. Id.

Pierce filed suit against Key and the mortgage company seeking a declaratory *521 judgment (among other causes of action) that awarded him title to the property. Id. at 707 . The defendants argued that Pierce's claim was barred by the statute of frauds. Id. The parties filed cross motions for summary judgment and the trial court found in favor of Pierce on his declaratory judgment claim and it awarded Pierce a fee simple interest in the property once he deposited the purchase money from the first nonjudicial foreclosure sale into the court's registry. Id.

The judgment was then appealed. On appeal, the defendants argued that there was no writing for the purchase of the property sufficient to satisfy the statute of frauds, while Pierce asserted that the posted notice of sale and the deed of trust were "sufficient memoranda" to satisfy the statute of frauds. Id. at 708 . The appeals court first noted that "[a] contract for the sale of real estate is not enforceable unless it is (1) in writing; and (2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him." Id. at 707-08 (citing Tex. Bus. & Com. Code Ann. § 26.01 (a)(1)-(2) ). Discussing whether a contract comes within the statute of frauds, the appeals court stated that:

Whether a contract comes within the statute of frauds is a question of law. The statute of frauds requires the written agreement or memorandum to contain all of the essential elements of the agreement so that the contract can be ascertained from the writings without resort to oral testimony. It does not require that the contract itself be in writing . Rather, the written instrument merely furnishes written evidence of a contract and its essential terms. A valid memorandum of the contract may consist of numerous communiques signed by the party to be charged and addressed to his agent or the other party to the contract, or even to a third party not connected with the transaction.

8 S.W.3d at 708 (emphasis added) (internal footnotes omitted).

Applying the above law to the facts of the case, the court of appeals affirmed the trial court and found that: (1) the notice of sale was signed by Key; (2) the notice of sale described the property; (3) the notice of sale stated that the property would be sold to the highest bidder for cash; (4) the deed of trust dictated when, where, and upon what terms the property must be sold; (5) the deed of trust required that Key deliver a trustee's deed to the highest bidder; and (6) Pierce's tender of the purchase price, all together, "provide[d] all essential terms of the contract and satisfie[d] the statute of frauds." Id.

This Court extrapolates Key's holding to the facts at bar and finds that even though there is no express written contract for the sale of the Property, the following documents provide all of the essential terms of a contract: (1) the notice of sale being signed by the substitute trustee (i.e., Prins), [Pl.'s Ex. 18]; (2) the notice of sale describing the Property, [Pl.'s Ex. 18]; (3) the notice of sale stating the Property will be sold to the highest bidder or bidders for cash, [Pl.'s Ex. 18]; (4) the Deed of Trust dictating under what terms the Property must be sold, and the notice of sale, under the terms of the Deed of Trust, setting forth the date, location, and upon what terms the Property must be sold, [Pl.'s Exs. 14, 18]; (5) the Deed of Trust requiring that the Trustee deliver a trustee's deed to the highest bidder, 72 [Pl.'s Ex. 14];

*522 and (6) the Purchasers' tender of the purchase price on October 4 and 6, 2016, 73 [Pl.'s Exs. 20, 31-32]. Thus, here, the Deed of Trust, the notice of sale, and Elbar's tender of the purchase price-not only in the initial form of eleven cashier's checks but also subsequently in the form of a wire transfer-contain all of the essential elements of the agreement so that a contract can be ascertained from the writings without resorting to oral testimony. Key , 8 S.W.3d at 708 . Based on Key , this Court finds that a contract between Elbar and United Sentry existed for the purchase of the Property. 74

The question now is whether it is possible to have a third party beneficiary to this contract under Texas law. The answer is yes. Indeed, under Texas law, one can be a third party beneficiary even if the contract is an oral contract. See Cunningham v. Healthco, Inc. , 824 F.2d 1448 , 1455 (5th Cir. 1987) (finding sufficient evidence to support jury's findings that "Dental Leasing was an intended beneficiary of the oral contracts in the testimony of Dr. Cunningham, Dr. Bonola, and Mr. Green"); Steves & Sons, Inc. v. Trinity Glass Int'l Inc. , No. SA-06-CA-0357-XR, 2008 WL 11334576 , at *3 (W.D. Tex. June 24, 2008) ("It is possible to be a third-party beneficiary of an oral contract.") (citing Cunningham , 824 F.2d at 1458 ). As Texas law allows for one to be a third party beneficiary to an oral contract, the Court must now examine whether the Property was purchased for the benefit of the Purchasers-i.e., whether the Purchasers are third party beneficiaries to the contract between Elbar and United Sentry.

To qualify as a third party beneficiary under Texas law, an alleged third party beneficiary must prove:

(1) that [the alleged third party beneficiary] was not privy to the written agreements; (2) that the contracts were actually made for [the alleged third party beneficiary]'s benefit; and (3) that the contracting parties intended for [the alleged third party beneficiary] to benefit by their written agreements.

Talman Home Fed. Sav. & Loan Ass'n of Ill. v. Am. Bankers Ins. , 924 F.2d 1347 , 1350-51 (5th Cir. 1991) ; see also Wallace v. Perry (In re Perry) , 423 B.R. 215 , 255 (Bankr. S.D. Tex. Feb. 3, 2010) ("To qualify as a third party beneficiary under Texas law: (1) [the alleged third party beneficiary] must not have been in privity of contract; (2) the contract ... must have been made-at least in part-for [the alleged third party beneficiary]'s benefit; and (3) the contracting parties must have intended in the written agreement to benefit [the alleged third party beneficiary].").

Here, the first element is met. "Privity of contract is established by proving that [one] [is] a party to an enforceable *523 contract with either [another person] or a party who assigned its cause of action to [that other person]." Allan v. Nersesova , 307 S.W.3d 564 , 571 (Tex. App.-Dallas 2010, no pet.). The Purchasers (not including Elbar) were not parties to any contract with United Sentry. As discussed directly below, Elbar was to be the legal owner of the Property with the Purchasers being the beneficial owners. There is no evidence that the Purchasers (i.e., Abdullatif, Jabbour, Twyman, Bustamante, and Elbar) all entered into an enforceable contract with United Sentry.

The second and third elements are met as well. In determining whether one is a third party beneficiary to a contract, "the intention of the contracting parties is controlling." MCI Telecomms. Corp. v. Tex. Utils. Elec. Co. , 995 S.W.2d 647 , 651 (Tex. 1999). "[A] presumption exists that parties contracted for themselves unless it 'clearly appears' that they intended a third party to benefit from the contract." Id. ; see also Cunningham , 824 F.2d at 1455 ("Parties are presumed to contract for themselves and it follows that a contract will not be construed as having been made for the benefit of a third person unless it clearly appears that such was the intention of the contracting parties.") (quoting Briercroft Sav. & Loan Ass'n v. Foster Fin. Corp. , 533 S.W.2d 898 , 901 (Tex. Civ. App.-Eastland 1976, writ ref'd n.r.e.) ). Further, "the 'provisions of the contract' upon which the claim of 'third party beneficiary succeeds or fails' are the oral promises and understandings between the parties as reflected in the trial testimony and established by the findings of the jury." Cunningham , 824 F.2d at 1455 (quoting Greenville Indep. School Dist. v. B & J Excavating, Inc. , 694 S.W.2d 410 , 412 (Tex. App.-Dallas 1985, writ ref'd n.r.e.) ).

The evidence clearly shows that (1) the purchase of the Property was made for the Purchasers' benefit and (2) the contracting parties (i.e., Elbar and United Sentry) intended for the agreement to benefit the Purchasers. Even though the eleven cashier's checks, and later the wire-transfer of the Proceeds, came from Abdullatif, Jabbour, and Bustamante themselves, it is clear that Elbar was the contemplated purchaser of the Property at the foreclosure sale. First, Twyman-who is a vice president of Elbar-was the individual who attended the foreclosure sale (and was the successful highest bidder) as a representative of Elbar. [Finding of Fact No. 32]. Second, even though the money came from Bustamante himself, the four cashier's checks (that were not from Abdullatif and Jabbour) given to Shum at the foreclosure sale on October 4, 2016, were made payable to the order of Elbar. [Finding of Fact No. 32; see Pl.'s Ex. 20]. Third, the receipt tendered by Shum-that is signed by both Shum as substitute trustee and Twyman as Elbar's vice president-sets forth that payment was received from Elbar. [ See Pl.'s Ex. 20]. Fourth, Bustamante testified that when purchasing real property, the individuals (and Elbar itself) provide the funds to purchase properties as their beneficial owners, and that Elbar then acquires the legal title to the properties. 75 [Finding *524 of Fact Nos. 30-31, 33; Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 91:2-10; TransWorld's Ex. II, Bustamante Dep. 142:5-145:5]. Similarly, Klaimy testified that when buying property, the property is only titled in Elbar's name because "[t]his is, kind of, like a requirement, that if a group of people are buying it, the property goes into Elbar, because Elbar is a registered company and has been doing business for a long time, and they do business legally." [TransWorld's Ex. JJ, Klaimy Dep. 12:1-10]. Moreover, Abdullatif testified that he participates in buying properties with Elbar and that Bustamante, as an officer of Elbar, is in charge of the purchase. [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 165:13-16, 166:21-167:4, 167:8-15, 168:11-12]. Hence, even though the wire of the $2.4 million came from Abdullatif, Abdullatif wire transferred the $2.4 million at the direction of Elbar, [ id. at 167:21-25], and for the benefit of all the Purchasers, [ see id. at 168:11-12]. Likewise, Jabbour testified that at the foreclosure sale on the Property, Elbar did the bidding and the Purchasers put up the money for the purchase of the Property. [ Id. at 172:9-12]. Jabbour also testified that he relied on Bustamante to sort out whatever he needed to do next to complete the purchase of the Property. [ Id. at 173:19-22].

Fifth, before the wire transfer of the $2.4 million was sent to the IOLTA, Bustamante requested that the wire show Elbar as the sending party. [Pl.'s Ex. 31]. Sixth, all of the correspondence after the occurrence of the foreclosure sale on October 4, 2016, concerning the return of the cashier's checks and payment by wire was between Shum/Prins and Twyman, as the attorney and vice president representing Elbar. [ See Pl.'s Exs. 21-31]. Thus, the evidence shows that Elbar, although not fronting all of the money for the purchase of the Property, was the intended legal purchaser of the Property. All of the above described circumstances show that the Purchasers were the intended third-party beneficiaries of the agreement that Elbar entered into with United Sentry's substitute trustees to purchase the Property. 76 These circumstances make Elbar a real party in interest pursuant to FRCP 17(a)(1)(F), as Elbar is "a party with whom *525 or in whose name a contract has been made for another's benefit." As Elbar is a real party in interest to this adversary proceeding, Elbar has prudential standing to prosecute this action and seek the remaining funds ($716,084.58) it has yet to collect on behalf of all Purchasers.

For all these reasons, Elbar has the right to prosecute this suit on behalf of itself and all other Purchasers seeking a judgment to recover all amounts still owed to all of the Purchasers.

C. Elbar's Violation of the Automatic Stay

In determining whether Elbar should recover on its claims for equitable subrogation, money had and received, and unjust enrichment, this Court is required to weigh the equities based upon the totality of the circumstances. See Murray v. Cadle Co. , 257 S.W.3d 291 , 300 (Tex. App.-Dallas 2008, pet. denied) (equitable subrogation) First Am. Title, Ins. Co. v. Brett C. Moody Invs., LLC , No. H-14-0473, 2015 WL 1220733 , at *5 (S.D. Tex. Mar. 17, 2015) (money had and received); Bank of Saipan v. CNG Fin. Corp. , 380 F.3d 836 , 841 (5th Cir. 2004) (money had and received); Helm v. Landry Serv. Co., Inc. , No. 01-94-00348-CV, 1995 WL 319014 , at *6 (Tex. App.-Houston [1st Dist.] May 25, 1995, writ denied) (unjust enrichment). In weighing the equities, a key issue is whether Elbar violated the automatic stay. 77 In this section, the Court therefore analyzes whether Elbar violated the automatic stay: (1) on October 4, 2016, when it was the high bidder at the foreclosure sale; (2) on October 6, 2016, when it wire transferred the Proceeds to the IOLTA; and (3) on January 3, 2017, when it filed a lis pendens against the Property. The Court ultimately concludes that Elbar did violate the automatic stay on each of these occasions. Later sections of this Memorandum Opinion will discuss what effect Elbar's violations of the automatic stay has on Elbar's claims for equitable subrogation, money had and received, and unjust enrichment.

1. October 4, 2016, Stay Violation

An analysis of whether Elbar violated the stay begins with a review of the Code provision that imposes the stay: 11 U.S.C. § 362 (a). The legislative history of 11 U.S.C. § 362 "reveals that the automatic stay is one of the fundamental protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection efforts and permits the debtor to attempt repayment or reorganization ...." In re Lile , 103 B.R. 830 , 836 (Bankr. S.D. Tex. 1989) (internal citations and quotations omitted). Additionally, "[t]he automatic stay is designed to protect creditors as well as debtors." Brown v. Chesnut ( In re Chesnut) , 422 F.3d 298 , 301 (5th Cir. 2005). The automatic stay is effective upon the filing of the bankruptcy petition, and it does not require actual notice to be effective. In re Lile , 103 B.R. at 836 . Further, a willful violation of the stay does not require a specific intent to violate the stay. Thornburg v. Lynch (In re Thornburg) , 277 B.R. 719 , 725 (Bankr. E.D. Tex. 2002). Section § 362(a), in pertinent part, reads as follows: "a petition filed under section 301, *526 302, or 303 of this title ... operates as a stay, applicable to all entities, of ... any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate ...."

Elbar's participation in the foreclosure sale on the Property held at approximately noon on October 4, 2016, [Main Case Doc. No. 118, Dec. 15, 2016, Hrg. 10:12-17], coming away as the highest bidder, and its attempt to pay the bid price by tender of the eleven cashier's checks-even without the knowledge that the Debtor had filed her bankruptcy petition at approximately 8:20 a.m. on October 4, 2016, [Finding of Fact No. 28], three and a half hours prior to the foreclosure sale taking place-amounts to a violation of the automatic stay. See, e.g. , Jackson v. Priority Trs. Servs. of Miss., L.L.C. (In re Jackson) , 392 B.R. 666 , 671 (Bankr. S.D. Miss. 2008) (holding that "the foreclosure sale, conducted the day after the filing of the Bankruptcy Petition, constituted an act 'to obtain possession of property of the estate' in violation of § 362") (quoting 11 U.S.C. § 362 (a)(3) ); Smith v. London (In re Smith) , 224 B.R. 44 , 46 (Bankr. E.D. Mich. 1998) (finding that foreclosure sale was void because it violated the automatic stay and the fact that the mortgage company who conducted the foreclosure sale was not given notice of the debtor's bankruptcy filing was irrelevant in determining whether the stay was violated). Thus, Elbar violated the automatic stay on October 4, 2016, merely by tendering the eleven cashier's checks to Shum in the aggregate amount of $2.4 million, [ see Finding of Fact No. 32; Main Case Doc. No. 118, Dec. 15, 2016, Hrg. 10:12-17], as this act occurred three and a half hours after the Debtor's filing of her Chapter 7 petition, [Finding of Fact. Nos. 28-29].

2. October 6, 2016, Stay Violation

The next question is whether Elbar's act of wiring the $2.4 million to Prins was an act to obtain possession of property of the estate. Case law says that it was. 78 In Capital Realty Services, LLC v. Benson (In re Benson) , the question was whether the purchaser at a foreclosure sale-knowing that the owner of the property posted for sale had filed a bankruptcy petition-violated the stay by remitting funds to the trustee under the deed of trust. 293 B.R. 234 (Bankr. D. Ariz. 2003). The court held that:

If, as concluded here, payment of the bid price is necessary for the high bidder to conclude his purchase of the property, then payment of the bid price must be regarded as an "act to obtain possession of property of the estate." Consequently payment of the bid price, unlike recordation of a trustee's deed, is not merely a ministerial act that preserves the status quo or only gives the world notice of what has occurred, but rather is an act of legal substance that changes the relationship of the parties and effectively removes property from property of the estate. Consequently payment of the bid price after the bankruptcy petition is filed violates the automatic stay pursuant to § 362(a)(3).

*527 293 B.R. at 240 -41 . Other cases support this holding. See, e.g. , Harris v. Ramel (In re Allen) , 75 B.R. 572 , 574 (Bankr. E.D. Mo. 1987) (finding that post-petition action taken by purchaser to perfect a pre-petition sale of debtor's real property "was an attempt to affect and exercise control over the bankruptcy estate's interest in the [d]ebtor's real property, contrary to 11 U.S.C. § 362 (a)(3)"); Ford v. Loftin (In re Ford) , 296 B.R. 537 , 543 (Bankr. N.D. Ga. 2003) (finding that postpetition foreclosure sale, where foreclosing creditor received notice of bankruptcy filing, violated § 362(a) ).

The undersigned judge agrees with this conclusion. An act to obtain title to estate property violates the stay pursuant to the very language of § 362(a)(3). The sole objective of any purchaser at a foreclosure sale in giving money to the trustee is to have the trustee execute and deliver to the money-giver a deed to the property. Yet, if this property is "property of the estate," then the money-giver's act-and objective-necessarily seeks to deprive the estate of title to the subject property. Thus, here, Elbar violated the stay by wire transferring the $2.4 million to the IOLTA. [ See Finding of Fact No. 40].

To the extent that Elbar suggests that its wire transferring the Proceeds in violation of the automatic stay is essentially "no harm, no foul" because Elbar (or another party, such as Prins) could have moved to have the automatic stay retroactively annulled, such argument holds no weight with this Court. 79 An opinion from the Fifth Circuit exposes the weakness of this argument. In In re Chesnut , the creditor willfully violated the automatic stay by foreclosing on real property that the debtor argued was part of his bankruptcy estate because it was his community property. 422 F.3d at 300 . The Fifth Circuit, articulating a concept called "arguable" property of the estate, held that if there is a bona fide dispute over whether a debtor has an interest in certain real property, then the non-debtor party should assume that it is indeed property of the estate that is protected by the automatic stay; and that the non-debtor party should therefore not proceed to foreclose, but rather should file a motion to lift stay requesting approval from the bankruptcy court to go forward with the foreclosure. Id. The Fifth Circuit cogently explained its reasoning for this holding:

Whether an asset is property of the estate is a legal determination which frequently entails complex analyses involving a number of legal elements and a variety of facts .... [t]hese questions concerning the characterization of the ... property ... can only be answered with finality through the judicial process ....

Id. at 303 . 80

Application of In re Chesnut to the suit at bar lends strength to this Court's finding that Elbar willfully violated the stay on October 6, 2016, when it wired the Proceeds to the IOLTA. [

*528 See Finding of Fact Nos. 38-41]. If Elbar had complied with In re Chesnut , it would not have wired the $2.4 million on the afternoon of October 6, 2016. By this time and date, Elbar knew that the Debtor had filed a bankruptcy petition and that she was asserting that she had an interest in the Property. [Finding of Fact No. 37]. Under these circumstances, Elbar could not-as a matter of law-take the position that the Debtor had no interest in the Property and therefore disregard the automatic stay and wire the $2.4 million. Rather, pursuant to In re Chesnut , Elbar should have filed a motion to lift stay, describing the factual background to support its position, and requesting this Court to lift the stay to: (1) allow Elbar to wire the $2.4 million to Prins, as substitute trustee; and (2) authorize Prins to take all steps appropriate under state law to complete the foreclosure sale under the Deed of Trust, including executing and delivering a deed to Elbar conveying title to the Property. See also In re Lile , 103 B.R. at 837 (citations and quotations omitted) (noting that "[o]nce a party is put on notice of a bankruptcy filing, he is under a duty to seek further information which should reveal the applicability and scope of the automatic stay." Further, "[k]nowledge of the bankruptcy filing has been held to be the legal equivalent of knowledge of the automatic stay. The creditor takes the risk of being assessed for damages if he fails to obtain clarification from the bankruptcy court.").

If Elbar had chosen this course, it would have fulfilled the public policy objectives of the Bankruptcy Code and due process as articulated in In re Chesnut : namely, to afford all parties in interest, including the Debtor and all of her creditors, the opportunity to be heard; and to allow this Court to consider the evidence, reflect upon the parties' arguments, and then render a decision as to whether the Property was property of the Debtor's estate subject to the automatic stay and, if so, whether the stay should be annulled. In re Chesnut , 422 F.3d at 303-04 ; see also In re Lile , 103 B.R. at 836 (citation omitted) ("All parties benefit from the fair and orderly process contemplated by the automatic stay and judicial relief procedure. Judicial toleration of an alternate procedure of self-help and post hoc justification would defeat the purpose of the automatic stay."). Elbar's willingness to violate the stay in the hope of preserving its claim to the Property through the subsequent annulment of the stay 81 is a large strike against Elbar in this Court's analysis of Elbar's claim for equitable subrogation against United Sentry and Elbar's claims for money had and received and unjust enrichment against Industry Drive and TransWorld, as these causes of action require a court to weigh the equities based on the totality of the circumstances when determining whether a plaintiff should prevail on those claims. See Murray , 257 S.W.3d at 300 (equitable subrogation) First Am. Title, Ins. Co. , 2015 WL 1220733 , at *5 (money had and received); Bank of Saipan , 380 F.3d at 841 (money had and received); Helm , 1995 WL 319014 , at *6 (unjust enrichment). Here, this Court finds that Elbar's willful violation of the automatic stay by wiring the *529 $2.4 million represents a deliberate disregard of the law, a breach of its duty to comply with the Bankruptcy Code, a lack of good faith, and also violates principles of equity and righteous dealing. No plaintiff who knowingly violates the law can escape such a moniker. See In re Lile , 103 B.R. at 837 (noting that when IRS knowingly chose to disregard the automatic stay by seizing estate's assets instead of seeking further clarification from the court, the IRS "assumed the risk that [its] actions would be found wrongful").

3. January 3, 2017, Stay Violation

Elbar not only willfully violated the automatic stay on October 6, 2016, when it wire transferred the Proceeds to the IOLTA; Elbar also willfully violated the automatic stay for a second time when it filed a lis pendens against the Property in January 2017. [Finding of Fact No. 89]. Filing a lis pendens postpetition with knowledge of the debtor's Chapter 7 case is a blatant violation of the automatic stay. See, e.g. , In re Thornburg , 277 B.R. at 729-30 (holding postpetition filing of a notice of lis pendens violated automatic stay and noting that "[t]he effect of filing a Notice of Lis Pendens in the State of Texas is the 'functional equivalent of an involuntary lien as it acts as a cloud on title under Texas law.' ") (quoting F.D.I.C. v. Walker , 815 F.Supp. 987 , 990 (N.D. Tex. 1993) ); Byrd v. Hoffman , 417 B.R. 320 , 329 (D. Md. 2008) (holding postpetition filing of a notice of lis pendens violated automatic stay); Elrod v. Elrod (In re Elrod) , 91 B.R. 187 , 189 (Bankr. M.D. Ga. 1988) (same); Crumrine v. Blum (In re Crumrine) , 261 B.R. 669 , 671 n.1 (Bankr. N.D. Cal. 2001) (emphasis in original) ("In this circuit, the postpetition recording of a lis pendens violates the automatic stay.") (citing Barnett v. Edwards (In re Edwards) , 214 B.R. 613 , 619 (9th Cir. BAP 1997) ). Elbar's second willful violation of the automatic stay further underscores Elbar's cavalier attitude towards the automatic stay and abiding by the Bankruptcy Code.

Elbar's business model and prior litigation history regarding foreclosure sales make its willful violations of the stay on October 6, 2016, and January 3, 2017, particularly egregious-which in turn makes this Court's finding of Elbar's bad faith and lack of equitable and righteous dealing even more pronounced. Elbar's entire business is based upon conducting research about real properties that have been posted for foreclosure, deciding on which properties to bid, and then attending and participating at these sales. [ See Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 53:9-11, 111:24-112:15, 112:25-113:2, 113:16 -22, 114:4-7; TransWorld's Ex. JJ, Klaimy Dep. 7:10-18, 8:14-18, 13:5-7, 13:17-14:7]. Elbar has been pursuing this business model for approximately 34 years, and has frequently participated in sales where the owner of the property has filed for bankruptcy. [TransWorld's Ex. II, Bustamante Dep. 67:15-20, 182:6-10; TransWorld's Ex. JJ, Klaimy Dep. 13:13-15; Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 134:11-14]. So, there is no question that Elbar is an extremely sophisticated entity that understands that property owners frequently file bankruptcy petitions at the last second in order to stop the foreclosure process through the imposition of the automatic stay. Indeed, Elbar's in-house counsel-Twyman-has a substantial background himself representing home lenders in consumer bankruptcy cases in the Southern District of Texas before joining Elbar. 82 He, of all people, *530 knows that once a participant in a foreclosure sale receives notice of the property owner's bankruptcy filing, the automatic stay immediately bars all participants from taking any further steps to consummate the sale. So, in the suit at bar, Elbar cannot gain any sympathy from this Court (as it analyzes all of the facts and circumstances) on the grounds that it is inexperienced in participating at foreclosure sales.

The circumstances here are similar to In re Burke , 147 B.R. 955 (Bankr. W.D. Mo. 1992). In In re Burke , the court found that a "local investor who purchases foreclosure properties on the courthouse steps" acted in willful violation of the automatic stay when two public records (i.e., a lis pendens filed against the property and a judgment lien against the property) existed prior to the foreclosure sale that connected the property to the debtor's bankruptcy, even though there was no evidence presented that the investor had actual knowledge of the bankruptcy estate's interest in the property. 147 B.R. at 957 -59 . Despite there being no evidence that the investor had actual knowledge of the estate's interest in the property, the court found that:

[The investor]'s purchase of the property was a deliberate attempt to exercise control over estate property and he is deemed to have had notice of the bankruptcy estate's interest such that he should have known of that interest. [The investor] is not an innocent consumer who purchased this property for a residence. He is an inveterate investor in distress properties and a regular buyer of foreclosure property. As such a higher standard of knowledge foreshadows his actions .

Id. at 959 (emphasis added). Here, too, the Purchasers are very experienced and established investors in distressed properties and are regular purchasers of properties sold at foreclosure sales. [Finding of Fact Nos. 30-34]. As such, as in In re Burke , the Purchasers are held to a higher standard, i.e., they are required to do greater due diligence in determining whether the property to be sold at a foreclosure sale is owned by someone who is in bankruptcy. For example, here, once Twyman learned on October 5, 2016, from the Prins Law Firm that the Debtor took the position that she had an interest in the Property pursuant to a deed, Twyman could have asked Prins, or Shum, or Payne (the Debtor's bankruptcy attorney), for a copy of this deed in order to determine the strength of the Debtor's assertion that she did own an interest in the Property on the date of the filing of her bankruptcy petition. [ See Finding of Fact No. 37]. Had Twyman taken this action, he would have-or at least should have-informed Bustamante that the Property was arguably property of the estate and that therefore the automatic stay was in effect, and that Bustamante would therefore be violating the stay by wire transferring funds to the IOLTA.

But, there is more. Not only are Elbar and Bustamante experienced in participating at foreclosure sales, they are also experienced in appeals involving foreclosure sale disputes. Indeed, Elbar and Bustamante have been on the losing end of two disputes that have resulted in published opinions from the Fifth Circuit: Elbar Investments Inc. v. Pierce ( In re Pierce) , 91 F. App'x 927 (5th Cir. 2004) and Bustamante v. Cueva (In re Cueva) , 371 F.3d 232 (5th Cir. 2004). These two opinions merit inclusion in this Court's weighing of the equities based upon the totality of the *531 circumstances when assessing whether Elbar should prevail on its claims for equitable subrogation, money had and received, and unjust enrichment.

In In re Pierce , Elbar purchased property at a judicial tax sale without knowledge of the bankruptcy petition and automatic stay. 91 F. App'x at 928 . After the constable refused to issue a deed, Elbar filed a motion for relief from the automatic stay to validate the judicial tax sale retroactively. Id. Elbar also filed an adversary proceeding arguing that, even if the bankruptcy court did not annul the automatic stay, the automatic stay did not prevent Elbar from acquiring the mortgagee's interest in the property. Id. The Fifth Circuit affirmed the district court's affirmance of the bankruptcy court's denial of Elbar's requested relief, stating that: "[c]ritically, 11 U.S.C. § 362 (a) automatically stayed the tax sale proceedings; thus, the bankruptcy court correctly held that the tax sale ... was null and without legal effect." Id. at 929 .

In In re Cueva , Bustamante-who, it must be remembered, is a vice president of Elbar-purchased a one-half interest in property sold at a foreclosure sale without knowledge of the bankruptcy petition and automatic stay. 371 F.3d at 234 . Bustamante filed pleadings requesting relief from the automatic stay and a declaration that his post-bankruptcy purchase of the property at the foreclosure sale was a valid purchase and not voided by the automatic stay. Id. The Fifth Circuit affirmed the district court's decision and held that "the foreclosure sale was in violation of the automatic bankruptcy stay and therefore invalid ...." Id. at 238 .

The holdings issued in these opinions lead this Court to find that Elbar is an extremely knowledgeable and sophisticated litigant that understands perfectly that it is a direct violation of the Bankruptcy Code to (1) attempt to acquire fee simple to real property when the foreclosure sale occurs after the filing of the property owner's bankruptcy; and (2) file a lis pendens against a property in bankruptcy. 83

And, there is even more. To the extent that Elbar suggests that it has clean hands because § 362(d) allows it-or, United Sentry-to seek to annul the stay in order to overcome any violation of the stay, this Court disagrees. The problem with this position is that there is ample case law holding that only innocent parties-in-interest who had no knowledge of the bankruptcy-and therefore no notice that the automatic stay was in effect-are able to obtain annulment of the stay. See, e.g. , Jones v. Garcia (In re Jones) , 63 F.3d 411 , 412-13 (5th Cir. 1995) (affirming lower courts' decision declining to void a postpetition foreclosure sale when purchasers were not sophisticated parties and they received neither actual nor presumed constructive notice of the bankruptcy filing until after title had been transferred to them); Soares v. Brockton Credit Union (In re Soares) , 107 F.3d 969 , 977 (1st Cir. 1997) ("When a creditor inadvertently violates the automatic stay in ignorance of a pending bankruptcy, courts sometimes have afforded retroactive relief.").

In In re Soares , the creditor, with knowledge of the debtor's bankruptcy, sought an order of default and a judgment authorizing foreclosure in state court but failed to notify the state court of the debtor's *532 bankruptcy and the automatic stay. 107 F.3d at 972 . The creditor thereafter filed a motion to annul the stay with the bankruptcy court. Id. The First Circuit reversed the bankruptcy court's decision to grant the motion and held "that bankruptcy courts ordinarily must hold those who defile the automatic stay to the predictable consequences of their actions and can grant retroactive relief only sparingly and in compelling circumstances ...." Id. at 978 . The First Circuit based its decision on the purpose and policy behind the automatic stay. Id. at 972, 977 ("If retroactive relief becomes commonplace, creditors-anticipating post facto validation-will be tempted to pursue claims against bankrupts heedless of the stay ...."). Further, the First Circuit stated that the "[creditor]'s entreaty that the equities favor retroactive relief rings unmistakably hollow; though [the creditor] expended funds to clear title and maintain the property after foreclosing, this financial hardship is the natural consequence of its own failure to abide by the terms of the automatic stay." Id. at 978 .

If Elbar's seasoned and veteran counsel (i.e., Twyman and Bustamante) had only done research on the law, they would have found this case and other case law on point. See, e.g. , IMC Mortg. Co., Inc. v. Brown (In re Brown) , 251 B.R. 916 , 919 (Bankr. M.D. Ga. 2000) ("[B]ecause it would be inappropriate for the Court to approve a wilful violation of the automatic stay, it should be clear that the Court will grant an annulment only if the Creditor justifiably believed its action did not violate the automatic stay."); Stancil v. Bradley Invs., LLC (In re Stancil) , 487 B.R. 331 , 340 (Bankr. D.C. 2013) ("[K]nowledge of the bankruptcy filing precludes annulment of the automatic stay."); In re Schumann , 546 B.R. 223 , 229 (Bankr. D.N.M. 2016) ("[A]nnulment of the automatic stay 'thereby reinstating previous claims retroactively ... is rare and probably available only to claimants who were honestly ignorant of the bankruptcy stay.' ") (quoting Franklin Sav. Ass'n v. Office of Thrift Supervision , 31 F.3d 1020 , 1023 (10th Cir. 1994) ).

In fact, Elbar and Bustamante should be well aware of the specific set of circumstances in which it is proper for the Court to grant a motion to annul the stay. In In re Jefferson , Elbar filed a motion to annul the automatic stay. No. 13-33515-H3-13, 2013 WL 4505591 , at *1 (Bankr. S.D. Tex. 2013). The record made at the hearing on the motion to annul the stay reflected the following: (1) on the date of the filing of the Debtor's bankruptcy petition, Elbar purchased certain real property at a foreclosure sale; (2) on the date of this foreclosure sale, the debtor had no interest in this property, but rather the debtor's sister owned the property; (3) ten days later, the debtor's sister conveyed the property to her; (4) the debtor then took the position that she owned the property and she had the right to reside in it, and that the stay prevented Elbar from taking title to and possession of this property; and (5) the debtor had not taken the required pre-petition credit counseling course. Id. The court granted Elbar's motion by emphasizing that the debtor did not own the property on the date of the filing of her petition and also had failed to take the requisite credit counseling course. Id. at *1-2 . Stated differently, the court found cause under 11 U.S.C. § 362 (d)(1) to annul the stay because the debtor had played fast and loose with the property and the Bankruptcy Code, whereas Elbar had conducted a legitimate foreclosure that did not violate the automatic stay.

Here, unlike In re Jefferson , Elbar did violate the stay-willfully-because it knew of the Debtor's bankruptcy prior to wire-transferring the Proceeds and filing *533 the lis pendens, [Finding of Fact Nos. 37-41, 89]; therefore, annulment of the stay for Elbar's benefit would be wholly inappropriate. Elbar violated the automatic stay clear and simple, and any annulment argument is simply not persuasive.

In sum, Elbar violated the automatic stay three times, and in two of these instances, Elbar did so willfully. The Court will take this conduct into account when analyzing Elbar's claims for equitable subrogation, money had and received, and unjust enrichment.

D. The Claims Against Prins and United Sentry: Fraud in Real Estate Transactions, Common Law Fraud, Texas Theft Liability Act, and Equitable Subrogation

1. Agency Law as it Applies to the Fraud in Real Estate Transactions, Common Law Fraud, and Texas Theft Liability Act Claims

Elbar argues that because Prins, as the substitute trustee under the Deed of Trust expressly appointed by United Sentry, [Finding of Fact No. 19], had actual or apparent authority to act as United Sentry's agent, United Sentry is liable for Prins' fraud and theft. [Adv. Doc. No. 217 at 11-12 of 35, ¶¶ 28-29]. Elbar concedes that if this Court finds that Prins was not acting with actual or apparent authority, then Elbar's claims against United Sentry for fraud in real estate transactions, common law fraud, and the Texas Theft Liability Act fail as a matter of law. [Adv. Doc. No. 222, Feb. 8, 2017, Trial Tr. 23:6-15]. Thus, the threshold question is whether Prins was acting with actual or apparent authority from United Sentry. 84

a. Review of Applicable Agency Law

"Under Texas law, an agent is someone authorized by a person or entity to transact business or manage some affair for that person or entity." Tex. Soil Recycling, Inc. v. Intercargo Ins. Co. , 273 F.3d 644 , 650 (5th Cir. 2001). The party asserting the agency relationship has the burden of proof. McGowan & Co., Inc. v. Bogan , No. H-12-1716, 2015 WL 3422366 , at *8 n.13 (S.D. Tex. May 27, 2015) (citing Reliant Energy Servs. Inc. v. Cotton Valley Compression, L.L.C. , 336 S.W.3d 764 , 783 (Tex. App.-Houston [1st Dist.] 2011, no pet.) ).

"An agency relationship may be demonstrated by 'written or spoken words or conduct, by the principal, communicated either to the agent (actual authority) or to the third party (apparent authority)." Bridas S.A.P.I.C. v. Gov't of Turkm. , 345 F.3d 347 , 357 (5th Cir. 2003) (quoting Hester Int'l Corp. v. Fed. Republic of Nigeria , 879 F.2d 170 , 181 (5th Cir. 1989) ); see also Utils. Optimization Grp., L.L.C. v. TIN, Inc. , 440 F. App'x 249 , 252 (5th Cir. 2011) ("Absent actual or apparent authority, an agent cannot bind a principal.") (quoting Tex. Cityview Care Ctr., L.P. v. Fryer , 227 S.W.3d 345 , 352 (Tex. App.-Fort Worth 2007, pet. dism'd [mand. dism'd] ) ); McGowan & Co. , 2015 WL 3422366 , at *8 n.13 ("A principal is liable for the acts of another acting as its agent only when the *534 agent has actual or apparent authority to do those acts or when the principal ratifies those acts.") (quoting Reliant Energy Servs., Inc. v. Cotton Valley Compression, L.L.C. , 336 S.W.3d 764 , 783 (Tex. App.-Houston [1st Dist] 2011, no pet) ).

"Actual authority includes both express and implied authority and usually denotes the authority a principal (1) intentionally confers upon an agent, (2) intentionally allows the agent to believe he possesses, or (3) by want of due care allows the agent to believe he possesses." Utils. Optimization Grp., L.L.C. , 440 F. App'x at 252 (quoting Tex. Cityview Care Ctr., L.P. v. Fryer , 227 S.W.3d 345 , 352 (Tex. App.-Fort Worth 2007, pet. dism'd [mand. dism'd] ) ).

Apparent authority, on the other hand, "is based on estoppel arising either from a principal knowingly permitting an agent to hold [himself] out as having authority" or "by a principal's actions which lack such ordinary care as to clothe an agent with the indicia of authority, thus leading a reasonably prudent person to believe that the agent has the authority [he] purports to exercise." Utils. Optimization Grp., L.L.C. , 440 F. App'x at 252 (internal quotation marks and citations omitted). Apparent authority arises either (1) "from a principal knowingly permitting an agent to hold herself out as having authority" or (2) "by a principal's actions which lack such ordinary care as to clothe an agent with the indicia of authority, thus leading a reasonably prudent person to believe that the agent has the authority she purports to exercise." Hitachi Capital Am. Corp. v. Andress , No. H-06-1959, 2007 WL 2752696 , at *3 (S.D. Tex. Sept. 20, 2007) (quoting Ames v. Great S. Bank , 672 S.W.2d 447 , 450 (Tex. 1984) ). "Because apparent authority is an estoppel principle, a party seeking to recover under such legal theory must show justifiable reliance on the principal's words or conduct resulting in harm to the party." Reliant Energy Servs. Inc. v. Cotton Valley Compression, L.L.C. , 336 S.W.3d 764 , 784 (Tex. App.-Houston [1st Dist.] 2011, no pet.). "To determine an agent's apparent authority, the court examines the conduct of the principal and the reasonableness of the third party's assumptions regarding the agency's authority." Kirkindoll v. Nat'l Credit Union Admin. Bd. , No. 3:11-CV-1921-D, 2015 WL 1636534 , at *9 (N.D. Tex. Apr. 13, 2015).

"Key to the tests for both actual and apparent authority is the need for some action or omission by the principal, not merely the agent." Utils. Optimization Grp., L.L.C. , 440 F. App'x at 253 . "An agent's authority ... depends on some communication by the principal either to the agent ( [to establish] actual ... authority) or to the third party ( [to establish] apparent ... authority)." Id. (quoting Gaines v. Kelly , 235 S.W.3d 179 , 182 (Tex. 2007) ).

A principal is liable for the torts of his agent "committed in the course and scope of their employment." Ross v. Marshall , 426 F.3d 745 , 763 (5th Cir. 2005). To determine whether an agent acted within the scope of his employment the plaintiff must show that the act was: (1) within the general authority given to the agent; (2) in furtherance of the principal's business; and (3) for the accomplishment of the object for which the employee was employed. Id. at 763-64 ; see also Schrum v. Land , 12 F.Supp.2d 576 , 582 (S.D. Tex. 1997) (emphasis in original) ("In determining the principal's vicarious liability, the proper question is not whether the principal authorized the specific wrongful act, but whether the agent was acting within the scope of the agency at the time of committing the act.").

*535 "[U]nder Texas law, an agent's 'serious criminal activity' is almost never taken within the scope of authority granted by the principal." Ross , 426 F.3d at 764 . A principal is not liable for the agent's intentional and malicious actions that are unforeseeable considering the agent's duties. Id. at 765 (citing Williams v. United States , 71 F.3d 502 , 506 n.10 (5th Cir. 1995) ); see also Zarzana v. Ashley , 218 S.W.3d 152 , 160 (Tex. App.-Houston [14th Dist.] 2007, pet. struck) ("[E]mployers are generally not liable for serious criminal acts of employees that are unforeseeable considering the employee's duties."); Millan v. Dean Witter Reynolds, Inc. , 90 S.W.3d 760 , 768 (Tex. App.-San Antonio 2002, pet. denied) ("In cases involving serious criminal activity, an employer is not liable for intentional and malicious acts that are unforeseeable considering the employee's duties"); Adami v. Dobie , 440 S.W.2d 330 , 334 (Tex. Civ. App.-San Antonio 1969, writ dism'd) ("A master is not liable for unauthorized intended tortious conduct of his servant, even when the act was done in connection with the servant's employment, where the wrongful act was unexpectable, in view of the duties of the servant.").

Generally, "a principal is deemed to know facts that are known to its agent." Secs. Inv'r Prot. Corp. v. Cheshier & Fuller, L.L.P. ( In re Sunpoint Secs., Inc.) , 377 B.R. 513 , 562 (Bankr. E.D. Tex. 2007) (citation omitted). However, "[i]f the agent is acting adversely to the corporation, the corporation may not be bound by the agent's activity or knowledge." Id. at 564 ; see also Ernst & Young and Ernst & Young, LLP v. Bankr. Servs., Inc. ( In re CBI Holding Co., Inc.) , 311 B.R. 350 , 369 (Bankr. S.D.N.Y. 2004) ("The 'adverse interest' exception ... provides that when an agent is committing a fraud for his own benefit, and has totally abandoned his principal's interest, the acts of the agent will not be imputed to the principal ....") (citation and quotations omitted). For the adverse interest exception to apply "the agent must have totally abandoned his principal's interests and be acting entirely for his own or another's purposes." In re Sunpoint Secs., Inc. , 377 B.R. at 564 (citation omitted); see also F.D.I.C. v. Shrader & York , 991 F.2d 216 , 223 (5th Cir. 1993) ("A principal is not affected by the knowledge of an agent in a transaction in which the agent secretly is acting adversely to the principal and entirely for his own or another's purposes ....") (quoting Restatement (Second) of Agency § 282(1) (1957) ).

b. Application of Agency Law to the Facts in This Adversary Proceeding

The Court now applies these agency principles to the suit at bar. Whether United Sentry is liable for the acts committed by Prins hinges on whether Prins committed these acts in the course and scope of his employment. Ross , 426 F.3d at 763 . The Court first considers the scope of actual authority United Sentry gave to Prins. The Deed of Trust expressly gives the substitute trustee (i.e., Prins) 85 the authority to give notice of a *536 foreclosure sale and to sell the Property at a foreclosure sale. [Finding of Fact No. 12]. Therefore, Prins had actual authority to hold a foreclosure sale as the agent of United Sentry. See First Edwards, LP v. Union Pac. R.R. Co. , No. H-08-1573, 2009 WL 10693830 , at *6 (S.D. Tex. Mar. 16, 2009) ("Actual authority is created when the principal communicates to the agent, by words or conduct, that the agent has authority to act on the principal's behalf."). The Deed of Trust also expressly states what Prins, as trustee and agent of United Sentry, has the authority to do with the proceeds generated from a foreclosure sale. [Finding of Fact No. 12]. Specifically, the Deed of Trust states that the trustee, if requested by the beneficiary to foreclose on the lien shall:

1. Either personally or by agent give notice of the foreclosure sale as required by the Texas Property Code as then amended;

2. Sell and convey all or part of the Property to the highest bidder for cash with a general warranty binding Grantor, subject to prior liens and to other exceptions to conveyances and warranty; and

3. From the proceeds of the sale, pay, in this order:

a. expenses of foreclosure, including a normal hourly fee of the Trustee;

b. to Beneficiary, the full amount advanced, or the full amount of the principal, interest, attorney's fees, and other charges due and unpaid;

c. any amounts required by law to be paid before payment to Grantor; and to Grantor, any balance.

[Pl.'s Ex. 14].

A principal is liable only for the torts of his agent committed in the course and scope of the agent's employment. Ross , 426 F.3d at 763 . Did Prins, as United Sentry's agent, in fact stay within the authority conferred upon him by the Deed of Trust?

He most certainly did not. The Deed of Trust did not authorize Prins to steal the Proceeds and use them for his own personal benefit. Indeed, the Deed of Trust did not authorize Prins: (1) to hold the sale after learning about the Debtor's bankruptcy , [ see Finding of Fact No. 29]; or (2) to accept the $2.4 million wire transfer from Elbar at a time when he knew of the Debtor's filing of her bankruptcy petition and her position that she owned the Property , [ see Finding of Fact Nos. 29, 36, 39, 40]. Stated differently, the Deed of Trust did not authorize Prins to violate the automatic stay. Further, there was no trial testimony that MacKenzie expressly directed Prins to go forward with the foreclosure sale after MacKenzie learned about the Debtor's bankruptcy. To the contrary, MacKenzie testified at trial that it was Prins who decided to proceed with the sale on October 4, 2016, [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 256:17-19], and that October 11, 2016, was the first time Prins told MacKenzie that Elbar had wire transferred the Proceeds to the IOLTA, [Adv. Doc. No. 221, Feb. 7, 2018, Trial Tr. 221:3-10, 222:10-15; United Sentry's Ex. 1]. Therefore, Prins did not have actual authority to hold the foreclosure sale on the Property illegally or to accept the $2.4 million wire transfer from Elbar after the automatic stay was in effect.

The Court next considers the scope of any apparent authority Prins may have had. "An agent's authority ... depends on some communication by the principal ... to the third party ( [to establish] apparent ... authority)." Utils. Optimization Grp., L.L.C. , 440 F. App'x at 253 (quoting Gaines v. Kelly , 235 S.W.3d 179 , 182 (Tex. 2007) ); see also Kirkindoll. , 2015 WL 1636534 , at *9 ("To determine an agent's *537 apparent authority, the court examines the conduct of the principal and the reasonableness of the third party's assumptions regarding the agency's authority."). Here, there was no testimony at trial that MacKenzie (or any other person who would be considered a principal of United Sentry) communicated at all with Elbar at the time of the foreclosure sale. Nor was there any testimony from any representatives of Elbar concerning any assumptions Elbar might have had regarding whether or not Prins was acting within the scope of authority given to him by United Sentry when he held the foreclosure sale after learning about the Debtor's bankruptcy and accepting the $2.4 million wire transfer from Elbar after the automatic stay was in place. As the party asserting the agency relationship, it was Elbar's burden to prove that apparent authority existed for Prins to take the actions that he did, see McGowan & Co. , 2015 WL 3422366 , at *8 n.13, and this Elbar did not do.

Even if it was within the scope of Prins' employment as trustee under the Deed of Trust to accept the $2.4 million wire transfer from Elbar after notice of the bankruptcy and imposition of the automatic stay, it is wholly unforeseeable that Prins, as trustee, would engage in such serious criminal activity after receiving the $2.4 million by absconding with all of the funds for his own personal benefit. [ See Finding of Fact Nos. 46-50, 57]. It is so unforeseeable for a trustee under a deed of trust to misappropriate and steal such funds that even Elbar's own expert witness, Bustamante, testified that in his over 40 years of experience, he has never seen anything like Prins' misconduct. [Adv. Doc. No. 220, Feb. 6, 2018, Trial Tr. 81:21-82:2]. Under Texas law, United Sentry simply cannot be held liable for Prins' unforeseeable serious and egregious criminal activity. See Ross , 426 F.3d at 764 ; Zarzana , 218 S.W.3d at 160 ; Adami , 440 S.W.2d at 334 . For all of these reasons, Prins was not acting as United Sentry's agent; therefore, United Sentry is not liable to Elbar for fraud in real estate transactions, common law fraud, or theft.

Finally, Prins, in first accepting and thereafter absconding with the $2.4 million, was acting adversely to the interest of United Sentry. 86 See Bailey v. State , 885 S.W.2d 193 , 197-98 (Tex. App.-Dallas 1994, pet. ref'd) ("It is well settled that when a fiduciary decides, for whatever reason, to unlawfully and permanently deprive the lawful owner of its property, the fiduciary is

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