# Appendix — French v. Liebmann (No. 05-1459) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1041%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 2006 ## Text App. i TABLE OF CONTENTS Appendix to Petition Page Published Opinion of The United States Court of Appeals For The Fourth Circuit entered February 16, 2006.................cccccceeessseees App. 1 Order of The United States District Court For the District of Maryland Re: Affirming the Decision of the Bankruptcy Court entered December 8, 2004...............cccccccsseeseeteee App. 19 Memorandum Opinion of The United States District Court For the District of Maryland entered December 8, 2004..............ccccccsssssseeeeees App. 20 Order of The United States Bankruptcy Court For the District of Maryland Re: Granting Trustee’s Motion for Summary Judgment entered April 21, 2004................cc...sccscc0000 App. 35 Memorandum Opinion of The United States Bankruptcy Court For the District of Maryland entered April 31, BO0G........:ccccccsccscsssssoiercssvcerene App. 37 App. ii Order of The United States Bankruptcy Court For the District of Maryland Re: Denying Defendants’ Motion to Dismiss eriboredl Ceboer GB, BOG, o.oo seiscvicsccanccesssovscsntenes App. 45 Memorandum Opinion of The United States Bankruptcy Court For the District of Maryland entered October 8, 2004................ccccccccecceeseeneees App. 47 Judgment of The United States Court of Appeals For The Fourth Circuit entered February 14, 2006 ............... eee App. 70 Fe A as I Gi cas venbittidei veiscntoniccvianansannanbabenasinae App. 71 $4 TIS CORR sos ccna App. 72 BE CGA We We Cascisticaherdabibessacinransnstainnheneliigunes App. 73 Be Reeds te WD vcnichaptbaniadetaaiciacncesvesandah \csnehabeiionanbies App. 74 a Nc Ae I cckcinsnicdnninikndeebinciiniesbsncihn cneancnnnbebaaeaaea App. 76 ER I chcidentatinhsiacaniacincecciadenhweuibabethualees App. 77 Duke, et al. v. Andler, et al., [1932] 4 D.L.R. 529; Fe aati Rae a Do cicavisincvncnnscndvericblaninaiesin App. 78 H. L. (E.) Galbraith v. Grimshaw, et al., [1910] 1 K. B. 339, [1910] L. R. 508... App. 96 Stewart Estate v. Cartwright, [2001] BHS J. No. 60 1999 No. 1375............... App. 104 App. tii Excerpts of the Bahamian Fraudulent EIRENE FE TI Bis arsicis hinchada’ Suentenitasatanacaes App. 109 Bahamian Registration of Records Act, 1928, IE BT sinc ci ved fei cdcan sens va chsanchicanniibakinerwOhennaicens App. 112 Restatement of the Law, Second, Conflict of Laws, § 223 .............. eee App. 115 Dicey and Morris, The Conflict of Laws, GOT BN RD cas das cctosscrrieSanesasbn dace abacctassnucamuessensas App. 127 Excerpt of David M. Green & Walter Benzjia, Spanning the Globe: The Intended Reach of the Bankruptcy Code, 10 Am.Bankr.Inst.L.Rev.85 (Spring 2002)........... App. 139 Excerpt of Odgers, Sir Charles E., The Construction of Deeds and Statutes, GAG WR s RINE A Daa rosicabindbsnnccdicitand oscatabasieecccsDaasiasukcenve App. 140 App. 1 Filed: February 16, 2006 [ENTERED: FEBRUARY 16, 2006] UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT | No. 05-1054 (CA-04-1947-WMN) In Re: BETTY I. FRENCH, Debtor, RANDY LEE FRENCH; DONNA MARIE SHAKA, Appellants, versus GEORGE W. LIEBMANN, Trustee - Appellee. ORDER The court amends its opinion filed February 14, 2006, as follows: On the cover sheet, the second sentence of the disposition section is corrected to read: “Judge Motz wrote the opinion, in which Judge Wilkinson and Judge Michael joined.” For the Court /s/ Patricia S. Connor Clerk App. 2 PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT In Re: BETTY I. FRENCH, Debtor. RANDY LEE FRENCH; DONNA MARIE SHAKA, Appellants, Vv. GEORGE W. LIEBMANN, Trustee-Appellee. No. 05-1054 Appeal from the United States District Court for the District of Maryiand, at Baltimore. William M. Nickerson, Senior District Judge. (CA-04-1947-WMN) Argued: November 29, 2005 Decided: February 14, 2006 Before WILKINSON, MICHAEL, and MOTZ, Circuit Judges. Affirmed by published opinion. Judge Motz wrote the opinion, in which Judge Wilkinson and Judge Michael joined. Judge Wilkinson wrote a separate concurring opinion. App. 3 COUNSEL Stanton J. Levinson, ‘Silver Spring, Maryland, for Appellants..Orbie R. Shively, GEORGE W. LIEBMANN, P.A., Baltimore, Maryland, for Appellee. OPINION DIANA GRIBBON MOTZ, Circuit Judge: This appeal presents the question of whether a United States bankruptcy court can avoid a constructively fraudulent transfer of foreign real property between United States residents. The transferees here argue that the presumption against extraterritoriality and the doctrine of international comity preclude application of the Bankruptcy Code. Both the bankruptcy court and the district court rejected these arguments and allowed avoidance. For the reasons that follow, we affirm. I. In 1976, Betty Irene French, a resident of Maryland, purchased a house in the Bahamas. At a Christmas party held in Maryland in 1981, she gave a deed of gift to the Bahamian property to her children, Randy Lee French, a resident of Maryland, and Donna Marie Shaka, a resident of Virginia (hereinafter “the transferees"). Assertedly to avoid high Bahamian transfer taxes, the transferees decided not to immediately record the deed in the Bahamas. In the late 1990s, Mrs. French and her husband began experiencing serious financial problems. Concerned by this downturn, the transferees decided at last to record the deed in the Bahamas, a task they accomplished through a Bahamian attorney in mid-2000. In October 2000, Mrs. French’s creditors filed an involuntary App. 4 Chapter 7 bankruptcy petition against her. The bankruptcy court entered an Order for Relief on January 29, 2001. On August 22, 2002, the bankruptcy trustee, George W. Liebmann, filed an adversary proceeding against the transferees to avoid the transfer of the Bahamian property and to recover the property or its fair market value for the benefit of the estate.’ In his complaint, the trustee alleged (in pertinent part) that the debtor and the transferees had engaged in a constructively fraudulent transfer, as defined by the Bankruptcy Code, because the debtor had been insolvent at the time of the transfer and had received less than a reasonably equivalent value in exchange. See 11 U.S.C. § 548(a)(1)(B) (2000). The transferees conceded that the debtor never received a reasonably equivalent value for her gift of the Bahamian property, and they further conceded that the debtor was insolvent in 2000, when the deed was recorded. These facts would normally be sufficient to establish constructive fraud. Nevertheless, the transferees filed a motion to dismiss before the bankruptcy court based on two grounds. First, they invoked the presumption against extraterritoriality, contending that because of it § 548 should not apply to transfers of foreign property. Second, they maintained that considerations of international comity counseled the application of Bahamian (rather than United States) bankruptcy law, which assertedly ! As required by the Bankruptcy Code, 11 U.S.C. § 548(d)(1) (2000), all the parties consider the transfer in question to have taken place with the recordation of the deed in 2000, not with the transfer of the deed of gift in 1981. App. 5 would allow the transferees to retain the Bahamian property. The bankruptcy court rejected the transferees’ arguments and denied their motion to dismiss. Liebmann — uv. French (In re French), 303 B.R. 774 (Bankr. D. Md. 21904). The trustee then moved for summary judgment, which the bankruptcy court granted by finding the transfer to be constructively fraudulent; the district court aifirmed. French v. Liebmann (In re French), 320 B.R. 78 (I). Md. 2004). The transferees noted a timely appeal. IT. "It is a longstanding principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.” EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991) {hereinafter Aramco] (quoting Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285 (1949)). However, courts only apply this presumption against extraterritoriality when a party seeks to enforce a statute "beyond the territorial boundaries of the United States." Id.; see also Kollias v. D & G Marine Maint., 29 F.3d 67, 72 (2d Cir. 1994). The presumption has no bearing when "the conduct which Congress seeks to regulate occurs largely within the United States" — that is, when regulated conduct is domestic rather than extraterritorial. Envtl. Def. Fund, Inc. v. Massey, 986 F.2d 528, 531 (D.C. Cir. 1993). Thus, before deciding how the presumption affects the interpretation of a given statute, a court should consider whether the presumption applies at all. Both parties have treated the application of § 548 to the transfer here as extraterritorial. This assumption may not be warranted. This court has never defined when conduct is extraterritorial for purposes of the presumption. We have recognized, however, that a similar inquiry — defining App. 6 "foreign conduct" — is particularly. challenging in cases (like this one) that involve a "mixture of foreign and domestic elements." Dee-K Enters., Inc. v. Heveafil Sdn. Bhd., 299 F.3d 281, 286 (4th Cir. 2002). In this case too, we believe that any definition must eschew rigid rules in favor of a more flexible inquiry into the "place" of regulated conduct. Minimal contact with the United States should not automatically render conduct domestic. See Gushi Bros. Co. v. Bank of Guam, 28 F.3d 1535, 1538 (9th Cir. 1994); Kollias, 29 F.3d at 72; Maxwell Commc’n Corp. PLC v. Societe Generale PLC (In re Maxwell Commc’n Corp.), 186 B.R. 807, 817 (S.D.N.Y. 1995) [hereinafter Maxwell II]. Nor should minor contact with another country suffice to render conduct extraterritorial. See Massey, 986 F.2d at 531-32; Maxwell Commce’n Corp. PLC v. Societe Generale PLC (In re Maxwell Commc’n Corp.), 170 B.R. 800, 809 (Bankr. S.D.N.Y. 1994) ("Not every transaction that has a foreign element represents an extraterritorial application of our laws."); Jay Westbrook, The Lessons of Maxwell Communications, 64 Fordham L. Rev. 2531, 2538 (1996). To avoid these extremes, we have held for purposes of the Sherman Antitrust Act that, in determining whether conduct is "foreign" or "domestic," "a court should consider whether the participants, acts, targets, and effects involved" in the transaction at issue “are primarily foreign or primarily domestic." Dee-K Enters., 299 F.3d at 294. We think that an equally flexible test taking into account "all component events of the transfer[ ]," Maxwell IT, 186 B.R. at 816, is appropriate to determine whether an allegedly fraudulent transfer occurred extraterritorially. In this case, the perpetrator and most of the victims of the fraudulent transfer — all except a single Bahamian creditor — have long been located in the United States. Given these facts, the effects of this App. 7 tiransfer were (naturally) felt most strongly here, and not in the Bahamas. . We also find it significant that the conduct constituting the constructive fraud occurred in the United States. Section 548 defines a constructively fraudulent transfer, inter alia, as one where (1) the debtor was insolvent, and (2) the debtor received “less than a reasonably equivalent value in exchang2." 11 U.S.C. § 548(a)(1)(B); see also In re GWI PCS 1 Inc., 230 F.3d 788, 805 (5th Cir. 2000). Here, domestic facts and conduct establish both elements. The determination of Mrs. French’s insolvency relies almost entirely upon a comparison of domestic debts and assets. And the de2cision not to provide a "reasonably equivalent value" for the transfer was made in the United States as well — whether we consider the relevant decision to be Mrs. French’s gift of the deed in 1981, or the transferees’ recordation of the deed in 2000. However, we recognize that two aspects of this transfer indisputably involve foreign facts and conduct. The first is relatively insignificant: the transferees’ Bahamian lawyer recorded their deed to the property in the Bahamas. The physical place where the deed was recorded is at most “incidental” to the actual conduct proscribed by § 548. See Gushi Bros., 28 F.3d at 1538-39. Moreover, although the act of recordation necessarily took place abroad, the transferees themselves may well have been located in the United States both when they decided to record the deed and when they arranged for the Bahamian lawyer’s services (the record is not clear on thus point). More importantly, the transferees emphasize that the real property at issue in this case is located in the Bahamas. At first blush, this fact does not seem critical because § 548 focuses not on the property itself, but on the fraud of transferring it. In this case, the facts App. 8 underlying the fraud occurred here. However, the law has long recognized the: powerful interest that states and nations have in the real property within their boundaries; the strength of that interest explains why the law of the situs generally applies to real property. See, e.g., Oakey v. Bennett, 52 U.S. 38, 44-45 (1850); Robinson v. Campbell, 16 U.S. 212, 219 n.a (1818); Restatement (Second) of Conflict of Laws § 223 comm. b (1974); cf. Robby Alden, Note, Modernizing the Situs Rule for Real Property Conflicts, 65 Tex. L. Rev. 585, 591-98 (1986-1987) (summarizing arguments on the importance of the location of real property); but cf. Cent. Va. Cmty. Coll. v. Katz, 546 U.S. ___, 2006 WL 151985, at *8 (Jan. 23, 2006) ("(The] exercise [of bankruptcy jurisdiction] does not, in the usual case, interfere with state sovereignty even when States’ interests are affected."). ! Given this long history, the fact that application of United States law could affect Bahamian real property, however indirectly, perhaps merits special weight in the balancing test. The parties in this case certainly seem to believe so — from the outset both sides have treated § 548’s reach as extraterritorial. Here, we need not resolve this slippery question. This is so because even if we assume that the application of the Bankruptcy Code would be extraterritorial, the presumption against extraterritoriality does not prevent its application to the transfer at issue here. III. Although the presumption against extraterritoriality is important to "protect against unintended clashes between our laws and those of other nations which could result in international discord," it nevertheless must give way when Congress exercises its undeniable "authority to enforce its laws beyond the territorial boundaries of the United States." Aramco, 499 App. 9 U.S. at 248. Thus, whether a given statutory provision should be given extraterritorial effect is a question of congressional intent; there must be the "affirmative tatention of the Congress clearly expressed” to apply the provision abroad. Jd. (quoting Benz v. Compania Naviera Hidalgo, S.A., 353 U.S. 138, 147 (1957)). To determine whether Congress has expressed such an affirmative iatention, courts may look to "all available evidence," Sale v. Haitian Ctrs. Council, Inc., 509 U.S. 155, 177 (1993), including the text of the statute, the overall statutory scheme, and legislative history. See Smith v. United Sitates, 507 U.S. 197, 201-03 & n.4 (1993); Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285-88 (1949); United States v. Gatlin, 216 F.3d 207, 212 (2d Cir. 2000). In this case, several indicia of congressional intent rebut the presumption against extraterritoriality. Pursuant to § 541 of the Bankruptcy Code, all of a debtor’s property, whether domestic or foreign, is "property of the estate" subject to the bankruptcy court’s in rem jurisdiction. See Hong Kong & Shanghai Banking Corp., Ltd. v. Simon (In re Simon), 153 F.3d 991, 996 (9th tir. 1998) [hereinafter Simon]. Section 541 defines the property of the estate broadly as all property "wherever located." 11 U.S.C. § 541(a) (2000). This phrase first appeared in the Bankruptcy Code in 1952; Congress explained that the amendment "make[s] clear that a trustee in bankruptcy is vested with the title of the bankrupt in property which is located without, as well as within, the United States." H.R. Rep. No. 82-2320, at 15 (1952), reprinted in 1952 U.S.C.C.A.N. 1960, 1976. Thus, "oroperty of the estate" includes both foreign and _ domestic property. Section 541 defines "property of the estate" as, inter alia, all "interests of the debtor in property." 11 U.S.C. § 541(a)(1). In turn, § 548 allows the avoidance of certain transfers of such "interest[s] of the debtor in App. 10 property.” 11 U.S.C. § 548(a)(1). By incorporating the language of § 541 to define what property a trustee may recover under his avoidance powers, § 548 plainly allows a trustee to avoid any transfer of property that would have been "property of the estate" prior to the transfer in question — as defined by § 541 — even if that property is not "property of the estate" now.’ Cf. Begier v. IRS, 496 U.S. 53, 58, 59 n.3 (1990) (reaching a similar conclusion about another avoidance provision, § 547 of the Bankruptcy Code); Cullen Ctr. Bank & Trust v. Hensley * The circuits are divided as to whether "property of the estate" encompasses property that a debtor has fraudulently transferred. If it does — as the Fifth Circuit has held, see Cullen Ctr. Bank & Trust v. Hensley (In re Criswell), 102 F.3d 1411, 1417 (5th Cir. 1997); Am. Nat7 Bank v. MortgageAmerica Corp. (In re MortgageAmera Corp.), 714 F.2d 1266, 1275 (5th Cir. 1983) — then the Bahamian property here falls squarely within § 541’s definition of "property of the estate," and that provision’s clear incorporation of foreign property would obviously rebut the presumption against extraterritoriality. However, not every court has agreed with the Fifth Circuit’s conclusion that "property of the estate" includes property that could be, but has not yet been, recovered as the object of a fraudulent transfer. Instead, other courts have concluded that property held by third-party transferees only becomes "property of the estate" after it has been avoided and recovered. See In re Saunders, 101 B.R. 303, 304-05 (Bankr. N.D. Fla. 1989); see also FDIC v. Hirsch (In re Colonial Realty Co.), 980 F.2d 125, 131 (2d Cir. 1992); Dunes Hotel Assocs. v. Hyatt Corp., 245 B.R. 492, 504-05 (D.S.C. 2000). Because we hold that § 548 applies to the transfer in this case even assuming that § 541’s definition of "property of the estate" does not by itself extend to the Bahamian property, we need not join this dispute. App. 11 (In re Criswell), 102 F.3d 1411, 1416 (5th Cir. 1997) ("These § 541 ‘property of the estate’ definitions have been directly linked with the term ‘interest of the debtor in. property’ under § 547(b)."). Through this incorporation, Congress made manifest its intent that § 548 apply to all property that, absent a prepetition transfer, would have been property of the estate, wherever that property is located. 3 This interpretation fully accords with the purpose of the Bankruptcy Code’s avoidance provisions, which is tc prevent debtors from illegitimately disposing of property that should be available to their creditors. See Palmer & Palmer, P.C. v. U.S. Tr. (In re Hargis), 887 F.2d 77, 79 (5th Cir. 1989) ‘avoidance provisions "protect[ ] the rights of creditors via protection of the bankruptcy estate"); see also Unif. Fraudulent Transfer Act § 3 comm. 2, 7A U.L.A. 295 (1984) ("[T]he purpose of the Act [is] to protect a debtor’s estate from being depleted to the prejudice of the debtor’s unsecured creditors"). In furtherance of this purpose, Congress provided that creditors are entitled to the “interests of the debtor in. property" under § 541 — expressly including all property “wherever located" — and that they may avoid a debtor’s fraudulent transfer of the same "interest([s] of the debtor in property" under § 548. Congress thus demonstrated an affirmative intention to allow avoidance of transfers of foreign property that, but for a fraudulent transfer, would have been property of the debtor’s estate. Therefore, the presumption against extraterritoriality does not prevent application of § 548 here. IV. The transferees argue, however, that even if the presumption against extraterritoriality does not prevent extension of § 548 to the transaction here, we should App. 12 nevertheless refrain from applying the statute under the doctrine of international comity. In particular, they emphasize that disputes concerning real property should be governed by the law of the situs — here, Bahamian law. We disagree. Even if the elements of this transfer do not conclusively render it domestic rather than extraterritorial, a consideration of all the important components of the transfer certainly compels the conclusion that application of the United States Bankruptcy Code is appropriate here. International comity is "the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws." Hilton v. Guyot, 159 U.S. 113, 164 (1895). Although there is some dispute as to the precise contours of this doctrine — compare Hartford Fire Ins. Co. v. California, 509 U.S. 764, 798 (1993), with id. at 813 (Scalia, J., dissenting) — at base comity involves the recognition that there are circumstances in which the application of foreign law may be more appropriate than the application of our own law. In this case, the transferees maintain that application of Bahamian bankruptcy law, which (according to them) only allows avoidance if there is proof of an actual intent to defraud, is more appropriate than application of § 548, which allows avoidance of constructively fraudulent transfers like the one at issue here. In deciding whether to forego application of our own law under the doctrine of international comity, the Supreme Court has referred to the factors in Restatement (Third) of Foreign Relations Law § 403 (1987). See Hartford Fire Ins., 509 U.S. at 799 & n.25; id. at 818 (Scalia, J., dissenting); see also Maxwell Commce’n Corp. PLC v. Societe Generale PLC (In re Maxwell Commc’n App. 13 Corp.), 93 F.3d 1036, 1047-48 (2d Cir. 1996) {hereinafter Maxwell III}. The Restatement looks to, inter alia, “the extent to which the activity takes place within the territory" of the regulating state, "the connections, such as nationality, residence, or economic activity, between the regulating state and the person principally responsible for the activity to be regulated," "the extent to which other states regulate such activities" or "may have an interest in regulating [them]," the “likelihood of conflict with regulation by another state," and "the importance of regulation to the regulating state." Restatement (Third), supra, § 403(2). Applying those factors, we can only conclude that the doctrine of international comity does not require that we forego application of the United States Bankruptcy Code in favor of Bahamian bankruptcy law. The strongest argument in favor of applying Bahamian law is that this case involves real property, which (the transferees argue) should be governed by the law of the situs. When a case involves the definition of property interests, principles of international comity may, i some cases, counsel courts to employ the property law of the situs to resolve those interests, notwithstanding other comity factors. See Koreag, Controle et Revision S.A. vu. Refco F/X Assocs., Inc. (In re Koreag, Controle et Revision S.A.), 961 F.2d 341, 349 (2d Cir. 1992).° But ° The transferees’ citation to Kojima v. Grandote Int'l L.L.C. (In re Grandote Country Club Co., Lid.), 252 F.3d 1146 (10th Cir. 2001), does not support their contention that there is a per se rule that the law of the situs governs questions of fraudulent transfers. In that case, the trustee in a Japanese bankruptcy proceeding brought an ancillary proceeding in Colorado to avoid an allegedly fraudulent transfer of Colorado real property that had been made in Colorado. The Tenth Circuit held that ‘olorado law rather than Japanese law should determine App. 14 analogous modern choice-of-law principles recognize that the law of the situs does not necessarily govern "the allocation of interests in land [between] . . . debtor and creditor" if "regulation of the relationship is of greater concern to a state other than the situs." Restatement (Second) of Conflict of Laws ch. 9, topic 2, introductory note. This is "particularly" true "when the land is part of an aggregate of property which it is desirable to deal with as a unit." Jd. Both of these factors are present in this case. The real property at issue is part of an aggregate — the bankruptcy debtor’s estate — that is most desirably dealt with as a whole. Cf. Katz, 546 U.S. ___, 2006 WL 151985, at *10 (noting that the origins of the Bankruptcy Clause and the earliest bankruptcy legislation enacted by Congress show that “the Framers’ primary goal was to prevent competing sovereigns’ interference with the debtor’s discharge"). Furthermore, the United States has a stronger interest than the Bahamas in regulating this transaction. The purpose of the United States Bankruptcy Code is to protect the rights of both debtors and creditors during insolvency. See Philips v. Congelion, L.L.C. (In re White Mountain Mining Co.), 403 F.3d 164, 169 (4th Cir. 2005) (quoting 1 Collier on Bankrupicy { 3.02[2] (15th ed. rev. 2005)). The Code protects debtors by providing them a fresh start. See Foley & Lardner uv. Biondo (In re Biondo), 180 F.3d 126, 130 (4th Cir. 1999). In exchange, the Code’s avoidance provisions protect creditors by preserving the bankruptcy estate against illegitimate depletions. See Hargis, 887 F.2d at 79. The the fraudulence of the transfer. Jd. at 1150. But the transfer at issue in Grandote was no ordinary transfer; rather, it was so deeply enmeshed with Colorado tax law that the Tenth Circuit deemed the transfer to have been made by the state of Colorado, not by the debtor. Id. at 1148-49, 1151-52. Colorado thus had a much stronger connection to the property in question, justifying the application of local law. App. 15 United States has a strong interest in extending these personal protections to its residents — including the vast majority of the interested parties here. The Bahamas, by contrast, has comparatively little interest’ in protecting nonresidents. Cf. Hurtado v. Superior Court, 522 P.2d 666, 670 (Cal. 1974) (holding that Mexico has no interest in. applying its statutory limitation on damages when defendants in a tort action were not Mexican residents). Thus, applying Bahamian law here would undercut the purpose of the United States Bankruptcy Code by withdrawing its protections from those it is intended to caver, while simultaneously failing to protect any Bahamian residents. Several other factors make application of United States law more appropriate. Most of the activity surrounding this transfer took place in the United States. Moreover, almost all of the parties with an interest in this litigation — the debtor, the transferees, and all but one of the creditors — are based in the United States, and have been for years. Compare Maxwell III, 93 F.3d at 1051 (deference to British law is appropriate when all of the parties were British). Certainly, Mrs. French, "the person principally responsible for the activity to be regulated," has a strong connection to this country as a long-time United States resident. Finally, there are no parallel insolvency proceedings taking place in the Bahamas. There is thus no danger that the avoidance law of the regulating state — the United States — will in fact conflict with Bahamian avoidance law. See Simon, 153 F.3d at 999. Accordingly, we find that the many contacts between this fraudulent transfer and the United States justify the application of United States rather than Bahamian law. App. 16 V. For the foregoing reasons, the judgment of the district court is AFFIRMED. WILKINSON, Circuit Judge, concurring: The unique properties of bankruptcy law compel an affirmance of the district court. The bankruptcy laws provide an integrated scheme for gathering and disbursing the assets of a debtor’s estate. See, e.g., Grady v. A.H. Robins Co., 839 F.2d 198, 202 (4th Cir. 1988). The Code anticipates that this will take place within a single proceeding, rather than asset by asset in inefficient piecemeal litigation. Indeed, a major purpose of the Bankruptcy Code is to forestall "a chaotic and uncontrolled scramble for the debtor’s assets in a variety of uncoordinated proceedings in different courts." Underwood v. Hilliard (In re Rimsat, Ltd.), 98 F.3d 956, 961 (7th Cir. 1996) (internal quotation marks omitted); see also 5 Collier on Bankruptcy { 541.01 (Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev. 2005) (explaining that the "central aggregation of property .. . promotes the effectuation of the fundamental purposes of the Bankruptcy Code"). Ease and centrality of administration are thus foundational characteristics of bankruptcy law. For these reasons, Congress has broadly defined property of the estate as property "wherever located and by whomever held." 11 U.S.C. § 541(a) (2000). This broad definition reflects congressional support for the Code’s extraterritorial application in appropriate circumstances. See Hong Kong & Shanghai Banking Corp. v. Simon (In re Simon), 153 F.3d 991, 996 (9th Cir. 1998). The fraudulent transfer provision, 11 U.S.C. § 548(a) (2000), App. 17 is part and parcel of Congress’s overarching objective to aggregate assets. Allowing this constructively fraudulent transfer from the debtor to her children would impair the orderly administration of the bankruptcy estate. I can hardly believe, therefore, that Congress wanted us to excise § 548(a) — and this provision alone — from the remainder of the Bankruptcy Code. And it is unlikely that Congress would desire to accord an invariable exemption from the Code’s operation to those who leave our borders to engage in fraud. This is particularly true where, as here, the debtor, the transferees, and virtually every creditor are located in the United States. My colleague’s careful opinion leaves intact the Supreme Court’s’ strong presumption against extraterritorial application of congressional statutes. See EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991) (Aramco); Foley Bros. v. Filardo, 336 U.S. 281, 285 (1949). Bankruptcy is, in general, materially different from those provisions held not to apply extraterritorially, such as anti-discrimination statutes, see Aramco, 499 U.S. at 248 (Title VII); Reyes-Gaona v. N.C. Growers Ass’n, 250 F.3d 861, 864-65 (4th Cir. 2001) (Age Discrimination in Employment Act), or hourly wage laws, see Foley Bros., 36 U.S. at 285. In those contexts, ease of administration is not a raison d’étre, and congressional intent for extraterritorial application is considerably less clear. See aiso Curtis A. Bradley & Jack L. Goldsmith, Foreign Relations Law 528 (2003) (noting that courts have treated bankruptcy law with special consideration in the extraterritoriality context). The special context of bankruptcy law, therefore, provides little occasion to set forth general pronouncements on extraterritoriality. Quite properly, the panel opinion also does not suggest that every portion of the Bankruptcy Code invariably applies to conduct abroad. Instead, it represents a sensitive recognition of the administrative App. 18 exigencies that are bound up with the avoidance of this fraudulent transfer. I agree with this view, and I am happy to join in Judge Motz’s fine opinion. App. 19 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND In re: BETTY I. FRENCH Case No. 01-6-3163-JS KR KK KK KK KK KK RANDY LEE FRENCH et al. Vv. Civil Action No. WMN-04-1947 GEORGE LIEBMANN, TRUSTEE [ENTERED: December 8, 2004] ORDER In accordance with the foregoing memorandum and for the reasons stated therein, IT IS this 8th day of December, 2004, by the United States District Court for the District of Maryland, ORDERED: 1. That the decision of the Bankruptcy Court avoiding the transfer of real property to Appellants is hereby AFFIRMED; 2. That Civil Action No. WMN-04-1947 is hereby CLOSED; and 3. That the Clerk of the Court shall mail or transmit copies of this Memorandum and Order to all counsel of record. /s/ William M. Nickerson Senior United States District Judge App. 20 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND In re: BETTY I. FRENCH Case No. 01-6-3163-JS FREER KHA HK HK *K KF RANDY LEE FRENCH et al. Vv. Civil Action No. WMN-04-1947 GEORGE LIEBMANN, TRUSTEE [ENTERED: December 8, 2004] MEMORANDUM This is an appeal from a Bankruptcy Court decision under Section 548 of the Bankruptcy Code* which avoided as fraudulent the transfer of certain real property located in the Bahamas. The underlying facts are largely uncontested. At issue is the permissible extraterritorial reach of Section 548. Apparently, no other federal court has addressed this specific issue in a reported decision, aside from the decision of Bankruptcy Judge James F. Schneider in this action, Liebmann v. French, 303 B.R. 774 (Bankr. D. Md. 2003). The facts underlying Judge Schneider’s decision follow. The Debtor, Betty I. French, acquired the property in question in November 1976. The Debtor asserts, and this Court accepts for the purposes of this appeal, that she gifted the deed to the real property to her children, Appellants Randy Lee French and Danna Marie French, on December 25, 1981, as a Christmas present. According to Appellants, the Debtor presented this gift to them in * 11U‘S.C. § 548. App. 21 Maryland. The deed was not immediately recorded, however. Appellants assert that substantial Bahamian recording taxes made it undesirable to do so at the time, aad that it was their understanding that, under Bahamian law, the transfer was complete, valid, and final upon the delivery of the deed. In the late 1990s, Appellants’ father, Elwood Dean French, began to experience serious financial difficulties. Appellants assert that in response to their father’s deteriorating financial condition: they determined to record the deed in the Bahamas so that “their ownership of the property would not be adversely affected somehow by Mr. French’s financial difficulties.” Appellants’ Brief at 6. Appellants hired a Bahamian lawyer for that purpose and on June 21, 2000, the deed was duly recorded among the land records of the Bahamas Registrar General. On October 20, 2000, a creditor filed an involuntary Chapter 7 ban':ruptcy petition against Appellants’ mother. On August 22, 2002, Appellee, as Trustee for the Chapter 7 estate, filed an adversary action under Sections 548 and 550 of the Code to avoid the pre-petition transfer of the Bahamian property and to recover that property or its fair market value for the benefit of the estate. The Trustee alleged that the property was transferred for no consideration, within 12 months of the filing of the bankruptcy petition, and at a time that the Debtor was insolvent and thus, was constructively fraudulent under Section 548(a)(1)(B).° In ° Section 548(a)(1)(B) provides that the trustee can avoid any transfer of an interest of the debtor in property that was made within one year prior to the filing of the petition if the debtor “received less than a reasonably equivalent value in exchange for such transfer” and “was insolvent on the date that such transfer was made... or became insolvent as a result of such transfer.” App. 22 the alternative, the Trustee asserted that the transfer was made with the actual intent to defraud the Debtor’s creditors and thus, could be avoided under. Section 548(a)(1)(A).° With the Complaint, the Trustee filed a motion for a temporary restraining order, preventing Appellants from transferring or encumbering the Bahamian property for a period of ten days. The Bankruptcy Court granted that motion and later issued a preliminary injunction - prohibiting the same. Appellants moved to dismiss the Trustee’s claim on three grounds. First, Appellants argued that the transfer took place in 1981 when the deed was gifted to them, regardless of when it was recorded. Second, Appellants asserted that the “presumption against extraterritoriality” barred the application of Section 548 to transfers of real property located outside of the United States. Appellants’ third argument was that under principles of “international comity,” the Bankruptcy Court should refrain from applying Sections 548 and 550 extraterritorially in this case. The Bankruptcy Court denied the motion, finding that the argument that the transfer actually occurred in 1981 involved a factual dispute inappropriate for resolution on a motion to dismiss. After reviewing decisions of numerous other courts upholding the extraterritorial application of other provisions of the Bankruptcy Code, the Bankruptcy Court held that neither the presumption § against § Section 548(aX(1)(A) provides that the trustee can avoid any transfer of an interest of the debtor in property that was made within one year prior to the filing of the petition if the debtor made such a transfer “with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made .. ., indebted.” App. 23 extraterritoriality nor the doctrine of international comity warranted dismissal under the facts presented. Shortly thereafter, the Trustee filed a motion for summary judgment. After a hearing, the Bankruptcy Judge granted the motion as to the Trustee’s claim of constructively fraudulent transfer. The Court found that under Section 548(d)(1) of the Bankruptcy Code, the transfer of the property occurred in June of 2000.’ Because there was no dispute that the conveyance was a gift without consideration, and that the Debtor was insolvent at that time, the Bankruptcy Court determined that the conditions for avoidance under Section 548(a)(1)(B) had been met. Because the transfer could be avoided under Section 548(a)(1)(B), the Bankruptcy Court did not reach the merits of Trustee’s claim of intentional fraud under Section 548(a)(1)(A). In this appeal, Appellants contend that the Bankruptcy Court erred in refusing to dismiss the avoidance action under the presumption against extraterritoriality and/or the doctrine of international comity. Because the applicability of the presumption against extraterritoriality is a pure question of law, this Court reviews the decision of the Bankruptcy Court as to that issue de novo. As to whether the Bankruptcy Court should have declined to exercise its jurisdiction over the matter based upon the doctrine of international comity, that question was a matter of that court’s discretion which this Court reviews under an abuse of discretion standard. For the reasons that follow, this Court 7 That section provides that a transfer does not occur until it is perfected against a bona fide purchaser. Thus, for the purposes of the Bankruptcy Code, the transfer did not take place until the deed was recorded on June 21, 2000. App. 24 concludes that the Bankruptcy Court’s decision was correct in both regards. Although it has it roots in some earlier decisions of the Supreme Court,® the “presumption against extraterritoriality” was first denominated as such in Equal Employ. Opportunity Commission v. Arabian American Oil Co. (Aramco), 499 U.S. 244 (1991).’ As explained in Aramco, “[i]t is a longstanding principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Id. at 248(quoting Foley Bros. 336 U.S. at 285). This presumption against extraterritorial effect is based on the common-sense notion that Congress is "primarily concerned with domestic conditions" when it legislates. Foiey Bros., 336 U.S. at 285. Courts are required to assume that Congress acts with knowledge of this presumption and in Aramco, the Supreme Court instructed that unless there is "the affirmative intention of the Congress clearly expressed, courts must conclude that a federal statute does not apply outside the United States. Aramco, 499 U.S. at 248 (quoting Benz v. Compania Naviera Hidalgo, 353 U.S. 138, 147 (1957)). While Aramco would seem to require some “clear statement” in the statute itself indicating the congressional intent that the statute be applied extraterritorially, that requirement appears to have been 8 See American Banana v. United Fruit Co., 213 U.S. 347 (1909); Foley Bros., Inc. v. Filardo, 336 U.S. 281 (1949). ° In Aramco, the Court held that Title VII of the Civil Rights Act did not apply to employment activities that took place abroad. App. 25 relaxed by the Supreme Court in Smith v. United States, 507 U.S. 197 (1993)."° Under Smith, there must only be “clear evidence” of congressional intent to apply the statute extraterritorially. 507 U.S. at 204. In discerning congressional intent in the statute at issue in Smith, Chief Justice Rehnquist looked to the overall structure of the act, the legislative history, and other non-textual sources. Id. at 201-03. In another Supreme Court decision issued shortly after Smith, Sale v. Haitian Centers Council, Inc., 509 U.S. 155 (1993)," the Court indicated that it looked at “all available evidence” about the statute in. order to discern congressional intent, including the legislative history, the place of the particular provision within the statutory scheme, and the relevance of the statute to the overall body of law of which it was a part, i.e., immigration law. 509 U.S. at 177. Furthermore, lower courts considering the presumption against extraterritoriality have concluded that where congressional intent concerning extraterritorial application cannot be divined courts can examine additional factors to determine whether the presumption should be disregarded in a particular case. Hong Kong & Shanghai Banking Corp., Ltd. v. Simon (In re Simon), 153 F.3d 991, 995 (9th Cir. 1998). First, "the presumption is generally not applied where the failure to extend the scope of the statute to a foreign setting will result in adverse effects within the United States." © In Smith, the Court held that the presumption against extraterritoriality barred an action under the Federal Tort Claims Act based on conduct that took place in Antarctica. ‘' In Sale, the Court invoked the presumption against extraterritoriality to preclude provisions of the Immigration and Naturalization Act from applying to Haitian refugees apprehended in international waters. App. 26 Environmental Defense Fund, Inc. v. Massey, 986 F.2d 528, 531 (D.C. Cir. 1993) (citing Steele v. Bulova Watch Co., 344 U.S. 280 (1952)). Second, the presumption is not applicable when the regulated conduct is "intended to, and results in, substantial effects within the United States." Laker Airways, Ltd. v. Sabena Belgian World Airlines, 731 F.2d 909, 925 (D.C. Cir. 1984). While prior to Judge Schneider’s opinion in this action, no reported decision has applied these principles in the context of Section 548 of the Bankruptcy Code, courts have upheld the extraterritorial application of numerous other Code provisions, as noted by Judge Schneider. For example, in Simon, the Ninth Circuit concluded that a violation of a Section 524 discharge injunction by a foreign creditor outside the United States was sanctionable by a United States Bankruptcy Court. 153 F.3d at 995-96. In Nakash v. Zur (In Re Nakash), 190 B.R. 763 (Bankr. S.D.N.Y. 1996), the court held that the automatic stay of Section 362 should be given extraterritorial application so as to protect a debtor from a receiver’s filing of an insolvency proceeding against it in Israel. In In re Dow Corning Corp., 287 B.R. 396 (E.D. Mich. 2002), the district court held that the Code’s prohibition of post-confirmation litigation against a reorganized debtor applied equally to litigation initiated abroad. The fundamental framework of the Bankruptcy Code compels these results. As the Seventh Circuit noted in upholding the application of the Code’s automatic stay provision to halt an action instituted by the receiver of a debtor in the Federation of St. Kitts and Nevis, “the efficacy of the bankruptcy proceeding depends on the [bankruptcy] court’s ability to control and marshal the assets of the debtor wherever located.” Underwood v. Hilliard (In re Rimsat, Ltd.), 98 F.3d 956, 961 (7th Cir. 1996). This ability is specifically provided for in the App. 27 Code’s delineation of the scope of the debtor’s estate: “the estate is comprised of the debtor’s legal or equitable interests in property ‘wherever located and by whomever held.” In re Simon, 153 F.3d 996 (quoting 11 U.S.C. § 54.1(a), emphasis supplied in Simon). As commentators have aptly observed, “the Bankruptcy Code was drafted with the realization that the Code’s key provisions would be: applied extraterritorially when needed to effectuate its principal goals of asset preservation and equitable distribution of the same to holders of allowed claims.” David M. Green and Walter Benzija, “Spanning the Globe: The Intended Extraterritorial Reach of the Bankruptcy Code,” 10 Am. Bankr. Inst. L. Rev. 85, 93 (Spring, 2002). In this action, a Maryland debtor gave a deed to her son and daughter residing in Maryland and Virginia, respectively. The gift, according to Appellants, was made in Maryland. There is no dispute that had the deed related to real property located within the borders of the United States, the Bankruptcy Court could properly avoid the gift and return the property to the Debtor’s estate for the benefit of the creditors. Given the clear congressional intent expressed in the Bankruptcy Code that property of a debtor be treated the same whether located here or abroad, the Court can find no principled reason to reach a different result as to property subject to a pre-petition transfer avoidance action. The identical concerns for marshaling and equitably distributing assets for the benefit of creditors are implicated. Here, as they did before the Bankruptcy Court, Appellants rely heavily on a series of decisions related to the extraterritorial application of the Code’s preferential transfer provision in Section 547. See In re Maxwell Communications Corp., 170 B.R. 800 (Bankr. S.D.N.Y. 1994), affd, 186 B.R. 807 (S.D.N.Y. 1995), aff'd, 93 F.3d 1036 (2° Cir. 1996). In that action, Bankruptcy Judge App. 28 Tina Brozman concluded that Congress did not intend for Section 547 to be applied extraterritorially. As an alternative holding, she concluded that the avoidance actions before her should be dismissed under principles of international comity. The district court affirmed on both grounds. The Second Circuit, however, did not reach the question as to whether the Code’s preference provisions could be applied extraterritorially, affirming instead only on the comity ground. In a law review article that this Court finds particularly enlightening, the bankruptcy court’s decision in Maxwell received some criticism. See Suzanne Harrison, “The Extraterritoriality of the Bankruptcy Code: Will the Borders Contain the Code?,” 12 Bankr. Dev. J. 809 (1996). That article, written before the Second Circuit issued its decision, anticipated the result on appeal and suggested that the lower courts should have limited their consideration to the issue of comity. Id. at 843. The author suggested, and this Court agrees, that lower courts’ presumption of extraterritoriality analysis would have benefitted from examining congressional intent in the context of the Code as a whole instead of the specific provision in isolation. Courts should “interpret each section in such a fashion as ‘to preserve an overall sense and design, in light of the policies sought to be achieved.” Id. at 831 (quoting Hill v. Spencer Savings & Loan Ass’n (In Re Bevill), 83 B.R. 880, 887-88 (D.N.J. 1988)). In a subsequent decision, Judge Brozman limited her earlier holding in Maxwell. See Interbulk Ltd. v. Louis Dreyfus Corp. (In re Interbulk, Ltd.), 240 B.R. 195 (Bankr. S.D.N.Y. 1999). In Interbulk, a chapter 11 trustee sought to avoid, under Section 547, an attachment that a creditor had obtained from a French court a few weeks before the debtor filed its bankruptcy petition. When the creditor attempted to rely on the App. 29 series of decisions in Maxwell “as the linchpin for its argument that there is a presumption against the extraterritorial application of United States preference laws,” Judge Brozman responded: What [the creditor] fails to realize is that there are critical distinctions between the facts of Maxwell and those present here. In Maxwell, there were parallel bankruptcy proceedings in England and the United States for the debtor, an English corporation. The joint administrators appointed by the high court in London and the examiner appointed by this court entered into a procedural protocol (the "Protocol") to coordinate their efforts to administer the two cases as a single estate. The Protocol provided for the creation of a single pool of assets in which creditors from both countries could share by filing claims in either jurisdiction. Three foreign (to the United States) creditors (the "Creditors") had received transfers overseas from the debtor within 90 days of the debtor's bankruptcy filings. All three filed claims in England, but not here. Cognizant that the administrators contemplated suit in the United States to recover the preferences from them, the Creditors sought unsuccessfully, in England, to enjoin the administrators from commencing suit under section 547 of the Code. The administrators then filed adversary complaints in this court to recover the transfers from the Creditors. The Creditors promptly moved for dismissal, pursuant to App. 30 Fed. R.-Civ. P. 12(b)(6), for failure to state a claim upon which relief could be granted. The Creditors argued that the transfers were extraterritorial in nature and considerations of comity prevented the use of section 547 to avoid them. I concluded that section 547 was not meant by Congress to apply extraterritorially and that inasmuch as the center of gravity of these transfers was indeed extraterritorial, they could not be avoided. I alternatively concluded that principles of international comity dictated tht the avoidance actions had to be dismissed. Interbulk, 240 B.R. at 198-99. Like Interbulk, the instant case is readily distinguishable from Maxwell on its facts. Here, there is no international aspect to the transaction at issue other than the happenstance that the property represented by the deed is in the Bahamas. To the extent that this Court’s conclusion is at odds with the legal conclusion of the lower courts in Maxwell, this Court respectfully disagrees with those holdings. Aside from their reliance on the Maxwell decisions, Appellants’ primary argument for the conclusion that Judge Schneider erred is premised on the observation that Bahamas property was not actually property of the estate until after the transfer was avoided. Appellants note that several of the cases relied upon by the court below that applied the Bankruptcy Code extraterritorially did so under the legal fiction that, because bankruptcy court’s have constructive possession » over estate preperty, the foreign property is “legally” located within the jurisdictional boundaries of the court, . regardless of its actual location. See, e.g., Simon, 153 F.3d App. 31 at 996. By constructively locating the foreign property within domestic borders, a court can avoid directly confronting the presumption against extraterritoriality. Appellants are correct that Judge Schneider appears to have based his decision, at least in part, on a finding that the Bahamas property was property of the estate. See 303 B.R. at 783 (“Regardless of the fact that the land in question is located in the Bahamas, it is property of the estate within the subject matter jurisdiction of this Court pursuant to Section 541(a).”). Appellants are also correct that this conclusion would be at odds with a substantial body of case law, including a decision of Judge Schneider, that holds that property recovered by the trustee pursuant to his avoidance powers is not property of the estate until it is actually recovered. See In re Murray, 214 B.R. 271 (Bankr. D. Mass. 1997); In re Yellow Cab Co-op. Ass'n, 178 B.R. 265 (Bankr. D. Colo. 1995); In re Saunders, 101 B.R. 303 (Bankr. N. D. Fla. 1989); see also Allnutt v. Friedman (In Re Allnutt), 1995 U.S. Dist. Lexis 4870 (D. Md. 1995) (affirming decision of Judge Schneider). The conclusion that the real property was not property of the estate, however, does not alter this Court’s conclusion as to the non-applicability of the presumption. Confronting the presumption head on, this Court finds that “all available evidence” demonstrates that Congress did intend for the key provisions of the Bankruptcy Code to be applied ex:traterritorially for the reasons stated above. In the alternative, even if one concluded that the evidence of congressional intent was less than compelling, the Court finds that the so-called Massey exceptions referenced above would compel the Court to disregard the presumption in this instance. Allowing a debtor to defraud creditors, whether constructively or intentionally, by giving away significant foreign assets to family members, would undoubtedly “result in adverse App. 32 effects within the United States." Massey, 986 F.2d at 531. In the context of increasing globalization, to not apply Section 548 extraterritorially would provide the potential to deprive creditors of significant assets merely on the happenstance that they had been cached overseas. Turning to Appellants’ argument based on principles of “international comity,” this Court finds even less support. International comity is defined as “the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.” Hilton v. Guyot, 159 U.S. 113, 164 (1895). International comity “is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other.” Id. at 163. Appellants acknowledge that comity is typically invoked where there are competing proceedings in two countries and further acknowledge that, in this instance, there are no legal proceedings in the Bahamas that would conflict with the bankruptcy action here. Instead, Appellants rely on a second aspect of international comity that was laid out by Justice Scalia in a dissenting opinion in Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993), one that does not arise out of conflicting proceedings. As summarized by Justice Scalia, this principle provides that “a nation having some ‘basis’ for jurisdiction to prescribe law should nonetheless refrain from exercising that jurisdiction ‘with respect to a person or activity having connections with another state when the exercise of such jurisdiction is unreasonable.” Id. at 818 (quoting Restatement (Third) of Foreign Relations Law of the United States § 403(1)). Whether the exercise of jurisdiction in a specific context is App. 33 reasonable turns on a number of factors including, inter alia: the extent to which the activity takes place within the territory [of the regulating state], the connections, such as nationality, residence, or economic activity, between the regulating state and the person principally responsible for the activity to be regulated, the character of the activity to be regulated, the importance of regulation to the regulating state, the extent to which other states regulate such activities, and the degree to which the desirability of such regulation is generally accepted, the extent to which another state may have an interest in regulating the activity, and the likelihood of conflict with regulation by another state. Id., 509 U.S. at 818-19 (citations omitted). Furthermore, in discussing international comity in the context of a bankruptcy action, the Ninth Circuit in Simon has added, “fi]f any philosophy can be attributed to the structure of the Code it is that of deference to the country where the primary insolvency proceeding is located, including the United States if the plenary proceeding is located here, App. 34 and flexible cooperation in the administration of assets.” Simon, 153 F.3d at 998. The activity at issue here is the transfer of property. While the property transferred may be located in the Bahamas, the transfer took place in Maryland. The only individuals with any relationship to, interest in, or potential interest in the property - the debtor, the trustee, the Appellants, and the creditors — are all residents of the United States. No Bahamian individual or entity has any stake in the determination of ownership in the property. Under these circumstances, the Bankruptcy Court did not err in finding international comity concerns insufficient to compel it to withhold action. Accordingly, the decision of the Bankruptcy Court will be affirmed. A separate order will issue. /s/ William M. Nickerson Senior United States District Judge Dated: December , 2004 App. 35 SO ORDERED Date signed April 21, 2004 /s/ James F. Schneider JAMES F. SCHNEIDER U.S. BANKRUPTCY JUDGE IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND In re: BETTY I. FRENCH Case No. 00-6-3163-JS Debtor Chapter 7 KREEK KKK KK KH *K GEORGE W. LIEBMANN, Trustee Adv. Pro. No. 02-5757-JS V. RANDY LEE FRENCH and DONNA MARIE SHAKA, Defendants [ENTERED: April 21, 2004] ORDER GRANTING THE TRUSTEE’S MOTION FOR SUMMARY JUDGMENT AND AVOIDING FRAUDULENT TRANSFER Based upon the memorandum Opinion filed simultaneously herewith, the motion for summary App. 36 judgment filed by George W. Liebmann, Chapter 7 trustee, is hereby GRANTED and the transfer of property identified as “Lot No. 5 of the subdivision called and known as Love Estates in the Bambier District of the City of Nassau on the Island of New Providence, one of the islands of the Commonwealth of the Bahamas,” from the debtor, Betty Irene French, to the defendants, Randy Lee French and Donna Marie Shaka, by deed recorded among the Land Records of the Bahama Islands on June 21, 2000, is hereby AVOIDED and RECOVERED by the trustee on behalf of the debtor’s estate as a constructively fraudulent transfer. SO ORDERED. END OF ORDER App. 37 Date signed April 21, 2004 /s/ James F. Schneider JAMES F. SCHNEIDER U.S. BANKRUPTCY JUDGE IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND In re: BETTY I. FRENCH Case No. 00-6-3163-JS Debtor Chapter 7 KRKK KKK KK KK GEORGE W. LIEBMANN, Trustee Adv. Pro. No. 02-5757-JS Vv. RANDY LEE FRENCH and DONNA MARIE SHAKA, Defendants (ENTERED: April 21, 2004] MEMORANDUM OPINION GRANTING’ THE TRUSTEE'S MOTION FOR SUMMARY JUDGMENT AND A VOIDING FRAUDULENT TRANSFER On February 11, 2004, the trustee's motion for summary judgment came on for hearing. For the reasons set: forth, the motion will be granted. FINDINGS OF FACT App. 38 On July 13, 1999, the Peninsula Bank ("Bank") obtained a judgment in the amount of $3 97,425.10, against Betty Irene French ("debtor") in the Circuit Court for Wicomico County, Maryland. On October 20, 2000, the Bank filed the instant involuntary Chapter 7 bankruptcy petition in this Court against the debtor. On January 29, 2001, an order for relief was entered. On February 11, 2001, the debtor filed her schedules under penalty of perjury and swore that her assets had not diminished significantly during the year before the petition was filed.’ On August 22, 2002, George W. Liebmann, the Chapter 7 trustee, filed the instant complaint to avoid and recover an alleged fraudulent transfer of real property’ in the Bahama Islands, made by the debtor to her son and daughter, the defendants Randy French ("Randy") and Donna Shaka ("Donna"), for no consideration within one year of the filing of the petition. The verified complaint alleged that the debtor did not list the property in her schedules or disclose its existence in her Statement of Financial Affairs. It further alleged that the property was purchased by the debtor and titled in 1 In the debtor's Statement of Financial Affairs [P. 24], she stated under penalty of perjury that during one year before bankruptcy she made no payments to insiders, she suffered no losses from fire, theft, other casualty or gambling, no garnishment or seizure of assets, no repossession of assets or returns, that she made no large gifts or charitable contributions and no transfers of assets outside the ordinary course. * The property was identified in the complaint as “Lot No. 5 of the subdivision called and known as Love Estates in the Bambier District of the City of Nassau on the Island of New Providence, one of the islands of the Commonwealth of the Bahamas." Complaint, § 11. App. 39 her name by deed dated November 11, 1976, and recorded in the Bahamas; and that she transferred the property to the defendants by deed dated December 25, 1981, but that the deed was not recorded among the Bahamian land records until June 21,2000.° The trustee also filed a motion [P. 2] for temporary restraining order ("TRO"), which this Court granted by order [P. 3] entered August 26, 2002. The TRO prohibited the defendants from transferring or encumbering the Behamian property for a period often days. On September 4, 2002, Judge E. Stephen Derby granted the plaintiffs request for a preliminary injunction [P. 7], CONCLUSIONS OF LAW Summary judgment is appropriate when (1) the pleadings, depositions, answers to interrogatories, admissions on file and affidavits show that there is no genuine issue of material fact; and 2) the moving party is entitled to judgment as a matter of law. In determining the facts for summary judgment purposes, the Court may rely upon affidavits made with personal knowledge that sei; forth specific facts otherwise admissible in evidence and sworn or certified copies of papers attached to such affidavits. Fed. R. Civ. P. 56(c); Fed. R. Bankr. P. 7056; Bailey v. Blue Cross & Blue Shield of Virginia, 67 F.2d 53, 56 (4th Cir. 1995); Miller v. FDIC, 906 F.2d 972, 973 (4th Cir. 1990). Permissible inferences to be drawn from the underlying facts are viewed in the light most favorable to the nonmoving party. Miller, 906 F.2d at 973-74 (4th Cir. 1990) (citing Matsushita Elec. Indus. Co., * The Court has previously determined that the instant complaint to recover property of the estate located in the Bahamas does not implicate an _ extraterritorial application of the Bankruptcy Code. Liebmann v. French (In re French), 303 B.R. 774 (Bankr. D. Md. 2003). App. 40 Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 206 S. Ct. 13848, 1356, 89 L. Ed. 2d 538, 553 (1986)). In the instant case, all of the facts and inferences therefrom have been construed in a light most favorable to the defendants. The undisputed facts here present qualify this transfer as constructively fraudulent. 11 U.S.C. § 548(a)(1)(B).* In order to obtain summary judgment on the complaint, the trustee must demonstrate without dispute that the transfer of the subject property was made within one year of the filing of the debtor's bankruptcy petition for less than reasonably equivalent value while the debtor was insolvent. BFP v. Resolution Trust Corp., 511 U.S. 531, 535, 114 S. Ct. 1757, 1760, 128 L. Ed. 2d 556 (1994); Tavenner v. Smoot, 257 F.3d 401, 408-09 (4th Cir. * Section 548(a)(1)(B) provides as follows: § 548. Fraudulent transfers and obligations. (a)(1) The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of filing of the petition if the debtor voluntarily or involuntarily - (BX) received less than a reasonable equivalent value in exchange for such transfer or obligation; (ii(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation|[.] Id. App. 41 2001); Harman v. First American Bank of Maryland (In re Jeffrey Bigelow Design Group, Inc.), 956 F.2d 479, 484- 85 (4th Cir. 1992); Koch v. Rogers (In re Broumas), 203 B.R. 385, 393 (D. Md. 1996). Constructive fraud does not require proof of actual fraudulent intent. Balaber-Strauss uv. Sixty-Five Brokers (In re Churchill Mortgage Investment Corp.), 256 B.R. 664, 667 (Bankr. S.D.N.Y. 2000) ("If actual intent to defraud creditors cannot be proved under Section 548(a)(IMA),.a transfer may be avoided under a theory of constructive fraud."). While the Court accepts the defendants’ contention for purposes of ruling on summary judgment that the property was given to the defendants by deed of gift on December 25, 1981, the gift was not a matter of public record until June 21, 2000, when the deed was recorded. The debtor admitted in her deposition that she continued to visit and reside in the property after she made the gift and that she kept some personal belongings there. Deposition, 14-16, Exhibit 2 of Plaintiff s Ex Parte Motion for Temporary Restraining Order [P. 2]. Section 548(d)(1) of the Bankruptcy Code, which determines when a transfer occurs, provides that a transfer does not take place until it is perfected against a bona fide purchaser. In this case, therefore, the transfer occurred on June 21, 2000, when the deed to the property was recorded by the defendants.® Because the transfer occurred a mere five months before the debtor's ®* “This comports with Section 548(d)(1) of» the Bankruptcy Code, which provides that a transfer occurs ‘when such transfer is so perfected that a bona fide purchaser from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest in the property transferred that is superior to the interest in such property of the transferee, but if such transfer is not so perfected before the commencement of App. 42 involuntary petition was filed, the transfer occurred within the one year requirement of Section 548(a)(1). The undisputed facts also demonstrate that the debtor received less than reasonably equivalent value in exchange for the transfer. The debtor acknowledged that the transfer was by deed of gift. Randy also testified to that effect. Donna did not dispute the testimony of the debtor or Randy that the transfer was by deed of gift. Finally, there is no genuine dispute as to the material fact that the debtor was insolvent at the time of the transfer. Her schedules filed under penalty of perjury on February 11, 2001, less than one year after the conveyance took place, clearly demonstrate the fact of her insolvency. They reflect assets totaling $220,950, compared with liabilities of $2,940,175.35 [P.21]. The gross difference between the debtor's assets and liabilities with no reported change of circumstances in the year before bankruptcy leads to the inescapable conclusion that she was insolvent on June 21, 2000, the date of the transfer. "Where a debtor is shown to be insolvent at a date subsequent to a particular transfer and the debtor's condition did not change during the interim period, it is logical and permissible to presume that the debtor was insolvent as the time of the transfer." Grant v. Davis (In re Damason Constr. Corp.), 101 B.R. 775, 778 (Bankr. M.D. Fla. 1989), citing Foley v. Briden (In re Arrowhead Gardens, Inc.), 32 B.R. 296 (Bankr. D. Mass. 1983). The fact is undisputed that the debtor reported that she suffered no diminution of assets during the year prior to bankruptcy. Therefore, the Bank's judgment alone probably rendered her insolvent as early as July 13,1999, well before the date of transfer. the case, such transfer is made immediately before the date of the filing of the petition.’ 11 U.S.C. § 548 (d\J)." Liebmann, 303 B.R. 774, 777 (2003). App. 43 Because the record supports the finding that the transfer was constructively fraudulent, it is unnecessary to address the other grounds raised in the complaint. WHEREFORE, the trustee's motion for summary jadgment will be GRANTED and the subject transfer will be AVOIDED and RECOVERED by the trustee. ORDER ACCORDINGLY. cc: Orbie R. Shively, Esquire Liebmann and Shively 8 W. Hamilton Street Baltimore, Maryland 21201 Counsel to the Chapter 7 Trustee George W. Liebmann, Esquire Liebmann and Shively 8 W. Hamilton Street Baltimore, Maryland 21201 Plaintiff and Chapter 7 Trustee Stanton J. Levinson, Esquire P.O. Box 1746 Silver Spring, Maryland 20915 Counsel for the Defendants Randy Lee French 20957 Nanticoke Road Bivale, Maryland 21814 Donna Marie Shaka 11322 Magnolia Place Smithfleld, Virginia 23430 Betty Irene French 3999 Greenhill Church Road Quantico, Maryland 21856 App. 44 Office of the U.S. Trustee 300 West Pratt Street Suite 350 Baltimore, Maryland 21201 App. 45 SO ORDERED [ENTERED: OCTOBER 8, 2003] Date signed October 07, 2003 /s/ James F. Schneider JAMES F. SCHNEIDER U.S. BANKRUPTCY JUDGE IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND In re: BETTY I. FRENCH Case No. 00-6-3163-JS Debtor Chapter 7 RRKKKKK KKK KK GEORGE W. LIEBMANN, Trustee Adv. Pro. No. 02-5757-JS v. RANDY LEE FRENCH and DONNA MARIE SHAKA, _ Defendants ORDER DENYINu THE DEFENDANTS’ MOTION TO DISMISS Based upon the memorandum opinion filed simultaneously herewith, the defendants’ motion to dismiss is hereby DENIED. App. 46 END OF ORDER cc: Orbie R. Shively, Esquire George W. Liegmann, Esquire Liebmann and Shively 8 W. Hamilton Street Baltimore, MD 21201 Counsel to the Chapter 7 Trustee George W. Liegmann, Esquire Liebmann and Shively 8 W. Hamilton Street Baltimore, MD 21201 Plaintiff and Chapter 7 Trustee Stanton J. Levinson, Esquire P.O. Box 1746 Silver Spring, Maryland 20915 Counsel for the Defendants Randy Lee French 20957 Nanticoke Road Bivale, Maryland 21814 Donna Marie Shaka 11322 Magnolia Place Smithfield, Virginia 23430 Betty Irene French 3999 Greenhill Church Road Quantico, Maryland 21856 App. 47 In re: BETTY IRENE FRENCH, Debtor; GEORGE W. LIEBMANN, Trustee v. RANDY LEE FRENCH and DONNA MARIE SHAKA, Defendants Case No. 06-63163-JS, Chapter 7, Adv. Pro. No. 02-5757-JS UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND 303 B.R. 774; 2003 Bankr. LEXIS 1813 October 7, 2003, Decided [ENTERED: OCTOBER 8, 2003] DISPOSITION: [**1] Defendants’ motion to dismiss clenied. LexisNexis(R) Headnotes SOUNSEL: For Chapter 7 Trustee: Orbie R. Shively, Esquire, George W. Liebmann, Esquire, Liebmann and Shively, Baltimore, MD. George W. Liebmann, Esquire, Plaintiff and Chapter 7 Trustee, Liebmann and Shively, Baltimore, Maryland. For Defendants: Stanton J. Levinson, Esquire, Silver Spring, Maryland. eTUDGES: JAMES F. SCHNEIDER, U.S. BANKRUPTCY JUDGE. OPINION BY: JAMES F. SCHNEIDER OPINION: [*775] _ App. 48 MEMORANDUM OPINION DENYING THE DEFENDANTS' MOTION TO DISMISS This matter is before the Court upon the defendants’ motion to dismiss the trustee's complaint to recover fraudulently transferred estate property. For the reasons set forth, the motion will be denied. : FINDINGS OF FACT | On October 2U, 2000, the Peninsula Bank filed the instant involuntary Chapter 7 bankruptcy petition in this Court against the debtor, Betty Irene French. On January 29, 2001, an order for relief was entered. On August 22, 2002, George W. Liebmann, the Chapter 7 trustee, filed the instant complaint to avoid and recover an alleged fraudulent transfer made by the debtor to her son, Randy French, and her daughter, Donna Shaka, of certain [**2] real property located in Nassau in the Bahama Islands for no consideration within 12 [*776] months of the filing of the petition. The verified complaint alleged that the debtor did not list the property in her schedules or disclose its existence in her Statement of Affairs which she filed in her bankruptcy case. It further alleged that the property was purchased by the debtor and titled in her name by deed dated November 11, 1976, and recorded in the Bahamas; that she deeded the property to the defendants by deed dated December 1981 but not recorded in the Bahamian land records until June 21, 2000. The trustee also filed a motion [P. 2] for temporary restraining order ("TRO"), which:this Court granted by order [P. 3] entered August 26, 2002. The TRO prohibited the defendants from transferring or encumbering the Bahamian property for a period often days. On App. 49 September 4, 2002, Judge E. Stephen Derby granted the plaintiffs request for a preliminary injunction [P. 7]. On October 10, 2002, the defendants filed the instant motion to dismiss [P. 9]. The motion was premised upon two legal arguments. First, that the transfer in question occurred upon the date the unrecorded deed was executed, [**3] namely, December 1981, well outside the one-year period authorized for the recovery of fraudulemt conveyances. Second, that Sections 548 and 550 of the Bankruptcy Code nl [*777] providing for the recovery of fraudulent transfers, do not apply to property located cutsiide the borders of the United States, citing Maxwell Communication Corp. v. Barclays Bank (In re Maxwell Communication Corp.), 170 B.R. 800 (Bankr, S.D. N.Y. 1994), affd, 186 B.R. 807 (S.D.NLY. 1995), affd, 93 F.3d 1036 (2d Cir. 1996), and principles of International comity.. nl Section 548/a) provides, as follows: § 548. Fraudulent transfers and obligations. (A\) The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily- (A) made such transfer or incurred such obligation with’ actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after App. 50 the date that such transfer was made or such obligation was incurred, indebted; or (B)Gi) received less than a reasonably equivalent value in exchange for such transfer or obligation; and (ii) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation; (II) was engaged in business or a transaction, or was about to engage in business.or a transaction, for which any property remaining with the debtor was an unreasonably small capital; or (III) intended to incur, or believed that the debtor would incur, debts that would be beyond the debtor's ability to pay as such debts matured. 11 U.S.C. $ 548(a). Section 550 of the Code provides, as follows: § 550. Liability of transferee of avoided transfer (a) Except as otherwise provided in this section, to the extent that a transfer is avoided, under section 544, 545, 547, 548, 549, 553(b), or 724(a) of this title, the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from- - App. 51 (1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or (2) any immediate or mediate transferee of such initial transferee. (b) The trustee may not recover under section (a)(2) of this section from- - (1) a transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith, and without knowledge of the voidability of the transfer avoided; or (2) any immediate or mediate good faith transferee of such transferee. (c) If a transfer made between 90 days and one year before the Sling of the petition- - (1) is avoided under section 547(b) of this title; and (2) was made for the benefit of a creditor that at the time of such transfer was an insider; the trustee may not recover under subsection (a) from a transferee that is not an insider. (d) The trustee is entitled to only a single satisfaction under subsection (a) of this section. App. 52 (e)(1) A good faith transferee from whom the trustee may recover under subsection (a) of this section has a lien on the property recovered to secure the lesser of- - (A) the cost, to such transferee, of any improvement made after the transfer, less the amount of any profit realized by or accruing to such transferee from such property; and (B) any increase in the value of such property as a result of such improvement, of the property transferred. (2) In this subsection, "improvement" includes- - (A) physical additions or changes to the property transferred; (B) repairs to such property; (C) payment of any tax on such property; (D) payment of any debt secured by a lien on'such property that is superior or equal to the rights of the trustee; and (E) preservation of such property. (f) An action or proceeding under this section may not be commenced after the earlier of- - App. 53 (1) one year after the avoidance of the transfer on account of which recovery under this section is sought; or (2) the time the case is closed or dismissed. 11 U.S.C. $ 550. [**4] They also cited the case of Kojima v. Grandote Intern., LLC (In re Grandote Country Club Co., Ltd.), 252 I*.3d 1146 (8th Cir. 2001), for the proposition that foreign law can never apply to property located in another country. The defendants claim that there are no cases standing for the proposition that Sections 547 and 548 may be applied outside the United States to permit a trustee to recover property. CONCLUSIONS OF LAW . To the extent that the motion to dismiss contests the date of the transfer, it must fail. "When ruling upon a rnotion to dismiss a complaint for failure to state a claim for which relief can be granted pursuant to Federal Rule /2(6)(6), the Court must accept as true all well-pleaded allegations in the complaint, including all reasonable inferences that may be drawn from them, in the light rnost favorable to the plaintiff." Hemelt v. Pontier (In re Pontier), 165 B.R. 797, 798 (Bankr. D. Md. 1994). As stated in the complaint, the transfer in this case occurred cn June 21, 2000, when the deed to the property was recorded among the Bahamian land records by the clefendants. This comports with Section 548(d)(1) of the Bankruptcy [**5] Code, which provides that a transfer App. 54 occurs “when such transfer is so perfected that a bona fide purchaser from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest in the property transferred that is superior to the interest in such property of the transferee, but if such transfer is not so perfected before the commencement of the case, such transfer is made immediately before the date of the filing of the petition." The motion to dismiss could be denied without even addressing the extraterritoriality of the Bankruptcy Code, because the complaint does not allege that the transfer occurred outside this country, which the motion to dismiss assumes. Nevertheless, to the extent that the avoidance of the transfer at issue requires [*778] a discussion of extraterritoriality, it is rioted that the extraterritorial application of the Bankruptcy Code has been upheld in the context of the discharge injunction of Section 524, the worldwide effect of the automatic stay of Section 362, and the prohibition against litigation against a reorganized debtor after confirmation of a plan, pursuant to Sections 524 and 1141, considerations that have some application [**6] to the present controversy. In Hong Kong and Shanghai Banking Corp., Ltd. v. Simon (In re Simon), 153 F.3d 991 (9th Cir. 1998), the Ninth Circuit held in a Chapter 7 case that the violation of the discharge injunction by a foreign creditor outside the United States was sanctionable by the USS. Bankruptcy Court. In so holding, the court stated: Congress has the unquestioned authority to enforce its laws beyond the territorial boundaries of the United States. E.E.O.C. v. Arabian American Oil Co., 499 U.S. 244, 248, 111 S. Ct. 1227, 113 L. Ed. 2d 274 (1991) ("Aramco"). Whether Congress has exercised that authority in a App. 55 particular case is a matter of statutory construction. Stegeman v. United States, 425 F2d 984, 986 (9th Cir. 1970)(en banc). In construing a statute to ascertain Congress’ territorial intent, we begin with the presumption that "the legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Foley Bros. v. Filardo, 336 U.S. 281, 285, 69 S. Ct. 575, 93 L. Ed. 680 (1949). With that presumption in mind, we analyze intent [**7] by first examining the language of the act for indications of intent regarding extraterritorial application. Aramco, 499 U.S. at 248, 111 S. Ct. 1227, 113 L. Ed. 2d 274. In addition to the plain statutory words, intent may be discerned with reference to similarly-phrased legislation, id. at 250-51, HI S. Ct. 1227, or the overall statutory scheme. Foley Bros., 336 U.S. at 286, 69 S. Ct. 575. If these inquires are inconclusive, examination of legislative history is appropriate. Jd. Resort to administrative interpretations of the law may be employed if the legislative history is inconclusive. Id. at 286-88, 69 S. Ct. 575. If Congressional intent concerning extraterritorial application cannot be divined, then courts will examine additional factors to determine whether the traditional presumption against extraterritorial application should be disregarded is a particular case. First, “the presumption is generally not applied where the failure to extend the scope of the statute to a foreign setting will result in App. 56 adverse effects within the United States." Environmental Defense Fund, Inc. v. Massey, 300 U.S. App. D.C. 65, 986 F.2d 528, 531 (D.C. Cir. 1993) [**8] (citing Steele v. Bulova Watch Co., 344 U.S. 280, 73 S. Ct. 252, 97 L. Ed. 319, 1953 Dec. Comm'r Pat. 424 (1952)). Second, the presumption against extraterritoriality is not applicable when the regulated conduct is "intended to, and results, in, substantial effects within the United States" Laker Airways, Ltd. v. Sabena Belgian World Airlines, 235 U.S. App. D.C. 207, 731 F.2d 909, 925 (D.C. Cir. 1984). Applying this analysis to the instant case, the district court was entirely correct in upholding the bankruptcy court's order and giving effect to the section 524 discharge injunction. The district court properly concluded that as to actions against the bankruptcy estate, Congress. clearly intended extraterritorial application of the Bankruptcy Code. The filing of a bankruptcy petition under 17 U.S.C. § $ 301, 302 or 303 creates a bankruptcy estate. 11 U.S.C $ 541 (a). With certain exceptions, the estate is comprised of the debtor's legal or equitable interests in property "wherever [*779] located and by whomever held." Id. (emphasis supplied). The district court in which the bankruptcy case is commenced obtains exclusive in rem jurisdiction over all of the [**9] property in the estate. 28 U.S.C. $ 1334(e); Commodity Futures Trading Comm'n v. Co Petro App. 57 Marketing Group, Inc., 700 F.2d 1279, 1282 (9th Cir. 1983)(interpreting 28 U.S.C. $ 1471, the statutory precursor to 28 U.S.C. § 1334(e)). The court's exercise of "custody" over the debtor's property, via its exercise of in rem jurisdiction, essentially creates a fiction that the property - - regardless of actual location - - is legally located within the jurisdictional boundaries of the district in which the court sits. See Katchen uv. Landy, 382 U.S. 323, 327, 86 S. Ct. 467, 15 L. Ed. 2d 391 (1966)(noting that bankruptcy courts have "constructive possession" over estate property) (internal quotation marks and citations omitted); Commodity Futures, 700 F.2d at 1282 (noting that under the bankruptcy code, “all property of the debtor, wherever located, is in custodia legis of the bankruptcy court."). This includes property outside the territorial jurisdiction of the United States. See Stegeman, 425 F.2d at 986 (construing extraterritorial jurisdictional [**10] reach of — prior Bankruptcy Act); see also Underwood v. Milliard (In re Rimsat, Ltd.), 98 F.3d 956, 961 (7th Cir. 1996). Given this clear expression of intent by Congress in the express language of the Bankruptcy Code, we conclude _ that Congress intended extraterritorial application of the Bankruptcy Code as it applies to property of the estate. Although Hong Kong-Shanghai concedes this point, it questions whether such an extraterritorial application may operate to enjoin a foreign proceeding. As a matter of general App. 58 principle, protection of in rem or quasi in rem jurisdiction is a sufficient basis for a court to restrain another’ court's proceedings. Donovan v. City of Dallas, 377 U.S. 408, 412, 84 S. Ct. 1579, 12 L. Ed. 2d 409 (1964). In such cases, "the state or federal court having custody of such property has exclusive jurisdiction to proceed." Jd. This rationale extends to foreign proceedings. See Seattle Totems Hockey Club v. National Hockey League, 652 F.2d 852, 855 (9th Cir. 1981); see also Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349, 1356 (6th Cir. 1992); China Trade & Develop. Corp., v. U. V. Choong Yong, 837 F.2d 33, 36 (2d Cir. 1987). [**11] In the bankruptcy context, the Seventh Circuit has expressly held that protection of the bankruptcy court's in rem jurisdiction over estate property allows an international proceeding to be enjoined pursuant to the automatic stay in 11 U.S.C. $ 362. Underwood, 98 F.3d at 961. As Chief Judge Posner explained: "The efficacy of the bankruptcy proceeding depends on the court's ability to control and marshal the assets of the debtor wherever located..." Id. _ As applied to the concept of in rem bankruptcy jurisdiction, there is no functional difference between’ the automatic stay imposed by 11 U.S.C. $ 362 upon the commencement of a bankruptcy and the injunction prohibiting collection actions against the bankruptcy estate provided in 17 U.S.C. $ 524(a)(3). Each stay operates to protect the estate and the in App. 59 rem jurisdiction of the bankruptcy court. Accordingly, we join the Seventh Circuit's logic and hold that a bankruptcy court may validly exercise its in rem jurisdiction to protect estate property wherever the property is located in issuing a discharge injunction under 11 U.S.C. $ 524. [**12] Thus, the district court correctly held in this case that the 11 U.S.C. $ 524 discharge enjoined Hong [*780] Kong-Shanghai from commencing collection against any bankruptcy estate property regardless of its geographic location. Simon, 153 F.3d at 995-96. According to Section 541(a) of the Bankruptcy Code n2 property of the bankruptcy estate includes every interest of a debtor in property "wherever located and by whomever held." In Nakash v. Zur (In re Nakash), 190 B.R. 763 (Bankr. S.D.N.Y. 1996), this provision was held to indicate congressional intent that the automatic stay provisions of Section 362 of the Code be given extraterritorial application to protect a debtor from the filing of an insolvency proceeding against it in Israel. n2 Section 541 (a) provides, as follows: § 541. Property of the estate. (a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held: (1) | Except as_ provided in subsections (b) and (c)(2) of this section, all App. 60 legal or equitable interests of the debtor in property as of the commencement of the (2) All interests of the debtor and the debtor's spouse in community property as of the commencement of the case that is- (A) under the sole, equal, or joint management and control of the debtor; or (B) liable for an allowable claim against the debtor, or for both an allowable claim against the debtor and an allowable claim against the debtor's spouse, to the extent that such interest is so liable. (3) Any interest in property that the trustee recovers under section 329(b), 363(n), 543, 550, 553, or 723 of this title. (4) Any interest in property preserved for the benefit of or ordered transferred to the estate under section 510(c) or 551 of this title. (5) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date- - (A) by bequest, devise, or inheritance; : (B)as a result of a _ property settlement agreement with the debtor's App. 61 spouse, or of an interlocutory or final divorce decree; or (C) as a beneficiary of a life insurance policy or of a death benefit plan. (6) Proceeds, product, offspring, rents, or profits of or from property of the estate, except such as are earnings from services performed by an individual debtor after the commencement of the case. (7) Any interest in property that the estate acquires after the commencement of the case. 11 U.S.C. § 541 (a). [**13] In the case of In re Dow Corning Corp., 287 B.R. 396 (E.D. Mich. 2002), a confirmed Chapter 11 plan was given extraterritorial effect based upon the following analysis: Generally, there is a presumption against extraterritorial application of United States law as argued by the Australian Claimants. However, in the bankruptcy context, that presumption does not apply if ignoring the bankruptcy court orders would have "substantial effects within the United States." Jn re Simon, 153 F.3d 991, 997 (9th Cir. 1998). As noted previously, Dow Australia is contributing cash and insurance assets to the Joint Plan and Dow Australia has filed a contribution claim against the Debtor. If the Australian App. 62 Claimants were allowed to pursue their claims against Dow Australia, the Debtor would lose Dow Australia's contribution and would also have to defend its products in the Australian courts. It is noted that the Australian Claimants have submitted themselves to this Court's jurisdiction by participating in this bankruptcy action. When a creditor submits to bankruptcy court jurisdiction by filing a proof of claim in order to collect its debt, the creditor is [**14] subject to the court's orders and any discharge order pursuant to 11 U.S. C. $ 524. Id. at 997. International comity does not [*781] prohibit an injunction issued by the bankruptcy court. Jd. at 997-98. It is noted that the Bankruptcy Code extends the bankruptcy court's power over the debtor's legal and equitable interests in property "wherever located." Id. at 998; 11 U.S.C. § 541, The bankruptcy was initiated in the United States and the Australian Claimants participated in the action. It is noted that the release and injunction provisions [of the Joint Plan] do not apply to the Australian courts but to the participants in the bankruptcy proceedings, - specifically, the Debtor, Dow Australia and the Australian Claimants. The discharge provision of the Bankruptcy Code, 11 U.S.C § 524, does not apply to courts outside of the United States but to those creditors who enjoyed the benefits of participating in the United States bankruptcy. In re Simon, 153 F.3d at 999. The release and iujunction provisions in this case do not conflict with * * App. 63 the sovereignty of [**15] the Australian courts since those provisions do not apply to the Australian courts but to those who participated in the bankruptcy action, such as the Australian Claimants. It is further noted that there is no competing bankruptcy proceeding in Australia at this time, therefore, there is no _ conflict regarding the bankruptcy laws at issue. The Australian Claimants are therefore bound by the Court's orders because they participated in the bankruptcy action. * Without a release and injunction, the Shareholders would not have agreed to a plan at the funding level of the current Plan or one that involved the Shareholders' rights to hundreds of millions of dollars of insurance proceeds. . . The Debtor, alone, would have been unable to fund the Plan at its current level -without the insurance proceeds and would have had to stay in bankruptcy. The Shareholders and the subsidiaries/affiliates would each have potential contribution and indemnity claims against the Debtor if litigation over the Debtor's products were asserted against the non-debtors and would have no interest in relinquishing any right to the insurance. As noted by the Bankruptcy Court and the Sixth Circuit, claims for [**16] indemnification and contribution would affect the size of the estate and the length of time the bankruptcy proceedings will be sending, as well as Dow Coming's ability to resoive its liabilities and proceed with App. 64 reorganization. See, In re Dow Corning Corp., 244 B.R. 721, 745 (Bankr. E.D-Mith. 1999); In re Dow Corning Corp., 86 F.3d 482, 494. The Debtor has_ consistently maintained that the main reason the Debtor filed for bankruptcy was because of the thousands of pending lawsuits against it claiming its silicone gel products caused injury and disease. The Joint Plan submitted by the Debtor and the Tort Claimants' Committee was to resolve the pending litigation against the Debtor, its Shareholders and its subsidiaries and affiliates . . . The injunction and release provisions are essential to the Joint Plan and to both the consenting and non- consenting creditors. Dow Corning, 287 B.R. at 411-13. The fallacy of the defendants’ arguments is clear when one examines the cases. In Interbulk Lid. v. Louis Dreyfiis Corp. (In re Interbulk, Ltd.), 240 B.R. 195 (Bankr. S.D.N.Y. 1999), Chief Judge Tina Brozman distinguished [**17] her opinion in Maxwell, 170 B.R. 800 (Bankr. S.D. AT. 1994), holding that Section 547 might be invoked to address a transfer hi the form of an attachment obtained against an American debtor by an American corporation in a foreign [*782] court, and stated that such a transfer was not extraterritorial: . . .What Dreyfus fails to realize is that there are critical distinctions between the facts of Maxwell and those present here. App. 65 In Maxwell, there were parallel bankruptcy proceedings in England and the United States for the debtor, an English corporation. See Maxwell, 186 B.R. 807, 813 (S.D.N.Y. 1995). The joint administrators appointed by the high court in London and the examiner appointed by this court entered into a procedural protocol (the "Protocol") to coordinate their efforts to administer the two cases as a single estate. Id. The Protocol provided for the creation of a single pool of assets in which creditors from both countries could share by filing claims in either jurisdiction. Jd. Three foreign (to the United States) creditors (the "Creditors") had received transfers overseas from the debtor within 90 days of the debtor's bankruptcy [(**18] filings. Id, All three filed claims in England, but not here. Cognizant that the administrators contemplated suit in the United States to recover the preferences from them, the Creditors sought unsuccessfully, in England, to enjoin the administrators from commencing suit under section 547 of the Code. The administrators then filed adversary complaints in this court to recover the transfers from the Creditors. Id. at 814. The Creditors promptly moved for dismissal, pursuant to Fed. R. Civ. P. 12(6)(6), for failure to state a claim upon which relief could be granted. Id. The Creditors argued that the transfers were extraterritorial in nature and considerations of comity prevented the use of section 547 to avoid them. Id. I concluded that section 547 was not meant by Congress to apply extraterritorially and_ that App. 66 inasmuch as the center of gravity of these transfers was indeed extra‘erritorial, they could not be avoided. I alternatively concluded that principles of international comity dictated that the avoidance actions had to be dismissed. Whereas my decision was affirmed on both grounds in the district court, in the [**19] further appeal to the circuit court, only the alternative holding was reached and my decision was affirmed on that ground alone. The circuit court did not rule on the question of first impression - whether the U.S. preference laws are extraterritorial in their reach. Interbulk, 240 B.R. 195,198-- 99. Grandote Country Club, 252 F.3d 1146 (10th Cir. 2001), another case cited by the defendants, is equally inapposite to the facts of the instant case as was Maxwell. Grandote was a choice of law decision which, like Maxwell, involved parallel or duplicate insolvency proceedings pending in this country and overseas. The - trustee in a Japanese bankruptcy case brought an ancillary action in this country under Section 304 to avoid the tax sale of a Japanese-owned golf course in Colorado as a fraudulent conveyance. The question raised was whether to apply the law of Japan or of this country to a proceeding brought in this country by a foreign national relating to land located in this country. The bankruptcy, district and circuit courts discounted questions of comity - and applied the Colorado Uniform Fraudulent Transfer ' Act, holding that the tax [**20] sale in question did not effect a fraudulent transfer. 252 F.3d at 1150-52, The instant complaint was brought by the involuntary debtor's bankruptcy trustee in a proceeding filed in this country to determine the rights of the debtor App. 67 in property located outside of this country which she allegedly transferred to insiders, namely her children, for no consideration [*783] and which she failed to disclose to her creditors. The fact that there is no parallel or duplicative insolvency proceeding now pending in the Bahamas is an important factor in this Court's determination to deny the motion to dismiss. The defendants claim that Bahamian law controls the interest of the debtor in property located _ there. However, having conveyed the property to the clefendant transferees, it is obvious that considerations of ‘comity with the Bahamas are not implicated here. Under Bahamian law, the debtor has no further interest in the property conveyed and according to the defendants, the transfer to them cannot be avoided. This fact, if true, means that granting the motion to dismiss will most certainly result in prejudice to the clebtor's American creditors, whose interests are represented here by [**21] the trustee. Professor Jay Lawrence Westbrook, Benno C. Schmidt Chair of Business Law at the University of Texas School of Law, who was appointed amicus curiae by Chief Judge Brozman in the Maxwell case, rendered his opinion regarding the proper choice of law to be epplied in such a straight-forward case as the instant one: App. 68 ... Ina case like Maxwell, a particularized choice-of-law analysis may be unavoidable. In most transnational cases, however, the home country of the debtor-transferor of an alleged preference will be beyond serious argument. I continue to believe application of a home-country rule in those cases makes the most sense. Jay Lawrence Westbrook, The Lessons of Maxwell © Communication, Fordham Law Review, May 1996, 2531,2541. Regardless of the fact that the land in question is located in the Bahamas, it is property of the estate within the subject matter jurisdiction of this Court pursuant to Section 54l(a). This Court enjoys primary jurisdiction over the subject property because there is no competing insolvency proceeding involving the debtor now pending in the Bahama Islands. Cf. Stonington Partners, Ine. v. Lernout & Hauspie Speech Products, N. V., 310 F.3d 118 (3d Cir. 2002) [**22] (U.S. Bankruptcy Court erroneously entered "“anti-suit" injunction against pending Belgian insolvency proceeding according to the Maxwell analysis); and Official Committee of Unsecured Creditors v. Transpacific Corp. Ltd. (In re Commodore Intern., Ltd.), 242B.R. 243 (Bankr. S.D.N.Y, 7 P9P,) (Bahamian insolvency proceedings were given deference under the principle of comity, where a competing insolvency proceeding was pending in the Bahamas). This Court has personal jurisdiction as well over the parties, including the defendants, both of whom are domiciliaries of the United States who were properly served. As the debtor's children, the defendant- transferees are insiders of the debtor. This matter is a core proceeding over which this Court is exercising in rem jurisdiction. 28 U.S. C. § 157(b)(2)(F) and (H). App. 69 For all these reasons, the defendants' motion to clismiss will be DENIED. ORDER ACCORDINGLY. SO ORDERED Dated October 07, 2003 ORDER DENYING THE DEFENDANTS' MOTION TO DISMISS Based upon the memorandum opinion filed simultaneously herewith, the defendants’ motion to clismiss is [**23] hereby DENIED. App. 70 JUDGMENT Filed: February 14, 2006 [ENTERED: February 14, 2006] UNITED STATES COURT OF APPEALS for the Fourth Circuit No. 05-1054 CA-04-1947-WMN In Re: BETTY I. FRENCH Debtor RANDY LEE FRENCH; DONNA MARIE SHAKA Appellants we GEORGE W. LIEBMANN Trustee - Appellee Appeal from the United States District Court for the District of Maryland at Baltimore In accordance with the written opinion of this Court filed this day, the Court affirms the judgment of the District Court. A certified copy of this judgment will be provided to the District Court upon issuance of the mandate. The judgment will take effect upon issuance of the mandate. /s/ Patricia S. Connor CLERK App. 71 11 U.S.C. § 541: (a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of the following property, wherever located and by whomever held: (1) Except as provided in subsections (b) and (c)(2) of this section, all legal or equitable interests of the debtor in property as of the commencement of the case. KKKKE (3) Any interest in property that the trustee recovers under section 329(b), 363(n), 543, 550, 553, or 723 of this title. App. 72 11 U.S.C. § 544: (b)(1) Except as provided in paragraph (2), the trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502 of this title or that is not allowable only under section 502(e) of this title. App. 73 11 U.S.C. § 547 (b) Except as provided in subsection (c) of this section, the trustee may avoid any transfer of an interest of the debtor in property— (1) to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by the debtor before such transfer was made; (3) made while the debtor was insolvent; (4) made— (A) on or within 90 days before the date of the filing of the petition; or (B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and ; (5) that enables such creditor to receive more than such creditor would receive if— (A) the case were a case under chapter 7 of this title; (B) the transfer had not been made; and (C) such creditor received payment of such debt to the extent provided by the provisions of this title. App. 74 11 U.S.C. § 548: (a)(1) The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily — (A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted; or (B) received less than an equivalent value in-exchange for such transfer or obligation; and (ii) (JD was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation; (IJ was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the debtor was an unreasonably small capital; or | (III) intended to incur, or believed that the debtor would incur, debts that would be beyond the debtor’s ability to pay as such debts matured. App. 75 (d)(1) For the purposes of this section, a transfer is made when such transfer is so far perfected that a bona fide purchaser from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest in the property transferred that is superior to the interest in such property of the transferee, but if such (transfer is not so perfected before the commencement of the case, such transfer is made immediately before the late of the filing of the petition. App. 76 11 U.S.C. § 550: (a) Except as otherwise provided in this section, to the extent that a transfer is avoided under section 544, 547, 548, 549, 553(b), or 724(a) of this title, the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such | property, from — (1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or (2) any immediate or mediate transferee of such initial transferee. App. 77 28 U.S.C. § 1334: (e) The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction of all of the property, wherever located, of the debtor as of the commencement of such case, and of the property of the estate. | App. 78 [1932] 4 D.LR. 529, *; 1932 D.LR. LEXIS 649, ** (C) The Cartwright Group Ltd., 2006 DUKEKet al. v. ANDLER et al. [1932] 4 D.LR. 529; 1932 D.LR. LEXIS 649 CASE-HISTORY: Reversing [1932] 2 D.L.R. 19: Varying in part [1931] 3 D.L.R.561 Supreme Court of Canada JUDGES: Duff, Rinfret, Lamont, Smith and Cannon, JJ. October 11, 1932 KEYWORDS-1: Conflict of Laws I A — Jurisdiction of foreign Court in personam -Title to land in another country. KEYWORDS-2: Judgments and Orders IV A — Foreign judgments based on fraud --Purporting to have effect in rem — Recognition -- Conclusiveness — Whether supplementary enforcement. SUMMARY-2: Courts of a foreign country have no jurisdiction to adjudicate in rem upon the title to any immovable not situate in that country. Thus, when the defendant is resident within the territory of a foreign Court and has in alleged fraud of the plaintiff obtained title to land situated in another country, a judgment of the foreign Court purporting to deal with the title to that land does not affect the title as such and can be enforced merely in personam. Such a judgment cannot be recognized by the Courts of the country of the situs as binding between the parties and will not be enforced —— App. 79 against the defendant there by a supplementary judgment in rem. : APPEAL by the defendant from the judgment of the 3ritish Columbia Court of Appeal, [1932] 2 D.L.R. 19, 45 3.C.R. 96, reversing in part [1931] 3 D.L.R. 561, 43 ~ B.C.R. 549. Reversed. G. F. Henderson, K.C., and D. K. MacTavish, for appellants. A. Bull, K.C., for respondents. JUDGMENT-BY: DUFF, 3. SMITH, J. JUDGMENT: DUFF, J.:—The appeal should be allowed, and the action dismissed, with costs to defendants throughout, for the reasons given by Smith, J. RINFRET and LAMONT, JJ,, concur with SMITH, J. SMITH, J.:—On September 25, 1925, the appellant George E. Duke, entered into a contract with Josephine Promis, Augusta Col, Sophia Promis, Mary Giflespie, and Oscar Promis for the purchase of certain real estate in the City of Victoria, in the Province of British Columbia. The contract reads:-- We the undersigned (naming the above vendors) have this day granted, transferred, sold and conveyed to G. E. Duke the following described real property situated in Victoria City, B.C., Dominion of Canada. Then follows the particular description, the price, $55,000, payable $10,000 cash and a note for $45,000 to be secured by a mortgage on certain property in the City of Berkeley, in California, "the said mortgage to be App. 80 subject to an existing encumbrance now of record in the sum of $22,150 as a first lien on the property." There is then the following provision:-- Upon evidence of good merchantable title being vested in G. E. Duke, he will immediately cause to be paid in to the Alameda County Title Insurance Company the sum of ten thousand ($10,000.00) dollars U. S. lawful money, together with note and mortgage to be delivered to the vendors. All the parties to the contract were, at the time, residents of California, and the survivors and executors of the two vendors, who died shortly after the date of the contract, have continued to be residents of that state. This contract or another conveyance was placed in the hands of the Alameda County Title Ins. Co., it is claimed in escrow, which company handed over the contract or the other conveyance to the defendant G. E. Duke, who registered same and thus became the registered owner of the Victoria property, which he conveyed to his wife, the defendant Margaret E. Duke, who mortgaged it for $30,000. The vendors brought action in the Superior Court of the State of California in and for the County of Alameda, against the defendants, to rescind and cancel the contract and the mortgage, and to require the defendants to re- convey to the plaintiffs the Victoria property, alleging that G. E. Duke obtained possession of the conveyance without the knowledge of the plaintiffs and without complying with the terms of the agreement, and in violation of the escrow agreement, "in this," that he delivered the mortgage stipulated for subject to an encumbrance of $9,605 in addition to the encumbrance of $22,150 mentioned in the agreement. App. 81 The defence to the complaint about the $9,605 ancumbrance, stated shortly, was that the vendors falsely represented to defendant G. E. Duke that the Victoria property was then producing net earnings of $6,775 per year, and that the then tenants were ready and anxious to obtain new leases on the same terms as the existing leases, whereas in fact the net earnings were not greater than $3,903 per year, and the then tenants were unwilling to renew their leases on the same terms, but were preparing to quit unless extensive repairs were made, and that, to retain them, repairs costing $11,525 had to be made, which sum defendant G. E. Duke claimed as damages: for false representations inducing him to make the contract, and which he was entitled to set off against the $9,605 encumbrance. The defence further alleged that the Alameda County Title Ins. Co. was authorized by the plaintiff to cause the deed to be recorded, vesting the title to the Victoria property in defendant G. E. Duke before any part of the consideration therefor was to be paid or delivered by the defendant to the plaintiffs, "all in conformity to said contract." . I take it that this means that such is the proper construction to be put on the terms of the contract. The learned trial Judge in the California Court found that defendant G. E. Duke agreed to deliver the $45,000 mortgage free and clear of the $9,605 encumbrance before taking title to the Victoria property, and that there were no false representations, and no set-off, as alleged. He also finds that defendant G. E. Duke got possession of the deed without paying the $10,000, though there is no such claim in the plaintiffs' pleadings, the only non- compliance with the terms of the agreement alleged being that referred to above. ‘App. 82 The judgment entered in the Superior Court of California, omitting the style of cause, is as follows; — The Court having made and filed its Findings of Fact and Conclusions of Law herein, now, therefore, in accordance therewith, It is Ordered, Adjudged and Decreed that the defendants G. E. Duke and Margaret E, Duke, execute, acknowledge and deliver, and cause to be recorded and registered according to the forms and laws of British Columbia, Dominion of Canada, within 30 days of notice of entry hereof, a deed of conveyance of said Victoria Property' to Josephine Promis, Augusta Col, Mary Glliespie, A. G. Col and Josephine Andler, plaintiffs herein, and vesting in them the title thereto, subject to an encumbrance of $ 30,000 now of record, and subject to no other iiens or encumbrance whatsoever, and to do and perform, or cause to be done or performed such other act or acts as may be necessary or proper in the premises, to the end that the plaintiffs may be restored to the ownership and possession of said Victoria Property’ - - which said ‘Victoria Property’ is described as follows, to wit: Ail and singular these certain parcels or tracts of land and premises situate, lying and being Lots Three and Four, Block Seventy-five, Victoria City, recorded in Absolute Fees Book Fol. 22, Vol. 22, (Date of Registration May 10, 1904, 11.10 a.m.). Lots 11 and 12, block 75, map 219, Victoria City; recorded in Absolute Fees Book Fol. 30, Vol: 23. (Date of Registration, February 21, 1906, 10 a.m.). Together with all improvements thereon, It is further Ordered and Adjudged that in the event of the failure or refusal of G. E. Duke and/or Margaret E. App. 83 Duke, defendants herein, to so convey said ‘Victoria }roperty' within said time, George E. Gross, Clerk of this (Court, be, and he is hereby, appointed as Commissioner of this Court; and said George E. Cross, as such (Commissioner, is hereby ordered and empowered to make, execute and deliver such deed, and cause the same 0 be so recorded and registered, and to do and perform any and ali other acts as may be necessary or proper, to effect and perfect a conveyance of said ‘Victoria Property’ to the plaintiffs herein named, as and for said G. E. Duke and Margaret E. Duke, defendants herein, as their act and deed. It is further Ordered Adjudged and Decreed that that certain instrument in writing designated as ‘contract of sale’ dated September 25, 1925, and attached to Plaintiffs' complaint herein as ex. ‘A,’ wherein and whereby Josephine Promis, Augusta Col, Sophia Promis, Mary Gillespie and Oscar Promis, agreed to grant, transfer, sell and convey to G. E. Duke, one of the defendants herein, the said ‘Victoria Property' for certain considerations therein mentioned, be, and the same is hereby, cancelled and rendered null and void and of no effect whatsoever. It is further Ordered, Adjudged and Decreed, that the plaintiffs herein named do have and recover of and from the defendants G. E. Duke and Margaret E. Duke the sum of $16,804.11, together with plaintiffs' costs and disbursements incurred herein, taxed in the sum of $ Dated this 30th day of July, 1928, (Sgd.) John J. Allen, Judge. The defendants refused to execute a conveyance, as ordered by this judgment, and a conveyance was executed in their name by George E. Gross, County Clerk and App. 84 Commissioner of the Superior Court, pursuant to the terms of the judgment. The plaintiffs then brought the present action in the Supreme Court of British Columbia, [1931] 3 D.L.R. 561, for a declaration that, by virtue of the conveyance referred to, or, alternatively, by virtue of the conveyance and of the judgment referred to, and in the further alternative by virtue of the judgment alone, the plaintiffs are the owners of and entitled to be registered as owners in fee simple of the Victoria property in question, subject to the mortgage of $30,000 and interest, mentioned above. There is the further claim that the Court, in the exercise of its jurisdiction to implement the judgment of the Superior Court of the State of California, do vest the property in the plaintiffs. Judgment was given, declaring that, by virtue of the judgment of the Superior Court of California and of the conveyance made in pursuance of it, the plaintiffs are the owners of the property in Victoria subject to the $ 30,000 mortgage and a certain registered lease, and that the property vest in the plaintiffs, subject to these charges. On appeal, the Court of Appeal of British Columbia, [1932] 2 D.L.R. 19, 45 B.C.R. 96, by a majority of three to one, varied this judgment by striking out the first adjudicating paragraph and substituting a paragraph in different language, vesting the property in the plaintiffs, McPhillips, J.A., dissenting, would have allowed the appeal and dismissed the action. From this judgment of the majority, the present appeal is taken. | The question involved is whether or not the judgment of the foreign Court on the question of title and ownership of this real property situate in British Columbia is to be App. 85 recognized as final and to be enforced by the Courts of }3ritish Columbia, The general rule that the Courts of any country have no jurisdiction to adjudicate on the right and title to lands not situate in such country is not disputed. (Considering the operation of foreign law in regard to real and immovable property, Story on Conflict of Laws, 8th ad., at p. 591, says:— And here the general principle of the common law is, that the laws of the place where such property is situate, exclusively govern in respect to the rights of the parties, the modes of transfer, and the solemnities which should accompany them. The title therefore to real property can be acquired, passed, and lost only according to the lex rei sitae. This is generally, although (as we shall presently see) not universally, admitted by courts and by jurists, foreign as well as domestic. Then, at p. 757, para. 543, dealing with the jurisdiction of a nation over a person in its domain, there is the following: — A suit cannot, for instance, be maintainable against him, so as absolutely to bind his property situate elsewhere; and, a fortiori, not so as absolutely to bind his rights and titles to immovable property situate elsewhere, Dicey's Conflict of Laws, 5th ed., at p. 395, citing Story on Conflict of Laws, 8th ed., and Piggott's Foreign Judgments & Jurisdiction, 3rd ed., has the following:— The Courts of a foreign country have no jurisdiction — App. 86 (1) to adjudicate upon the title, or the right to the possession, of any immovable not situate in such country; or (2) (semble) to give redress for any injury in respect of any immovable not situate in such country. The undoubted rule, in short, is that, if a Court pronounce a judgment affecting land out of the jurisdiction, the Courts of the country where it is situated — and, it is presumed, also the Courts of any other country -- are justified in refusing to be bound by it, or to recognize it; and this even if the judgment proceed on the lex loci rei sitae. This rule is merely an application of a more general principle that no Court ought to give a judgment the enforcement whereof lies beyond the Court's power, and especially if it would bring the Court into conflict with the admitted authority of a foreign sovereign, or what is the same thing, the jurisdiction of a foreign Court. There is, however, a long line of cases in which it has been held that English Courts will enforce rights affecting real estate in foreign countries if such rights are based on contract, fraud or trust, and the defendant resides in Englan [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1041%3A2. Public record. Not legal advice.