Musselman v. Jasgur (In Re Seminole Walls & Ceilings Corp.)

MEMORANDUM OPINION

Joseph Jasgur is a very talented photographer who mingled with and photographed Hollywood celebrities starting in the 1940’s. One celebrity he photographed was Norma Jean Mortenson, 1 more popularly known as Marilyn Monroe. Jasgur apparently took her first professional photographs, including the only photo that suggests she had six toes on one foot. His collection, 2 however, is much more exten *210 sive, includes many Hollywood celebrities from the 1940-1950’s, and, by all accounts, is very impressive (the “Jasgur Collection”). During these bankruptcy proceedings, the debtor described the Jasgur Collection as consisting of “Norma Jean a/k/a Marilyn Monroe posters, collector cards, props limited edition photographs as well as the Hollywood Canteen Collection and other Hollywood celebrity photographs and memorabilia.” (Doc. No. 221, p. 3-4 in the Main Case). The reader can get a sense of the magic of these early celebrity photos by looking at some examples introduced during the trial or by looking at Jasgur’s personal journal. (Jasgur Ex. Nos. 15 and 16; Afrieh Ex. No. 59).

Unfortunately, Mr. Jasgur’s marketing and business expertise does not equal his photographic ability. For decades, Jasgur has tried to capitalize on his work, to largely no avail. He has associated with many potential purchasers and marketers for his photographs. One of these potential purchasers, PITA Corporation, is intertwined with the debtor in this Chapter 7 bankruptcy case.

Because of the numerous issues relating to the extent of PITA’s interest in the Jasgur Collection, a multi-day trial was held on some, but not all, of the complex issues raised in these adversary proceedings. The only two issues tried and the only two issues resolved in this Memorandum Opinion relate to (i) whether Jasgur ever effectively transferred any assets to PITA, and (ii) whether the Court should approve a settlement agreement between Jasgur and the Chapter 7 Trustee, Carla Musselman. All other issues raised in this adversary proceeding will be decided later, to the extent the issues remain relevant.

Parties and Bifurcated Issues

To start, a description of the parties and their complicated relationships is appropriate. The debtor is Seminole Walls and Ceilings Corporation (“Seminole Walls”). On March 13, 2001, the company initially filed a petition seeking to reorganize its financial affairs under Chapter 11 of the Bankruptcy Code. 3 Seminole Walls was controlled by Robert Fox, 4 who used the company for varying business purposes. He ran a drywall business, but he also used the debtor’s corporate entity for other diverse ventures, such as investing in fine wine. Pursuant to the Disclosure Statement filed by Seminole Walls, the debtor also owned PITA, 5 which in turn, claimed an interest in the Jasgur Collection:

The Debtor currently holds one hundred percent of the stock in PITA Corporation. This corporation was purchased as an investment vehicle for the Debtor. Over the years PITA has invested and disposed of various investment properties. The last purchase was the Jasgur Collection.... PITA sold all of its rights to the collection to Vintage Partners, *211 Inc., in exchange for cash and a note in the amount of $1,800,000.00. The note was due and payable on November 4, 2001. Citing the poor economy and other legal factors, Vintage Partners, Inc., defaulted on the note. The Debtor filed suit to collect on the note in the Circuit Court of Orange County Florida against one of the principals of Vintage Partners, Inc., in December of 2001. Further amendments to the complaint will be forthcoming to add additional defendants and to press for judgment on the note or return of the collateral. The Debtor is currently in settlement negotiations with Vintage. When the note is collected or the Jasgur Collection is liquidated, after costs expenses and debts of PITA are paid (PITA has less than $700,000 in debt), the net proceeds shall be used by the Debtor toward the implementation of the Plan of Reorganization.

(Debtor’s Disclosure Statement, Doc. No. 221 in the Main Case, p. 3-4).

PITA, in turn, was to contribute its interest in the Jasgur Collection to pay claims of Seminole Wall’s creditors. Specifically, Article VII of the debtor’s Plan of Reorganization provided that upon liquidation of the Jasgur Collection “[t]hese net proceeds shall be applied in the following sequential order: first, to the claim in Class 4 until that claim is paid in full; next to Class 6 until paid in full and finally to Class 7 until that claim is paid in full.” (Debtor’s Third Amended Plan of Reorganization, Doc. No. 221, Exhibit D, pg. 8 in the Main Case).

The debtor eventually confirmed, after several tries, a Third Amended Plan of Reorganization, as further amended (Doc. No. 221 and 244 in the Main Case). The confirmation order was entered on August 21, 2002. (Doc. No. 249 in the Main Case). Because the debtor’s earnings were speculative and just marginally enough to pay operating expenses, feasibility of the debt- or’s ability to perform as required under the plan looked shaky. Moreover, the Court had grave reservations about Fox, his trustworthiness, and his ability to perform upon his promises.

Based on these concerns, the Court specifically retained supervision over the debt- or and its finances and provided that no final decree closing the case could enter until after the debtor demonstrated to the satisfaction of the Court that it had substantially consummated its confirmed plan and, in no event, before January 29, 2003. The debtor, in the interim, was required to file monthly financial reports and to timely pay its taxes. More importantly, the debt- or knew that the only way the required payments realistically could occur was if PITA’s alleged interest in the Jasgur Collection was sold or if PITA collected upon the promissory note due by Vintage Partners, Inc.

Not unexpectedly, the debtor stopped making payments required under its confirmed plan. Creditors started filing motions seeking relief from the automatic stay and to dismiss the Chapter 11 case due to the debtor’s failure to perform (for example, the Motion to Dismiss filed by Hertz Equipment (Doc. No. 285A in the Main Case.); the Motion to Dismiss Case filed by creditor, Vicki B. Whitman (Doc. No. 302 in the Main Case); and the Motion for Relief from Stay filed by creditor, Williams Scotsman, Inc. (Doc. No. 304 in the Main Case)). Eventually, the United States Trustee filed a Motion to Convert the Case to Chapter 7 (Doc. No. 299 in the Main Case). In this motion, the UST asserted that the debtor had stopped making all required tax payments, including the payment of employee trust fund withholding taxes, and that the debtor, by its own admission, “has experienced a series of financial reverses that have prevented the *212 debtor from fully consummating the plan of reorganization.” 6 A hearing on the motion was set for April 2, 2003.

The hearing on this motion was dramatic. Fox entered the courtroom waving a check which, he said, could pay part, but not all, of the amounts then due under the debtor’s confirmed plan of reorganization. The monies were insufficient to stop the conversion, and the case was converted to a Chapter 7 case (Doc. No. 312 in the Main Case). Carla Musselman was appointed as the Chapter 7 trustee. Since that day, April 2, 2003, the trustee has sought to collect the assets of the debtor. One of the primary assets is the bankruptcy estate’s interest in the Jasgur Collection.

After some preliminary investigation, the trustee filed two adversary proceedings — Adversary Proceedings 04-77 and 04-79 — both seeking to get control of the Jasgur Collection. In the first adversary proceeding, 04-77, the trustee seeks a diverse variety of relief, including, in Count 3, a declaratory judgment that would define the items included in the Jasgur Collection and determine the claims of the various parties who claim ownership in some or all of the Jasgur Collection. In addition, the trustee in both adversary proceedings seeks the turnover of the Jas-gur Collection from the various parties holding parts of the collection as well as determination of various fraudulent transfer claims. Because many people have been promised a part of the Jasgur Collection, the issues raised in these related adversary proceedings are complicated.

However, the trustee’s claim of ownership to the Jasgur Collection rests on two primary arguments. First, the trustee’s claim to the Jasgur Collection is no greater than the ownership interest of PITA. The trustee can only assert those rights that the debtor, Seminole Walls, had through its alleged subsidiary, PITA. In re Witko, 374 F.3d 1040, 1043 (11th Cir.2004) (although property of a bankruptcy estate is broadly defined under 11 U.S.C. § 541(a)(1), the trustee can take no greater rights in property than that held by the debtor as of the commencement of the bankruptcy case). Therefore, if PITA has no ownership rights, neither does the trustee.

Second, the trustee may have gained some rights to the Jasgur Collection pursuant to a settlement she entered into with Jasgur (Doc. No. 467 in the Main Case). Jasgur was represented by counsel during the negotiations to finalize the terms of the settlement agreement. The negotiations lasted several months, starting with the trustee’s original offer on August 26, 2004, and concluding when Jasgur signed the original version of the settlement agreement on January 14, 2005. (Trustee’s Ex. No. 5, Africh Ex. No. 63).

On March 29, 2005, the trustee filed a motion to approve her settlement with Jas-gur, contending that the settlement would reduce litigation costs, improve the estate’s ability to realize the value of the Jasgur Collection, and remove the uncertainty of Jasgur’s claim that he still owned and controlled the Jasgur Collection (Doc. No. 467 in the Main Case). The terms of the settlement are quite simple. The trustee will market and sell the Jasgur Collection, and, after paying any portion due to any other party claiming an interest in the collection, the trustee and Jasgur will split the proceeds with the trustee receiving 65 percent and Jasgur receiving the remaining 35 percent.

Sadly, Jasgur, who now is approximately 87 years old, was deemed incapacitated by *213 a Florida state court on August 10, 2005. (Jasgur Ex. Nos. 12 and 13). Jasgur no longer is able to contract, to manage his own property, or to sue and defend law-' suits. Martin L. Stanonik was appointed a limited guardian of the person and property of Jasgur and is authorized to make those decisions that Jasgur no longer can make. Stanonik did not testify at trial. Apparently, Stanonik was an acquaintance of Jasgur, currently lives in Illinois and, at one point, anticipated receiving some interest in the Jasgur Collection. As early as June 23, 2003, Stanonik acted as Jasgur’s Health Care Surrogate and held certain limited legal powers pursuant to a Durable Power of Attorney. (Jasgur Ex. No. 10). Stanonik also is the primary beneficiary under Jasgur’s Last Will and Testament and would inherit the Jasgur Collection, to the extent Jasgur regains control of the assets. (Trustee’s Ex. No. 57).

Jasgur currently resides in a nursing facility that provides him with the medical and physical care he needs, which is substantial. In the year before the trial, he broke his hip and encountered other serious medical problems. Jasgur is a very sympathetic character with a flamboyant history but who today is no longer able to care for himself or handle his own finances. Obviously, he could not testify at trial.

Jasgur’s guardian no longer wants to go forward with the settlement agreement between Jasgur and the trustee. Stanonik has filed a formal objection to the settlement and has filed a separate motion to rescind the compromise (Doc. Nos. 520 and 521 in the Main Case). Stanonik argues that, as a party to the settlement agreement, he can unilaterally rescind the agreement at any time prior to approval of the bankruptcy court. Further, Stanonik argues that Jasgur lacked the capacity to sign the settlement in January 2005, and that the agreement was signed under either a mutual or a negligent mistake of fact by the parties.

In addition, Africh Maintenance, Inc. (“Africh”), claims ownership of the Jasgur Collection and has objected to the trustee’s settlement with Jasgur. Like many issues in these adversary proceedings, those relating to Africh’s claims to the Jasgur Collection are complicated. However, for simplicity in this Memorandum Opinion, the Court need only mention that Africh Maintenance, Inc., a company controlled by Dartlin J. Africh, who, in turn, was a social friend of Fox, claims ownership of the Jasgur Collection. 7 Similar to the trustee’s claims, Africh’s claims all derive from PITA’s alleged ownership interest.

The objection by Africh to the trustee’s settlement is based on the argument that the trustee cannot sell the Jasgur Collection because neither she nor Jasgur own the Jasgur Collection. Rather, Africh argues that it is the true owner of the collection. 8 Africh also argued that it cannot properly frame an objection because it never was able to complete Jasgur’s deposition, due to his declining physical and mental health. Because both the trustee and Africh derive their ownership claims from whatever interest PITA has or held, both the trustee and Africh agree that PITA certainly had a substantial interest in the Jasgur Collection.

Jasgur, through his guardian and attorneys, now denies that PITA ever had a *214 legitimate right to the Jasgur Collection. In addition, yet another person, Paul E. Philipson, claims an earlier interest in the Jasgur Collection that arose in 1986, long before PITA even arguably acquired any interest in the photographs. Philipson and Jasgur were business partners in Los An-geles starting in 1986. The purpose of their business relationship was to market the items in the Jasgur Collection. The Court will discuss the various agreements between Jasgur and Philipson in more detail later; however, for now, it is enough to relay that certain legal rights in the Jas-gur Collection may have been conveyed by Jasgur to Philipson during the 1980’s.

Therefore, the ownership claims to the Jasgur Collection divide into those claims that arose prior to PITA’s claims — those of Jasgur and Philipson — and those that arose subsequently and derive from PITA’s interest — those of the trustee and Africh. The extent of PITA’s interest in the Jasgur Collection then is a dividing line. For that reason, the Court bifurcated the issues raised. The first portion of the trial addressed only two limited issues. First, whether PITA ever, through any means, acquired any interest in the Jasgur Collection. 9 Second, whether the Court should approve the settlement between the trustee and Jasgur. The resolution of these issues then will dictate whether the trustee ever obtained a legal interest in the Jasgur Collection and whether this Court ever needs to reach the other even more complicated issues raised in the adversary proceedings, such as what items are included in the Jasgur Collection, whether the interest acquired by Africh is avoidable as a fraudulent transfer, and the extent of the interest held by Philipson.

Philipson’s Interest in the Jasgur Collection

Going back to the earliest claim in time, Paul Philipson asserts somewhere between a 50 percent and a 100 percent interest in the Jasgur Collection. For the first phase of this trial, the Court need only determine whether Philipson has a 100 percent interest in the Jasgur Collection. If he owned the entire collection as early as 1987, Jas-gur could not have later conveyed any portion of the collection to PITA. Therefore, the Court is not resolving the extent of any lesser interest Philipson may have in the Jasgur Collection or otherwise resolving any ownership disputes between Philipson and Jasgur. Rather, the Court’s inquiry is limited to addressing whether Philipson held a 100 percent interest in the Jasgur Collection in the late 1980’s. The Court holds that he did not, as explained below. Jasgur retained a still undefined interest in the Jasgur Collection after his business dealings with Philipson went awry.

However, Philipson may indeed have a claim to a portion of the Jasgur Collection. Philipson bases his claims upon (i) a series of three agreements signed by Jasgur in 1986 and 1987, (ii) a settlement he contends was reached in litigation filed in California, and (iii) formal copyright assignments by Jasgur to Philipson of certain photos in the Jasgur Collection.

In the 1980’s, Jasgur still was living in Southern California. Paul Philipson and Jasgur worked for the same telemarketing company starting in 1985. Philipson professed to have marketing expertise that would allow him to sell Jasgur’s photos and make huge profits. They decided to go into business together and form a new company called Prime Entertainment, Inc. Jasgur was to act as President and a Di *215 rector. Philipson was to serve as the Chief Executive Officer and Chair of the Board of Directors. The new corporation was to provide Jasgur with a photo lab and storage facilities for his work while the items were being marketed. Philipson was to attract investors and market the Jasgur Collection. (Philipson Exh. Nos. 7, 8, 9, and 10). Philipson paid all of the corporate expenses and some of Jasgur’s personal living expenses.

To accomplish their business goals, the parties signed three separate agreements. All of the agreements were prepared without legal assistance and are difficult to interpret through a legal prism. The first agreement, dated August 28, 1986, titled a Preliminary Agreement on Provisions for Binding Contract, is similar to a Memorandum of Understanding, more of an agreement to agree in the future (the “First Philipson Agreement”). (Philipson Exh. No. 3).

Next, Jasgur and Philipson signed a letter agreement, dated January 22,1987 (the “Second Philipson Agreement”). (Philip-son Exh. No. 2). In this five-page document, the signors set forth more detail regarding their business relationship. Prime Entertainment, Inc. would market Jasgur’s work, and Jasgur and Philipson would equally share any profits. Philipson was to be the majority shareholder, holding four shares of the seven total, Jasgur would receive two shares, and a third party (Philipson’s then-fiancée), Andrea Slos-berg, who was to act as treasurer, would own the remaining share. The Second Philipson Agreement is very informal and, in many ways, reads more like a letter between friends than a business agreement. For example, it contains the following language:

Joseph Jasgur acknowledges the sincer-ety [sic] and committment [sic] both he and Paul have toward growing the company and realizes that all monies Paul has previously spent or will spend in the future are in good faith for Joseph’s and Paul’s mutual success. The money Paul has spent for Joseph’s livelihood i.e. rent and any other expenses; exemplifies Paul’s high code of ethics and fairness compelling Joseph to trust Paul entirely for every aspect connected to the operation of this business.

(Philipson Exh. No. 2, pp. 2-3).

In connection with the parties’ understanding of the ownership of Jasgur’s work, the Second Philipson Agreement is particularly difficult to interpret. One portion provides:

Joseph is recognized as the full owner of all his property and he is free to dispose of, utilize and control everything except the photograph and negative collections and the Norma Jeane Daughtery [sic] signed releases originals (all three of the releases). These exceptions listed herein are the mutual property of Joseph and Paul and only mutually agreed plans can be put into effect concerning them.

(Philipson Exh. No. 2, p. 3). This provision implies that Jasgur retains ownership of his work, with a very large exception relating to Jasgur’s “photograph and negative collections.” However, other language refers to Jasgur’s obligation to name Phil-ipson as the sole beneficiary of his assets, including his photos and his interest in Prime Entertainment, Inc., in his will. Perhaps the parties intended Jasgur to keep title to most of his work, until his death and then, if Philipson was still alive and Prime Entertainment was still operating, to bequeath the interest in his work to Philipson. Certainly, the Second Philipson Agreement did not require Jasgur to immediately transfer title to all of his photos *216 and works, until his death. 10

Last, the parties signed a third agreement on October 14, 1987 (the “Third Phil-ipson Agreement”). (Philipson Exh. No. 1). In this agreement, Jasgur agreed that he “has consigned to Philipson half ownership of the entire [Jasgur’s photography] collection with the understanding that both owners will consign all their rights to the corporation to list as assets, this entire collection and all rights ensuing from the collection.” The Third Philipson Agreement also states that Prime Entertainment Inc. was the “duly authorized entity who can claim as assets, represent as owner and licensing agent, conduct business with, and formalize contracts” involving the Marilyn Monroe photos. It is hard to interpret this language applying normal legal standards. For example, Jasgur never agrees to transfer any assets, merely to “consign” a 50 percent interest to Philipson who, in turn, was required to “consign” his interest to the corporation. Perhaps the parties were merely attempting to get financing and needed to document that the corporation had the right to transfer and market the photos in question. The Court cannot tell and would find that none of the three Philipson agreements independently conveyed any interest in any aspect of the Jasgur Collection to Philipson. Moreover, Philipson conceded during cross-examination that Jas-gur was very protective of the ownership rights to the negatives and original photos. Jasgur’s hesitancy to formally transfer ownership of the Jasgur Collection to Prime Entertainment is evidenced in the reticent and confusing language in the three agreements signed by Jasgur and Philipson.

Like much of Jasgur’s life, litigation follows him. The business relationship between Jasgur and Philipson soon soured. Eventually, Philipson sued Jasgur in a California state court. Philipson testified that the parties reached a settlement; however, the version introduced during the trial was unsigned by either Philipson or Jasgur (the “Purported Settlement”). (Philipson Ex. No. 11). Moreover, the Purported Settlement contains numerous conditions, which the parties may or may not have met. As such, the Court cannot interpret the Purported Settlement without further substantial evidence. However, the Court can conclude that the Purported Settlement, even if enforceable, did not independently transfer Jasgur’s entire interest in the Jasgur Collection to Philip-son; nor did it reconvey any interest he may have had back to Jasgur. 11 For purposes of this ruling only, the Court cannot find that the Purported Settlement is enforceable or that it altered Philipson’s interest in the Jasgur Collection.

However, the documents filed with the United States Copyright Office do provide Philipson with at least an argument that he is a partial owner of a portion of the Jasgur Collection. As part of the business of Prime Entertainment, in 1987 and 1988, Philipson applied for and received copyrights for specific photographs. (Jasgur Ex. Nos. 15 and 16). These photographs include many if not all of the early photos *217 Jasgur took of Marilyn Monroe. In accepting the registered copyright, the Copyright Office listed the joint copyright claimants as “Joseph Jasgur, Paul E. Phil-ipson,” with one exception, Copyright VAu-106-204, which listed only Joseph Jasgur as the copyright claimant. Therefore, it appears that Jasgur and Philipson may be joint claimants on these specific copyrighted photos. However, it also appears that the parties only copyrighted a portion of the photos that are included in the Jasgur Collection, and, although these may be the most valuable portion of the collection, the copyrighted photos do not constitute the entire Jasgur Collection. Moreover, in at least one case, Jasgur is the only copyright claimant.

As such, Philipson has failed to establish how the three business agreements, the Purported Settlement, or the copyright registration documents give him a 100 percent interest in the Jasgur Collection. The Court concludes that he may have a claim to a portion of the collection but that he has failed to demonstrate a 100 percent ownership in the collection. The Court also notes that Philipson has failed to take any action to assert any such claim for almost 20 years. He did not offer any credible explanation why he has failed to take any action in two decades to recover these assets, if he truly believed he was the sole owner of the valuable Jasgur Collection. Accordingly, regardless of Jas-gur’s possible future dispute with Philip-son over the extent of his claim, Jasgur clearly retained some interest in the Jas-gur Collection that he subsequently could transfer to others, possibly to PITA.

PITA’s Interest in the Jasgur Collection

The issue then becomes, what, if anything, did PITA acquire from Jasgur. PITA bases its ownership claims in the Jasgur Collection on two grounds. First, in early 2000, PITA signed two agreements with Jasgur — a Purchase Agreement and an Exclusive Marketing Agreement — which PITA asserts gave it ownership rights in the Jasgur Collection. Second, in March 2000, PITA purchased items Jasgur had left in a rental unit located in California from Joseph Yaron, the owner of the unit.

To put these transfers in context, by 2000, Jasgur had married Debbie Van Neste and was living in her home in Florida. Jasgur had met Robert Fox, who made a business proposal involving PITA and the marketing of the Jasgur Collection. Eventually, two written agreements were signed.

The first agreement, titled a Purchase Agreement (the “Purchase Agreement”), was signed by PITA and Jasgur on January 6, 2000. (Jasgur Ex. No. 31). For $6,250, Jasgur agreed to sell ten sets of photos, each set containing 25 black and white 11 inch by 14 inch images of Marilyn Monroe. Jasgur also agreed to give PITA “twenty signed letters of authenticity.” The sale contemplated only the transfer of copies of the photos and no ownership change insofar as Jasgur specifically required that the copyright for the photos “remain in the name of Joseph Jasgur.” PITA promptly paid for these photos. (Jasgur Ex. Nos. 32 and 33). PITA hired a professional photocopier to reprint the photos, and no dispute exists that these photos were timely supplied by Jasgur. Further, nothing in this early agreement gave PITA any ownership or intellectual property rights in the photos. 12 Rather, *218 the Purchase Agreement simply conveyed to PITA a small, defined group of photos and letters of authenticity.

The second agreement, the Exclusive Marketing Agreement (the “EMA”) (Jas-gur Ex. No. 35), contemplated a long term business relationship between Jasgur and PITA. The purpose of the agreement was to give PITA the exclusive right to market and to sell the inventory as defined in the EMA. However, some of the language in the EMA suggests that Jasgur may have intended to convey to PITA some portion of the Jasgur Collection beyond that already conveyed under the Purchase Agreement.

The EMA was signed on February 1, 2000, by Robert L. Fox, on behalf of PITA, and by Jasgur and his then-wife, Debbie Jasgur. Some discussion of the EMA’s language is necessary. In the preamble of the EMA, Jasgur represents that he is “the owner of certain photographic images and negatives” 13 that he wishes to market. In turn, PITA represents that it has contacts with possible buyers. As such, the parties agreed to form a joint venture “to market and sell the Inventory at a profit.”

The EMA provided that Jasgur “contributes the Inventory to PITA, as the exclusive agent therefor.” (Paragraph 2 of the EMA). Jasgur also represented that he owned the Inventory free and clear of any encumbrances whatsoever. In turn, PITA agreed to “use its best efforts to market the Inventory to those persons or entities, whether public or private, that it deems most likely to be interested in purchasing the Inventory.” The net profits of the joint venture were to be divided with Jasgur receiving 30 percent and PITA receiving 70 percent.

The joint venture was contemplated to last until the Inventory was completely sold or until the year 2025, provided, however, that Jasgur was guaranteed a distribution of at least $100,000 in the first year or either party could cancel the agreement. The EMA further specified that previous prints provided to PITA by Jas-gur would become assets of the joint venture and that all monies paid to Jasgur for the prints would be applied to the $100,000 distribution to Jasgur to occur in the first year under the EMA. 14

The Court specifically finds that, unlike the Purchase Agreement, the EMA did not convey any physical assets beyond those already conveyed under the Purchase Agreement, which were subsumed by the EMA. Rather, as the very title of the EMA makes clear, the EMA simply gave PITA the exclusive right to market and to sell the Inventory for the benefit of the parties, and nothing more. More significantly, the EMA transferred no intellectual property rights or any other type of ownership interest in the Jasgur Collection to PITA.

*219 Typical for Jasgur, the joint venture under the EMA did not go smoothly. PITA did start to market Jasgur’s work. PITA located a gallery, and the photos were displayed in a very attractive way for the public to view. However, a dispute soon arose between Fox and Jasgur. One evening after a blowup between them, Jasgur and his wife, Debbie, went to the gallery and removed every image. They refused to return the images or to supply any further work to PITA. Not surprisingly, litigation ensued.

Before pursuing this lawsuit, however, and separate and apart from what PITA acquired by way of the Purchase Agreement and EMA, PITA purchased items Jasgur had stored in a rental unit in California from Joseph Yaron, who owned the rental unit. Prior to 1998, Jasgur had stored items at the unit but had not paid the rental bill for some time. (Deposition of Debra Van Neste, p. 12, line 1 — p. 13 line 15, Africh Ex. No. 61). On July 21, 1998, Yaron instituted a state court unlawful detainer action, Case Number 98U16534, in the Los Angeles Superior Court, to regain possession of the storage unit. 15 A three-day eviction notice was posted directing Jasgur to either pay the rent or quit the premises. (Africh Ex. No. 15). He did neither. Jasgur was served, but he did not respond to the complaint.

On September 3, 1998, the California state court entered a default judgment against Jasgur and granted Yaron a Writ of Possession to regain control over the unit and to dispose of the unit’s contents. Both a Notice to Vacate and a formal Notice of Eviction were posted on the premises providing that Jasgur’s right to possess the premises “has been terminated. Any property which you may have left upon the premises is now under the legal control of the judgment creditor [Yaron].” (Africh Ex. Nos. 29 and 30). Moreover, the local Sheriffs Department gave Yaron access to the premises at 7:14 a.m. on September 23,1998. The Sheriffs Receipt for Possession of Real Property (Africh Ex. No. 31) contained the following information on disposing of the remaining personal property:

All personal property left on the premises has been turned over the property owner [Yaron]. The property owner may charge a reasonable storage fee for maintaining the property. However, upon demand of the tenant, the property owner must return the tenant’s property if the tenant pays all costs incurred by the property owner for storage and maintenance. If the cost incurred by the property owner is not paid, or if the property left behind is not claimed before the end of the fifteen-day period, the property owner may either sell the property at a public sale and keep from the proceeds of the sale the costs of storage and of the sale, or if the property is valued at less than $300.00, the property owner may dispose of the property or retain it for his own use.

Yaron did not immediately dispose of Jasgur’s items stored in the unit. Rather, Yaron continued to call Jasgur to make arrangements for Jasgur to retrieve his property. Eventually, in early 2000, around the same time that PITA was still working collegially with Jasgur under the EMA, Jasgur told Fox about his problem and explained that he was about to lose the valuable personal property stored in Yar-on’s rental unit. Fox, believing the prop *220 erty indeed had value and was related to the items they were attempting to market under the EMA, immediately flew to California to buy the property from Yaron. Fox would have had no knowledge of the abandoned property, if Jasgur had not told him. Jasgur was fully aware of the purpose of Fox’s trip. Indeed, Jasgur also traveled to California with Fox, specifically to assist him in negotiating a deal with Yaron.

Fox was successful in his negotiations. As President of PITA, Fox and Yaron signed a General Release, Settlement, and Purchase Agreement on March 17, 2000 (the “California Purchase and Release Agreement”) (Africh Ex. No. 10). Under the California Purchase and Release Agreement, PITA agreed to buy the property left at the storage unit for $25,000. There is no exact list of the property PITA purchased in California, however, the items include negatives, photos, photographic equipment and other related paraphernalia (the “California Assets”).

Jasgur was fully apprised of the terms of the sale and did not object. Further, as part of the exchange, Yaron gave both PITA and Jasgur full releases. Specifically, the California Purchase and Release Agreement provided that Yaron would “absolutely and unconditionally transfer, assign, convey, release, and deliver unto Pita, all of [Yaron’s] right, title, and interest in and to the Property.” Yaron thus released any claim he had to the California Assets, or against Jasgur for unpaid rent, in exchange for PITA’s $25,000 payment. PITA promptly hired a moving van to transport 17,000 pounds of goods, according to Fox, from California to Florida.

Jasgur now complains that Yaron’s sale of the California Assets to PITA was not properly conducted under California law. Section 1988 of the California Civil Code governs the disposition of personal property remaining on leased premises at the termination of a tenancy and provides that such property “shall be sold at public sale by competitive bidding.” West’s Ann.Cal. Civ.Code § 1988(a). Without question, no public sale was held in connection with the California Assets.

Nevertheless, for multiple reasons, Jasgur cannot now, seven years later, attack the validity of the sale and PITA’s purchase of the California Assets on the basis that Yaron did not comply with Section 1988(a). Jasgur assisted PITA in its negotiations with Yaron and was fully aware of PITA’s purchase of the California Assets from Yaron in March 2000. In exchange for the $25,000 PITA paid to Yaron, PITA and Jasgur both individually benefited. PITA received physical possession of the property. Jasgur got a complete release from Yaron for any liability to Yaron for unpaid rent or otherwise.

Jasgur cannot actively participate in the private sale and then later challenge the validity of the private sale. If Jasgur objected to the private sale, he should have voiced his objection at the time. He did not. Instead, he helped orchestrate and fully consented to the sale. In so doing, he has waived any right to assert this belated attack. Citizens of State of Florida v. Wilson, 571 So.2d 1300, 1302 (Fla. 1990) (Procedural irregularities may be waived by parties, who, knowing the irregularity, act without making any timely objection); Alaska Airlines v. U.S., 399 F.Supp. 906, 916 (N.D.Cal.1975) (discussing waiver and consent, noting that waiver constitutes the abandonment of a right); Donegan v. City of Los Angeles, 109 Cal.App. 673, 293 P. 912 (Cal.App. 3 Dist.1930) (discussing estoppel by acquiescence, and concluding that landowners waived any right to complain regarding a condemnation action, which they knew was unautho *221 rized, because they acquiesced by keeping a damage award for 13 years).

In addition, the equitable doctrine of laches also would bar Jasgur’s claim. Under Florida law, laches may bar a claim where there has been “unreasonable delay in enforcing a right, coupled with a disadvantage to the person against whom the right is sought to be asserted.” Peacock v. Firman, 177 So.2d 560, 562 (Fla.App.1965). (“The test in determining whether laches exists is whether the delay has resulted in injury, embarrassment, or disadvantage to any person, and particularly to the person against whom the relief is sought.”). California law, to the extent it applies, similarly provides that laches may bar a claim if the complaining party knows of the prior act and voluntarily acquiesced in the other party’s alleged wrongful acts:

One of the principal factors in determining laches is acquiescence. * * * Acquiescence, to constitute laches, ‘must be with the knowledge of the wrongful acts themselves and of their injurious consequences, it must be voluntary, not the result of accident, nor of causes rendering it a physical, legal or moral necessity, and it must last an unreasonable length of time, so that it will be inequitable even to the wrong-doer to enforce the peculiar remedies of equity against him after he has been suffered to go on unmolested and his conduct apparently acquiesced in.’

Nelson v. Robinson, 47 Cal.App.2d 520, 531, 118 P.2d 350, 357 (Cal.App. 3 Dist. 1941) (quoting 10 Cal. Jur. pp. 528-529, § 66).

Applying the standard for laches set forth under the laws of either state, Florida or California, the doctrine would preclude Jasgur from arguing that Yaron’s private sale of the California Assets to PITA was invalid at this late juncture. He participated in the sale. He did not object. More importantly, he clearly voluntarily acquiesced to the private sale, based upon a complete understanding of the terms of the sale, not due to any accident or mistake. It was not until years later, when Jasgur’s newly appointed guardian wanted to regain control of the California Assets, that the guardian first challenged the validity of the sale. Such a belated objection cannot undo the transfer, whether under a theory of consent, waiver, or laches. As such, Jasgur cannot now be heard to complain about whether the sale was private or public.

PITA purchased the California Assets from Yaron on March 17, 2000. The sale is valid and is not subject to avoidance at this point. As such, PITA rightfully -obtained possession of at least a portion of the Jasgur Collection, the California Assets. In addition, PITA obtained copies of photos under the Purchase Agreement, which it can sell. However, under the EMA, PITA obtained no intellectual property rights or other ownership interest in the remainder of the Jasgur Collection.

The only remaining issue is whether PITA obtained any enforceable claim against Jasgur or to the Jasgur Collection that arose under the EMA. PITA certainly asserted claims of this type on March 3, 2000, when PITA sued Jasgur in Florida state court to enforce the EMA 16 (the “Florida Litigation”). PITA asserted that Jasgur breached the EMA by failing to give PITA access to the inventory. (Af- *222 rich Ex. No. 19). Jasgur promptly answered the complaint, raising several affirmative defenses. 17 (Jasgur Ex. No. 37, paragraphs 13-15).

After the Florida Litigation was filed, the situation became even more complicated. PITA transferred its interest in the Jasgur Collection (including all rights under the EMA and to the California Assets) to yet another party, Vintage Partners, Inc. The transfer is reflected in a document titled Asset Purchase Agreement (the “APA”), dated November 4, 2000. In the preamble to this, PITA reflects that it “owns or has the exclusive rights to sell the entire photographic works of Joseph Jasgur” and that PITA intended to assign its rights in the Florida Litigation, “except that any recovery from the lawsuit shall be divided between the parties in the same manner as net revenues are divided as provided in the Promissory Note and Net Revenue Distribution Agreement,” attached to the APA, (Africh Ex. No. 21). Although complex, PITA agreed to sell to Vintage Partners all of its interest in the Florida Litigation, the California Assets, and the Jasgur Collection in exchange for a payment of $200,000 to a pawn shop, 18 any amounts that PITA ultimately had to pay Jasgur, and for a promissory note payable to PITA in the amount of $1.8 million, which would not accrue interest but was payable one year later, on November 4, 2001.

Vintage Partners granted PITA a security interest in the Jasgur Collection. Other than the California Assets and the copies of any photos provided under the Purchase Agreement, PITA did not have possession of any other significant portion of the Jasgur Collection. Therefore, this agreement obligates PITA to do the impossible — give Vintage Partners the Jas-gur Collection, which largely was in the possession of Jasgur or others.

Based on its rights under the APA, Vintage Partners entered the fray of the Florida Litigation. They filed an Intervenor’s Complaint also asking the court to enforce the EMA and to require Jasgur to turnover the Jasgur Collection. 19 Jasgur, in the meantime, went into a downward spiral. His attorney was no longer appearing on his behalf in the Florida Litigation, and Jasgur filed no answer to Vintage Partners’ Intervenor’s Complaint. Eventually, on May 16, 2002, the state court entered an order granting Vintage Partners’ Motion for Entry of Default Final Judgment. (Jasgur Ex. No. 60).

In granting this motion, however, the state court did not enter a default judgment. Rather, the court held that “as to liability” the motion was granted. The court then directed the parties to schedule an evidentiary hearing to determine the “specific items in the Jasgur Collection for which relief is sought and the amount of damages sought.” The state court has never held any further evidentiary hearing. Therefore, although the parties in this bankruptcy forum continually refer to this order as the “Default Judgment,” the parties err. The state court never entered *223 any judgment in favor of PITA or Vintage Partners, the Intervenor. Moreover, other than arguably precluding Jasgur from contesting liability on claims brought by Vintage Partners, no damages or relief was ordered by the state court.

Typical with the other events involving PITA and Fox, PITA’s relationship with Vintage Partners also eventually soured. PITA could not perform under the APA. On January 15, 2003, Vintage Collections, Inc. and PITA terminated the earlier APA between PITA and Vintage Partners, Inc. 20 The parties intended to return to the earlier status quo, with the only exception being that PITA was to receive all rights held by Vintage Collections, Inc. in the Florida Litigation. 21

In this adversary proceeding, the issue is whether PITA, in addition to the California Assets or copies of photos supplied under the Purchase Agreement, obtained any claims or interests enforceable against Jasgur or the Jasgur Collection under the EMA' as asserted in the Florida Litigation. Jasgur asserts PITA obtained nothing under these agreements because, at the time these agreements were executed, PITA was a dissolved Texas corporation, unabl