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IN RE CEDAR FUNDING, INC.

Bankruptcy No. 08-52709-MM. Adversary No. 08-5155.

398 B.R. 346 (2008)

In re CEDAR FUNDING, INC., Debtor. Larry W. Rollins and Marie P. Rollins, individually and as Trustees of the Rollins 2002 Family Trust, dated July 1, 2002, Douglas N. Forzani and Shirley J. Forzani, individually and as Trustees of the Forzani 1994 Revocable Family Trust, dated October 26, 2004, Plaintiffs, v. R. Todd Neilson, Trustee for Debtor, Cedar Funding, Inc., Defendant.

United States Bankruptcy Court, N.D. California.

October 29, 2008.

Attorney(s) appearing for the Case

Vincent C. Catania, Law Office of Vincent C. Catania, Monterey, CA, for Plaintiffs.

Cecily A. Dumas, Gail S. Greenwood, Robert E. Clark, Friedman, Dumas and Springwater, San Francisco, CA, for Defendant.

OPINION & ORDER ON THE CHAPTER 11 TRUSTEE'S MOTION TO DISMISS COMPLAINT PURSUANT TO F.R.C.P. 12(b)(6)

MARILYN MORGAN, Bankruptcy Judge.

INTRODUCTION

In this adversary proceeding, one of the primary pillars of bankruptcy law, ratable distribution, must be reconciled with a competing state law principle that authorizes courts of equity to impose an equitable lien against property where substantial justice calls for it. On one hand, ratable...

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