I. Introduction

        This case was tried before the court on March 4 and 5, 1991. It consists of a complaint by the debtor/plaintiff Donna         1 ABR 418  White ("White") and her son, plaintiff-in-intervention Shane Derryberry ("Derryberry") against defendant, counterclaimant and defendant-in-intervention Theodore Wiley ("Wiley"). The plaintiffs seek a declaratory judgment finding a home located at 901 W. 53rd in Anchorage, Lot 16, Block A, Sperstad Subdivision to be theirs. Wiley has counterclaims against White and Derryberry seeking a declaratory judgment placing title to the premises in himself. Additionally, Wiley seeks denial of discharge as to White and Derryberry, through his counterclaim against White and separate adversary action against Derryberry. Wiley also objects to their claim of exemption on the subject property. Trial of all claims arising among the parties in both actions was consolidated. A separate opinion will be issued regarding the Derryberry dischargeability action. For the reasons set forth herein, I find Wiley to be the owner of the disputed property and deny the dischargeof White.

II. Factual Backqround of Title Dispute

        Wiley is an 89 year old retired janitor from Kodiak. He lived there for the last 50 years and moved to Anchorage in 1988 after suffering a slight stroke. He has no family in Alaska. When in Anchorage, he went to visit his old friend Zelmer Lawrence. Lawrence, an 84 year old widower, introduced him to White.

        1 ABR 419 
        White, a glib 42 year old divorcee and self-described "welfare mother", took an immediate interest in Wiley. She befriended him during the spring of 1988. In a few short months, White persuaded Wiley to put up $46,000.00 toward the purchase of the disputed residence. White herself placed $11,000.00 toward the home purchase. White also persuaded Wiley to leave the premises to her and Derryberry in his will, put up a $20,000.00 certificate of deposit as security for White's travel business, and execute a power of attorney in her favor.

        Title to the property was initially held by Michael Orlowski, White's ex-husband and sometime roommate. After closing in June of 1988, Orlowski transferred the property to Wiley. Wiley prepared a handwritten deed in favor of White. This deed is the focus of the current controversy.

        Helen Simpson, an attorney who jointly represented both White and Wiley, held the disputed deed in her files. It was to be released upon Wiley's death. It was released and recorded, however, in March of 1989. Soon thereafter White quitclaimed half her interest in the property to Derryberry. The property was then encumbered for $15,000.00 on a HUD "slum grant" in May of 1989. Some improvements were made to the property through the grant, but they were never completed. The property is very dilapidated. White has since encumbered her interest in the property to her brother, Robert, but he has never been added as a party to this action.

        1 ABR 420 
        Wiley moved into one of the three "apartments" in the house after closing in June of 1988. White and Derryberry occupied the other apartments. While staying there Wiley's possessions were repeatedly stolen by unknown persons who accessed his room. White beat Wiley with a rubber hose during his stay at the home, but denies stealing from him. After tiring of the White-Derryberry hospitality, Wiley left in the fall of 1989. He slept in a grocery store at first but has since moved to the Pioneer's Home.

        Derryberry and White have continued to occupy the premises. They allege that they have paid taxes and insurance on the property but introduced no written evidence corroborating their payments. Wiley had a pending state court quiet title action set for trial when White and Derryberry filed bankruptcy on August 24, 1990. This court has jurisdiction over this controversy in accordance with 28 U.S.C. § 157(b) (2) (A), (I),(J),(O) and through the consent of the parties.

III. Legal Analysis of Title Issues

        White seeks to quiet title and obtain a declaratory judgment that her ownership interest is in fact valid. Derryberry seeks a declaratory judgment finding his one-half interest in the property to be valid and exempt. Wiley has counterclaimed for a declaration that he is the fee simple owner of the premises. The focus of these competing claims is the quitclaim deed executed by         1 ABR 421  Wiley in favor of White. The deed was acknowledged on November 7, 1988 and was recorded March 8, 1989. White alleges Wiley recorded it voluntarily. The reported consideration was $10.00. On November 4, 1988 Wiley also executed a bill of sale upon the property to White and Derryberry. It stated that Wiley transferred his interest in the real property to White in exchange for "nursing care" and "free rent until deceased."

        Alaskan courts have long recognized that deeds and wills are subject to invalidation when procured through undue influence. In Paskvan v. Mesich, 455 P.2d 229 (Alaska 1969), the Alaska Supreme Court disallowed a will upon grounds of undue influence. Tom Paskvan, Jr. was named the sole beneficiary of a will executed by Pete Mesich, a 65 year old Croatian who had suffered a substantial head injury in 1942.

        Mesich owned the Arctic Hotel in Fairbanks. In early 1946, he and Paskvan became 50-50 partners in the hotel although Paskvan made no investment in the property. In September of 1946 Mesich executed a power of attorney and will in favor of Paskvan. Paskvan invested in a bar, the "Elbow Room." Mesich gave Paskvan the property for the bar and contributed to it financially. Paskvan borrowed $10,000.00 for the construction of the bar. The Supreme Court concluded that a confidential relationship existed between Mesich and Paskvan. It went on to state:

        1 ABR 422 
        The remaining question is whether the probate master was clearly mistaken in finding that, because of the confidential relationship and other factors, the will was a product of undue influence exercised by Paskvan. The initial burden is on the contestant of a will to establish undue influence, and the existence of a confidential relationship alone does not suffice to raise a presumption that undue influence was present. But when the principal or sole beneficiary under a will, who had a confidential relationship with the testator, participated in the drafting of the will, then a presumption of undue influence arises. It requires the beneficiary to come forward with a satisfactory explanation for his actions. He must show that he did not take advantage of the confidential relationship in influencing the testator to execute the will in his favor.

. . .

        The presumption that undue influence existed is strengthened by other factors. Mesich was a Croatian who emigrated to the United States in 1902. At the time he executed the Paskvan will in 1946 he was 65 years old. He was unable to read or write the English language and spoke English with a heavy Slavic accent. In 1942 he was attacked by an unknown assailant who hit him on the head with a heavy instrument, inflicting serious wounds. He was required to be hospitalized for 42 days during much of which time he was unconscious or semiconscious. There was considerable testimony that after this blow to his head Mesich deteriorated mentally, had difficulty communicating with people, did not seem aware of what was going on around him, and was not competent to handle his business affairs.

        Paskvan did not carry his burden of overcoming the presumption of undue influence. It is true that he testified that Mesich had made the will in his favor as a reward for         1 ABR 423  Paskvan's willingness to help Mesich--because Mesich was happy with the way Paskvan did things and thought Paskvan was worthy of his consideration. But this was not enough. The presumption of undue influence was a strong one because of the age and mental condition of Mesich, the fiduciary or confidential relationship that existed between Mesich and Paskvan, Paskvan's opportunity to exercise undue influence because of his handling of Mesich's affairs as the "managing partner", the fact that Paskvan appeared to be the dominant party in their relationship, Paskvan's participation in the procurement of the will, the fact that Paskvan became the sole beneficiary under the will, Paskvan's possession of the will after its execution, and the fact that the will seemed to have been executed so that Paskvan could utilize it in order to obtain a real estate loan.

        The totality of these circumstances points to a situation where Paskvan took advantage of a trust and confidence that Mesich had in him in order to acquire all of Mesich's property upon his death. Paskvan had no satisfactory explanation for his actions in this regard. He did not show that in regard to the confidential relationship between him and Mesich he had acted with entire good faith and with due regard to the interests of Mesich. In the absence of such a showing, the presumption of undue influence prevails, and therefore the probate master and the superior court were not clearly erroneous in finding that the 1946 will was a product of undue influence.

Paskvan v. Mesich, 455 P.2d at 232 - 234 (footnotes omitted).

        In Burqess v. Burqess, 710 P.2d 417 (Alaska 1985), the Alaska Supreme Court ruled that a quitclaim deed from a wife to her husband was obtained through undue influence. Therefore, it was not a factor to be utilized by the court in adopting a property settlement. The court stated:

        1 ABR 424 
        The existence of the quitclaim deed does not change this result because the deed is fraudulent and the product of undue influence. In marital relationships a transaction in which one spouse gains an advantage over the other is presumptively fraudulent. Trujillo y. Padilla, 79 N.M. 245, 442 P.2d 203, 206 (1968) (warranty deed conveyed by the wife to the husband prior to divorce set aside). To overcome this presumption, the spouse gaining the advantage must show: (a) payment of adequate consideration; (b) full disclosure to the other spouse of his or her rights and the value of the property; and (c) that the spouse conferring the benefits has competent and independent advice.

Burgess v. Burgess, 710 P.2d at 421 (footnote omitted).

        Similarly, in Gabaig v. Gabaig, 717 P.2d 835 (Alaska 1986), the court found undue influence in the execution of a postnuptial property settlement. The court, interpreting California law, stated:

        Paragraph 11 of the agreement provides that it shall be construed under California law. Postnuptial agreements are valid, subject to the rules governing confidential relationships. When one spouse fails to act in good faith and thereby gains an advantage over the other, he is guilty of fraud. Furthermore, when one spouse gains an advantage over the other, the transaction is presumed to be the result of undue influence and without sufficient consideration, thus the advantaged spouse has the burden of proving the transaction was fair, just and reasonable. The advantaged spouse meets his burden of proof by showing full disclosure or arm's length bargaining.

Gabaig v.Gabaig, 717 P.2d at 841 (citations and footnotes omitted).

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        The Third Circuit has also adopted a similar rule when a confidential relationship arises.

        [I]n relationships of trust or confidence the burden of proof shifts to the person seeking to uphold the transaction to demonstrate the absence of undue influence. . . . .[T]he fairness of the agreement must be shown by clear and convincing evidence.

Francois v. Francois, 599 F.2d 1286, 1292-1293 (3rd Cir. 1979).
        The facts of this case show that Donna White had a confidential relationship with Wiley. She befriended a lonely old bachelor new to Anchorage. She got him to spend $46,000.00 for the purchase of a home, set up a $20,000.00 certificate of deposit as collateral for her business venture, execute a power of attorney in her favor and a will leaving the property to her and Derryberry. These actions arose out of a friendship of just a few months. Wiley stated: "I thought they [White and Derryberry] were good people." He placed confidence in White to represent his interests. Wiley, a wizened man in his late 80s, placed his trust in White, a worldly and persuasive woman of 42. This disparity in age, together with the numerous documents and business dealings all in White's favor, executed in a very short time frame, inescapably lead to a finding of a confidential relationship.

        Having found a confidential relationship between White and Wiley, the burden falls upon White to demonstrate the fairness and reasonableness of the deed. The first area to be looked at is         1 ABR 426  the adequacy of the consideration received by Wiley for execution of the deed.

        Concurrent with the deed, Wiley executed a bill of sale to the premises. The bill of sale was also signed by White and Derryberry. The bill of sale purported to give Wiley "nursing care" and "free rent until deceased." The consideration for the deed/bill of sale was illusory. White has not provided any nursing care to Wiley. White is not a nurse and is incapable of providing competent care. White's contention that "nursing care" means her referral of Wiley to good physicians is a novel approach, but hardly adequate consideration for $46,000.00. Moreover, she provided no referral services. White and Derryberry's promise of "free rent" is also inadequate consideration. First, Wiley was extremely old at the time of execution of the deed. He had very little time to receive "free rent" in return for his $46,000.00 in cash. Secondly, White and Derryberry, either through direct burglary or allowing others to take his possessions, made Wiley's continued occupancy of the premises untenable. Free rent is not free when a tenant's possessions are frequently stolen. White and Derryberry's free rent argument has no merit.

        White did place $11,000.00 toward the purchase price of the home. She also alleges that she and Derryberry have paid taxes and insurance on the premises. Is this consideration for Wiley's $46,000.00 investment? I think not. White and Derryberry have had         1 ABR 427  continuous possession of the premises for nearly 33 months. They have paid no rent. Pro-rating their payment, it amounts to $166.67 a month each, far below reasonable rental value for Anchorage. Secondly, and perhaps more importantly, White and Derryberry have failed to keep the premises in good repair. During their stewardship of the property, improvements have not been completed, and the home is in a shambles. Any initial contribution by White is more than offset both through her continued use of the property and the deterioration that has occurred under her care.

        The deed was procured at White's insistence. White, who represented herself at trial, is an articulate and manipulative person. She was the dominant party in her relationship with Wiley. The document was witnessed by Helen Simpson's secretary. The parties conferred with Simpson. Simpson had a long history of representing White and did not give Wiley the independent advise and competent counsel to which he was entitled. Moreover, according to Simpson, the deed was not to be released from her file or recorded until Wiley's death.

        White contends that one purpose of the deed was to enable her and Derryberry to obtain a "slum" loan for which Wiley did not qualify. While this may be true, Wiley received no real advantage from the slum loan. The improvements were never completed and the home is in worse condition than ever. The purpose of the loan was to aid White not Wiley. It further illustrates the nature of their one-sided relationship.

        1 ABR 428 
        Based upon the totality of the circumstances of this case, I find the deed executed by Theodore Wiley in favor of Donna White to be the product of undue influence. Wiley placed his trust and confidence in White. She dominated their relationship and abused his trust. This case is remarkably similar to Paskvan v. Mesich. Like Mesich, Wiley was old and infirm. Like Mesich, Wiley trusted another younger and sharper individual with his business affairs. Like Mesich, he executed a number of documents clearly against his own self-interest and in the interests of White. Just as Paskvan's inheritance was invalidated, so shall the deed from Wiley to White.

IV. Objections and Exceptions to Discharqe

        Wiley has filed a large number of objections and exceptions to discharge against White. A great number of the allegations relate to false oath denial of discharge under 11 U.S.C. § 727(a) (4) for statements made by White regarding the businesses, International Travel Experts and InternationalTravel Experts, Inc.

        White initially established International Travel Experts as a partnership with Wiley in 1988. It was licensed by the State in 1989. White served as "Sales Manager" of the business. It was later incorporated. While White was not an owner, she and her son actively controlled and managed the business. Despite her intimate         1 ABR 429  association with the business, White repeatedly denied her relationship. She stated that she hadn't been in a partnership or engaged in business for six years prior to the filing of her bankruptcy petition in her response to Statement of Affairs Question 2-C. She stated she had not held a job for two years at her first meeting of creditors when she was in fact self-employed through the travel businesses. She misstated the shareholders of the corporation at the first meeting. She failed to list Yuki Rosko, a creditor of the travel businesses, in her schedules. She also failed to list a corporate depository upon which she was a signatory in her Statement of Affairs.

        The statements were knowingly and fraudulently made. The documentary evidence overwhelmingly supports her knowledge of the businesses and their affairs. Her statements that the businesses "never really operated" are simply unbelievable. They had officers and employees and incurred liabilities through their operations, with White at the helm. The statements were material to the bankruptcy, irrespective of possible harm to creditors. The debtor's discharge will be denied. In re Sklarin, 69 B.R. 949 (Bankr. S.D.Fla. 1987); In re Chalik, 748 F.2d 616 (llth Cir. 1984); Williamson v. Fireman's Fund Ins. Co., 828 F.2d 249 (4th Cir. 1987).

        Wiley's remaining § 727 allegations are redundant and moot. I have reviewed Wiley's § 523 allegations, and find they         1 ABR 430  have no merit. The issues regarding wilful and malicious injury as well as breach of fiduciary obligations have been adequately remedied by the disposition of title to the premises. A further finding of nondischargeability is unnecessary and improper.

V. Conclusion

        The deed from Wiley to White is invalid. White and Derryberry have no interest in the premises. White's discharge will be denied. Wiley is entitled to costs and reasonable fees in accordance with Alaska Civil Rule 82 solely as to the title aspect of this cause. Alaska Cab Co. v. Vaughn, 1 A.B.R. 34, 42 (Alaska 1990). No attorney's fees are allowable for the dischargeability action. In re Itale, 114 B.R. 206 (9th Cir. B.A.P. 1990); In re Lewinson, 58 B.R. 831, 838 (Bankr. N.D.Ill. 1986). As neither White nor Derryberry have any interest in the real property, their claim of exemption is improper. Wiley's objection to their claims of exempt property is sustained.

VI. Order

        IT IS HEREBY ORDERED, ADJUDGED AND DECREED:

        1.    Plaintiff Donna White's complaint to quiet title and for declaratory relief is dismissed with prejudice;

        2.    Plaintiff-in-Intervention Shane Derryberry's complaint for declaratory relief is dismissed with prejudice;

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        3.    The quitclaim deed acknowledged November 7, 1988 and recorded March 8, 1989 in the Anchorage Recording District, No. 89-016771, from Theodore Wiley to Donna Marie White upon property described as:

Lot 16, Block A, Sperstad Subdivision, 901 W.
53rd Avenue, Anchorage, Alaska 99516

is void and invalid;

        4.    Defendant and counterclaimant Theodore Roosevelt Wiley is the fee owner of the previously described premises and Donna Marie White, a/k/a Donna White and Shane Norman Derryberry have no interest therein;

        5.    In accordance with 11 U.S.C. § 727(a)(4), the discharge of Donna White a/k/a Donna Marie White is denied;

        6.    Wiley is awarded costs against White and Derryberry;

        7. Wiley is awarded attorney's fees pursuant to Rule 82, Alaska Rules of Civil Procedure solely regarding the title issues as to both White and Derryberry. Wiley shall submit an itemized statement of such fees together with an affidavit in support of the fees within ten (10) days of this order; White and Derryberry shall have ten (10) days thereafter within which to object to the fees. If no objections are filed, the court will rule on the fees without a hearing. If objections are filed, the court will set the fees for hearing. No attorney's fees shall be payable by White regarding Wiley's dischargeability actions;

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        8.    White and Derryberry's claims of exemption to the above-described real property are denied; and

        9.    Nothing contained herein constitutes an adjudication of the rights of the bankruptcy estates of Donna White or Shane Derryberry or an adjudication of the rights of any third parties other than the present litigants. Neither the trustee of the White and Derryberry bankruptcy estates nor any third parties were joined in this action.

        Let Judgment be entered and docketed accordingly.

       DATED:    March 13, 1991.








DONALD MacDONALD IV
United States Bankruptcy Judge




Serve:	J. Fitzgerald, Esq.
	G. Weiss, Esq.
	Donna White
	W. Barstow, Trustee