7 ABR 304
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA
In re:
ELAINE B. WRIGHT,
Debtor.
Case No. 85-40071
Chapter 7
ORDER DENYING MOTION TO REVOKE TECHNICAL ABANDONMENT
The trustee's motion to revoke technical abandonment duly came before the court for hearing on June 20, 2002. Kenneth Ringstad appeared telephonically on behalf of the trustee, Larry Compton. Terrence Thorgaard appeared telephonically on behalf of the debtor. After reviewing the memoranda of the parties,
IT IS ORDERED that the trustee's motion to revoke technical abandonment is denied as moot. The condemnation proceeds arising from the condemnation of Lot 8, Rees Subdivision in Fairbanks have never been abandoned. These proceeds remain property of the bankruptcy estate for administration by the trustee.
Discussion
Elaine B. Wright filed for chapter 11 relief on July 26, 1985. Included in her initial schedules was a 1/4 interest in real property located at 3042 S. Cushman in Fairbanks. Newbery Alaska, Inc. was listed as a secured creditor upon the realty for $130,000.00. Newbery moved for relief from stay October 21, 1985. Wright's chapter 11 was converted to a case under chapter 7 on November 25, 1985, and Gary D. Copus was appointed chapter 7 trustee. Newbery was granted relief from stay on December 31, 1985. The debtor filed revised schedules on January 28, 1986. The revised schedules described her South Cushman Street property as a 1/4 interest in Lot 8, Rees Subdivision, Plat No. 77-84, Fairbanks, Alaska.
7 ABR 305
The State of Alaska filed a motion for relief from stay on March 27, 1986, to pursue eminent domain proceedings against Lot 8 to condemn the realty for a highway project. The debtor, Newbery and the trustee were given notice of the State's motion for relief from stay and did not object to it. On May 5, 1986, the State received relief from stay through an order signed by the Honorable J. Douglas Williams II.
Newbery Alaska, Inc. subsequently proceeded with a deed of trust foreclosure sale. It bid in the full amount of its debt, $152,818.02, and received title to the Lot 8 property in Fairbanks on July 3, 1986. Newbery did not, however, seek recovery of the proceeds resulting from the State's condemnation of this realty. On April 2, 1987, the state court entered a final judgment depositing the condemnation award in an account until such time as the owners made demand and proved their entitlement to the funds. Nothing happened. The trustee filed his final report, and a small distribution was made in Ms. Wright's bankruptcy case. The final decree closing the case was entered on April 18, 1990.
Almost nine years later, on April 21, 1999, Ms. Wright asserted a claim to the condemnation funds and initiated proceedings in state court to recover the funds. On motion of successor trustee Larry Compton, Ms. Wright's bankruptcy case was reopened on March 29, 2002, to administer possible assets. The trustee's motion to revoke the technical abandonment of the condemnation proceedings was filed on May 16, 2002.
Analysis
11 U.S.C. § 554 provides:
(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to
(c) Unless the court orders otherwise, any property scheduled under section 521(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title.
(d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.
Although the condemnation proceedings involved real property in which the debtor had an interest, the condemnation proceeds are a separate asset, distinct from the real property. 1
The condemnation proceeds were not formally abandoned under subsections (a) or (b) of § 554. Abandonment of an asset under either of these subsections “requires notice, a hearing, and an order of the court authorizing the abandonment.” 2
proceeds. Even though the trustee was aware of the proceeds, they must be scheduled by the debtor before they can be abandoned under § 554(c). 4Because the condemnation proceeds have not been abandoned, the trustee's motion to revoke technical abandonment will be denied as moot. Under 11 U.S.C. § 554(d), the condemnation proceeds remain property of the estate. 5
DATED: July 8, 2002.
BY THE COURT
DONALD MacDONALD IV
United States Bankruptcy Judge
N O T E S:
1. Cusano v. Klein, 264 F.3d 936, 946-47 (9th Cir. 2001) [a debtor's "songrights" and his claims for unpaid royalties based on the songs he has written are two separate assets]; Pace v. Battley (In re Pace), 146 B.R. 562, 565 (B.A.P. 9th Cir. 1992); aff'd 17 F.3d 395 (9th Cir. 1994).
2. Pace, 146 B.R. at 564.
3. Id. at 564-65.
4. See Battley v. Pace (In re Pace) 132 B.R. 644, 2 A.B.R. 173 (Bankr. D. Alaska 1991), aff'd. 146 B.R. 562 (9th Cir B.A.P. 1992), aff'd 17 F.3d 395 (9th Cir. 1994); Vreugdenhill v. Navistar Intern. Transp. Corp, 950 F.2d 524 (8th Cir. 1991); Kottmeier v. United States (In re Kottmeier) 240 B.R. 440 (M.D. Fla. 1999).
5. 11 U.S.C. § 541(a)(6), (7).