Alaska Bankruptcy Reports - Digest Volume 1
1 ABR 1: Ch. 7, estate property, marital debt, maintenance/support, qualified domestic relation order, timely complaint, failure to object to exemption (Ross).
Awards of back support and ½ interest in Debtor's pension are not dischargeable. Summary judgment for ex-wife.
Under the divorce agreement, ex-wife was to receive part of Debtor's income and ½ interest in his pension plan. A postpetition modification order awarded $2,816 as past due support. A Qualified Domestic Relation Order was entered, but never forwarded to the plan administrator.
The complaint is not time-barred as the 60-day rule applies only to complaints under 11 USC 523(a)(2), (4), and (6).
The Trustee has abandoned the pension fund, so whether it was estate property is no longer relevant. Failure to object to exemption of the property does not bar claiming an interest.
Division of the pension fund was a property settlement, not support. It appears in the decree's property division section and there is no provision for termination on death or remarriage. Wife's medical condition is noted and provided for under the support section.
The back support was awarded postpetition, and thus was not a preference. It transferred nothing, merely liquidating an amount due.
Under Teichman, ex-wife's interest in the future pension payments are not discharged, but Debtor will be a "conduit" to have the payments made to her. With a QDRO the duty to pay passes from Debtor to the pension administrators. Ex-wife should be permitted to send the QDRO to the plan administrator.
In re Fladland (Fladland Ranch Supply), F89-00544; Fladland v. Fladland, F89-00544-001; 5/22/90.
Valerie Therrien, Fairbanks, for Debtor; Robert Noreen, Fairbanks, for Wife; Peggy Gingras, Adv. Case Mgr.
1 ABR 11: Ch.7, involuntary petition, "generally not paying" test (MacDonald).
An order for relief under Ch. 7 is granted.
3 of 12 creditors filed for involuntary relief against Debtor.
$5,666 in disputed debt is excluded from the 303(h)(1) test.
Debtor has made payment of $788 against $132,000 in undisputed debt, less than 1% of the outstanding debts. The overwhelming weight of the evidence is that he is "generally not paying."
Whether creditors would be better served if the petition were denied is not a material consideration.
In re Swensen, A89-01304, 7/6/90.
Brent Wadsworth (Wadsworth & Associates), Anchorage, for Debtor; Erik LeRoy, Anchorage, for Creditor Case-Hoyt Corp.
1 ABR 16: Ch. 11, estimation of claim, wrongful death, personal injury, compensatory damages, punitives, airplane crash (Ross).
For the purpose of confirmation, Stewart Brandon's estate claim is estimated at $600,00 for compensatory damages, $12,000 interest, and nothing for punitives.
Brandon died in the crash of an aircraft that Debtor operated. He was unmarried, but alleged to have a 4-year old daughter. He was earning $28,643/yr. His estate filed for $4 million for compensatory and punitive damages for wrongful death. Debtor has $1 million per seat coverage for compensatory damages, nothing for punitives.
The hearing procedure allowed a limited number of witnesses for each side. The estate projected compensatories based on 5 high income levels from $50,000 to $100,000 and claimed interest at 10½%. Debtor's economic expert's analysis of loss at $98,305 to $212,290 was discredited.
Debtor's expert on aircraft accidents and wrongful death testified that verdicts have declined since 1970.
Compensatory loss would be no more than $600,000, assuming that paternity is established. This estimate uses $50,000/yr, which may be too optimistic.
The estate argues that outrageous conduct can be established by showing a pattern of disregard for load restrictions. The only evidence of this is maintenance inspector Keener's testimony, which would not be admitted in a civil suit. Punitives are disallowed for confirmation.
In re Ryan Air Service, A-88-00075, 7/8/90.
Roy Longacre (Longacre & Associates) and Lloyd Ericsson, Anchorage, for Debtor; John Hedland (Hedland, Fleischer, Friedman, Brennan & Cooke), Anchorage, for Estate; Jan Ostrovsky (Bogle & Gates), Seattle, for Unsecured Creditors' Committee.
1 ABR 31: Ch. 13, tax penalty, trustee's untimely disbursal (MacDonald).
Final payment to IRS of $3,319 approved, of which $2,000 is interest for late payments.
Debtor voluntarily filed for bankruptcy and was responsible for ensuring Trustee's timely disbursement of funds. Thus, he must pay the late payment penalty.
In re Klepzig, 3-86-00535, 7/18/90.
Gregory Oczkus, Anchorage, for Debtor; AUST Robert Crowther, Anchorage, for the IRS.
1 ABR 34: Ch. 13, notice of dismissal motion (Ross).
Bank and Trustee are given time to object to Debtors' motion for dismissal without prejudice. If objection is filed, hearing will be held.
A dismissal motion is not automatically a contested matter. Trustee and Bank, which incurred expense in contesting the confirmation, should get notice of Debtors' intended dismissal.
In re Beeson, A89-00267, 7/25/90.
Chris Johansen, Anchorage, for Debtors; Richard Ullstrom (Routh, Crabtree & Harbour), Anchorage, for FNB Anchorage; AUST Barbara Franklin.
1 ABR 37: Ch. 11, lease termination, waiver of right to declare lease default, fees (MacDonald).
Leases were not validly terminated prepetition and are estate property. Fees awarded to Debtor under Alaska Rule 82(a)(2).
Debtor leased 7 taxi permits from Vaughn and 2 from Sympsons.
Sympsons gave 30-days cancellation notice 5/24. §108(b) does not apply as a lease is involved. Thus, Debtor retained an interest in the leases after filing its petition 6/1. Either party may now move for acceptance or rejection of the leases. If the leases are accepted, Sympsons may give new notice to terminate.
Wide disparities in testimony as to the Vaughn leases reflect lack of candor. The parties' conduct is consistent with Vaughn's version: the lease agreements were amended to provide for payments each month on the 10th. Vaughn allowed Debtor to cure its breach and waived his right to declare default by taking and negotiating a 5/31 check prior to serving default notice.
In re Alaska Cab, A90-00500; Alaska Cab v. Vaughn, Sympson A90-00500-001; 7/25/90.
William Pace, Anchorage, for Alaska Cab; Kenneth Legacki, Anchorage, for Vaughn; Assistant Anchorage Municipal Atty. Halgrimson.
1 ABR 44: Dischargeability, student loan, undue hardship (MacDonald).
Summary judgment denied as the following material facts are unknown: Debtor's current medical condition, disposition of her spouse's retirement benefits, and whether they have found employment.
Tests are helpful, but not definitive. Hardship must be determined case by case.
In re Stuehr, A88-00340; Stuehr v. Alaska Commission Postsecondary Education, A88-00340-001; 7/27/90.
Asst. AG Thomas Slagle, Juneau, for ACPE; Tatiana Stuehr, pro per.
1 ABR 47: Deficiency claim, nonjudicial postpetition foreclosure (MacDonald).
Trustee's final account is approved.
The sole creditor was owed $133,000 on a trust deed at the time of filing. After obtaining relief from the stay it foreclosed nonjudicially and the property sold for $83,000. Creditor and Trustee argue that it is entitled to an unsecured claim for the deficiency, even though a deficiency judgment is specifically disallowed by Alaska statute.
The controlling date for determination of the amount of the unsecured claim is the petition date. Creditor's later foreclosure is irrelevant. As under Hougland, if a debtor can receive the benefit of bifurcation, he should also face any burden it may impose.
Were a creditor to nonjudicially foreclose prepetition there would be no right to a deficiency claim in bankruptcy.
This holding could be easily overruled.
In re Allard, A88-01223, 8/1/90.
David Rankine (McNall Law Offices), Anchorage, for Debtor; Richard Ullstrom (Routh, Crabtree & Harbour), Anchorage, for Creditor Goldome Realty Credit Corp.
1 ABR 51: Ch. 7, trustee employed as auctioneer (Ross).
Trustee is permitted to act as auctioneer to avoid the expense of obtaining a bonded auctioneer, an expense that could negate any profit from the sale.
The Code is flexible enough to let Trustee employ himself where a reasonable alternative is not available.
In re Galla, (Allstar Rent-A-Car Juneau, Allstar Rent-A-Car Wrangell); J-90-00475; 8/6/90.
Cabot Christianson & Joanne Grace (Christianson & Associates), Anchorage, for Trustee; AUST Barbara Franklin, Anchorage; Gordon Zerbetz, Trustee.
1 ABR 55: Ch. 11, proof of claim, wage claim, liquidated damages (Ross).
Proof of claim allowed.
Claimant Tarrant contracted with Debtor to compile and typeset a weekly paper. He assigned a claim for overtime to the Alaska Labor Dept. 8/89.
The overtime records were not contrived. The 2-yr limit has run on claims before 8/87. For purposes of his claim, Claimant was an employee. There was virtually no evidence as to the employee manual and it is not binding. "Excess" payments could not have been overtime since Debtor denies knowing about an overtime claim before 10/89 and Claimant says he did not request any before then.
Liquidated damages are disallowed as they would dilute other unsecured claims. The claim for severance and vacation pay is a general unsecured claim.
In re Pacific Rim Publishing, A89-01153, 8/7/90.
Thomas Yerbich, Anchorage, for Debtor; Hubert Tarrant, Anchorage, pro se.
1 ABR 61 and 1 ABR 71: Ch. 7 converted from Ch. 11, attorney fees, trustee fees (Ross).
Fees for Trustee and Trustee's attorney were approved. While there may have been a slight distortion by not applying §506(c) it is not significant enough where the secured creditors benefitted are also the largest unsecured creditors.
The hours that Debtor's attorneys claim are excessive for the tasks performed and the course of the case. The representation was marked by contentiousness and distrust of the SBA and Bank and the Ch. 11 was converted. The $160/hr rate was not contested and is used in the lodestar formula.
For Ch. 11 work, 210.55 hours of 404.7 are allowed; for Ch. 7, 30 of 176.8. The total $38,488 is to be prorated between the 2 estates involved.
Debtors were not straightforward with the Court and creditors, which was exacerbated by the law firm.
(1 ABR 61) In re Northern Marine Services, A88-00229; (1 ABR 71)In re Pickworth, A88-00199; 8/9/90.
Robert Hume (Copeland, Landye, Bennett & Wolf), Anchorage, for Debtors; Cabot Christianson, Anchorage, for Trustee; John Beard (Beard & Lawer), Anchorage, for FNB Anchorage; John DeVore & Karlee Gaskill, Anchorage, for SBA.
1 ABR 81: Ch. 7, dischargeability, prepetition taxes & penalties, relation back, res judicata, accord & satisfaction, partnership deduction (MacDonald).
Taxes, interest, and penalties for 1981-82 and the first 2 assessments for 1983, plus penalties on 1984 taxes, are discharged. The third IRS assessment in 1983 and the 1984 tax liability are nondischargeable and continue to accrue interest. By stipulation the Ch. 7 case is reopened and any lien valuations will be done there.
Debtor filed a late tax return for 1983. After an audit that allowed a deduction for a partnership loss, the IRS assessed $2,042 plus penalties & interest. The Tax Court upheld the partnership deduction and made a second assessment for 1983. A third assessment of $5,995 was made after another audit disallowed the partnership deduction.
Debtor contends that the third assessment is dischargeable: it relates back to prior 1983 assessments and is outside §507's 240-day requirement; the Tax Court decision allowing the deduction has a res judicata effect on the third assessment; or, the third assessment is barred by accord & satisfaction because the settlement he made was based on the Tax Court's decision that allowed the deduction.
There is no authority for "relation back" here and §507(a)(7) compels the conclusion that the third assessment is nondischargeable. The IRS Code shows that multiple assessments are commonplace and there is a separate-established time limit for making assessments of partnership items.
The Tax Court does not have jurisdiction, in a deficiency proceeding about a partner's individual return, to rule upon partnership item. Thus, res judicata does not apply.
There was an accord as to part of the tax liability for understatement of tax, but it did not encompass amounts due for disallowance of the partnership deductions. It was not shown that the partnership loss was treated as a "nonpartnership item" under §6231(b)(1)(C).
The penalties on the third assessment for 1983 and on the 1984 return are dischargeable under §523(a)(7)(B), as they are on taxes due more than 3 years before the bankruptcy petition date.
In re Frary, A88-01166; Frary v. US, A88-01166-001; 8/9/90.
Jame Pettigrew (Oczkus Law Office), Anchorage, for Plaintiff; AUSAs Robert Crowther and Stephen Baker, Anchorage.
1 ABR 100: Ch. 7, dischargeability, student loan, undue hardship (MacDonald).
Based on totality of circumstances and in light of husband's long unemployment, wife's ill health, and their tax liability, her $3,573 student loan is discharged for hardship.
While husband was employed as an S&L vice-president payments were timely; he now earns $700/mo as a janitor. He is unable to obtain work in banking due to his age (55). Wife has hypertension, ulcers, and dizzy spells, for which she goes without medical treatment as there is no health insurance. Their modest home is liened for taxes, and husband has a nondischargeable student loan. Monthly expenses are $1,100.
Pension proceeds were rightfully used for food, shelter, and taxes rather than the loan.
In re Stuehr, A88-00340; Stuehr v. Alaska Commission on Postsecondary Education, A88-00340-001; 8/14/90.
Asst. AG Thomas Slagle for the Commission; Martin & Tatiana Stuehr, pro per.
1 ABR 103: Ch. 13 eligibility, transaction costs, stripdown (Ross).
To qualify for Ch. 13 relief Debtors must show that they can reduce unsecured debt below $100,000. Debtors' schedule shows $87,347 unsecured claims. Contrary to Bank's argument, the IRS liens are not undersecured and do not increase the unsecured claim amount. The claim scheduled as partly disputed also appears to be unliquidated and a more extensive evidentiary hearing is required or Debtors could seek to obtain a release from the creditor.
Debtors sought to deduct transaction costs in valuing their home. Although such deduction was allowed in prior cases it is not clear that a debtor seeking to stripdown a secured claim on a residence under Hougland should automatically be entitled to do so.
In re Jewell (High Style Salon), A90-00520, 8/20/90.
Diane Valentine, Anchorage, for Debtors; Richard Ullstrom (Routh, Crabtree & Harbour), Anchorage, for Cenlar Federal Savings Bank; Beatrice Furman, Trustee.
1 ABR 112: Ch. 7, employee withholding taxes, independent contractor (MacDonald).
1984-86 employee withholding taxes are invalid for nonmanagement auto body repairmen.
Most of the auto body workers are independent contractors: Debtor controlled only the end product, not the method of performance; the workers provided their own tools, paid for their own assistants, and could refuse jobs and increase income by working faster; the relationship was "at will." However, the body men who ran the shop in Debtor's absence, receiving hourly or monthly pay, were employees.
The parts pullers were also employees. They were paid by the hour to perform a task that does not require much professional discretion. Their irregular hours or occasional refusal to perform is irrelevant.
The parts manager was also an employee. He provided no tools, had no investment in a business for profit, and hired no independent employees.
In re Imholte, A89-00644; Imholte v. US, A89-00644-001; 8/20/90.
Larry Caudle, Anchorage, for Plaintiffs; Acting US Atty. Davis, Anchorage, and Robert Branman, Dept. of Justice, Washington, DC, for the US.
1 ABR 125: Ch. 7, dischargeability, student loan, undue hardship (MacDonald).
Student loan is discharged except for $1,500, with interest at the contract rate, to be paid at $50/mo. Debtor borrowed $6,000 to attend computer programming school. $3,000 of the principal was assumed by her spouse when they divorced.
She works part-time, earning $600/mo and receives $150/wk unemployment. She faces a deficit of $200/mo and needs a car. She left Alaska because of the imminent release of her stepson who had been convicted for sexual abuse of her children. She receives no support.
Requiring payment in full on the loan would prevent her from providing the minimal necessary support for herself and children. However, because of her job prospects, the loan is restructured.
In re Posey, A89-01065; Posey v. Alaska, A89-01065-001; 8/20/90.
Dana Stoker, Wasilla, for Posey; Michael Lindeman (Patterson, Van Abel & Lindeman), Anchorage, for the State.
1 ABR 129: Ch. 11, liquor license, tax lien, supremacy, settlement (Ross).
Liquor license is subject to a federal tax lien, which is subordinate to state liens. Settlement with creditors is denied.
An Alaska liquor license was sold under Bankruptcy Court order as free of liens, which comprises part of the $130,000 proceeds that Debtor-in-possession holds. The IRS claims priority to the proceeds over various liquor trade creditors who have put "holds" on the license.
The federal tax lien has no value without transfer of the license, which is governed by state statute that requires payment of the liquor business creditors. To the extent that the IRS, by virtue of the federal lien, attempts to prime those creditors with "holds," the IRS position is subordinate.
As to settlement, the estate is fully liquidated and there is no reason that a simple liquidation plan should not be filed.
In re Stone (The Broiler), 4-80-00031; Stone v. Alaska Dept. of Revenue, 478-87-0062; 8/22/90.
Barry Jackson, Anchorage, for Debtor; Kay Hill, Anchorage, and Robert Branman, Washington, DC, for IRS; Gary Sleeper (Jermaine, Dunnagan & Owens), Anchorage, for Alaska Hotel Trusts; Millard Ingraham, Anchorage, for C.R. Kennelly; Asst. Fairbanks Bourough Atty. John Connolly for Fairbanks North Star Borough; Asst. AG Julia Coster, Anchorage, for Alcoholic Beverage Control Board.
1 ABR 137: Ch. 13, dismissal motion, bad-faith filing, unreasonable & prejudicial delay, failure to timely file a plan, failure to commence timely payments (Ross).
The Court moves for dismissal for bad-faith filing, filing opposition to stay relief in violation Rule 9011, unreasonable delay by Debtor that is prejudicial to creditors, failure to timely file a plan, and failure to begin timely payments.
Debtor was 2½ years ($7,245) behind in rent and has thwarted eviction by filing Ch. 13 6/27/90. He obtained more free rent by opposing motion for relief from stay. He has filed no plan, statements, or schedules.
Sanctions are not invoked, although they appear warranted.
In re Hood, A90-00565, 8/22/90.
Chris Johansen, Anchorage, for Debtor; Donald Hopwood (Kay, Saville, Coffey, Hopwood & Schmid), Anchorage, for Creditor Rangeview Annex.
1 ABR 140: Ch. 7, stay relief, marital debt, dischargeability (MacDonald).
Stay terminated as to state court divorce case.
Wife has filed an action to have a $900/mo obligation declared nondischargeable. The parties contend that resolution of the termination of the stay will determine dischargeability.
Cause exists for stay relief as to the whole of the state court proceeding. Partial termination is inappropriate.
All dischargeability issues were discussed here. The parties should stipulate to submission of the termination of stay record as the record for the adversary action.
In re Palmatier, A90-00584, 8/22/90.
William Pace, Anchorage, for Debtor; Gordon Schadt, Anchorage, for Creditor Palmatier.
1 ABR 143: Ch. 7, administrative expense (MacDonald).
$1,004 claim for postpetition condo dues is denied as administrative expense, allowed as a general unsecured claim.
There was negative equity in the condo. There was nothing to preserve for the benefit of general unsecured creditors.
The fact that the claim is contingent or matured is irrelevant. Under Alaska condo law, postpetition fees may be included in the claim as they are continuing obligations of the fee owner.
In re Hurd, A89-00493, 8/27/90.
Mary LaFollette, Anchorage, for Debtors; David Rankine (McNall Law Offices), Anchorage, for Creditor Contempo I.
1 ABR 150: Ch. 11, reconsideration, lease termination (MacDonald).
Debtors' leases with Sympsons terminated 7/1/90 in accordance with state law.
Costs & fees are not allowed due to Sympsons' earlier position that the leases were totally terminated prepetition. Debtor is awarded $750 fees as to Vaughn.
In re Alaska Cab, A90-00500; Alaska Cab v. Vaughn, Sympson, A90-00500-001; 8/28/90.
William Pace, Anchorage, for Plaintiff; Kenneth Legacki, Anchorage, for Vaughn; James Brennan (Hedland, Friedman, Brennan & Cooke), Anchorage, for Sympsons.
1 ABR 152: Ch. 11, dismissal, stay relief, fees (MacDonald).
Adversary complaint seeking dismissal of the petition and motion for relief from stay dismissed without prejudice. Fees denied.
An action for dismissal for bad faith filing is not an action for "injunction or other equitable relief." The relief motion cannot be filed in an adversary action.
As to fees, procedural defects could have been pointed out early in the proceeding. Instead, Defendant took full advantage of the automatic stay. All issues addressed here apply to the Trustee's motion to dismiss and there is no authority for a fee award absent extreme and outrageous conduct.
In re Horchover (Alaska Sea Adventures), J90-00306; Alaska Pacific Capital v. Horchover, J90-00306-001; 9/6/90.
Loren Domke (Domke & Olmstead), Juneau, for Plaintiff; Danie Bruce (Baxter, Bruce, Brand & Rodriguez), Juneau, for Defendant.
1 ABR 155: Ch. 7, dischargeability, marital debt (MacDonald).
Marital debts for child support, home maintenance, attorney fees, credit card, and any other obligation arising out of Debtor's obligation to save and hold harmless are nondischargeable.
The $900/mo "contribution" toward the mortgage payment on the home constitutes maintenance or support. Shelter is a necessity of life and the agreement states that the payments are for the children's stability. The fact that the payment exceeds state guidelines for child support is meaningless: a party can consent to pay more; state courts frequently structure a property settlement to satisfy possible maintenance issues; if the home was sold, child support was to be redetermined.
The $1,500 attorney fees are also in the nature of alimony, maintenance, or support. Included were any fees accrued in conjunction with support issues addressed at the contempt hearing prior to filing the petition.
Debtor concedes that the Visa debt is support.
In re Palmatier, A90-00584; Palmatier v. Palmatier, A90-00584-001; 9/11/90.
Gordon Schadt, Anchorage, for Plaintiff; William Pace, Anchorage, for Defendant.
1 ABR 165: Ch. 7, failure to list creditor, failure to file proof of claim (MacDonald).
Creditor was not listed in the petition filed 9/86 and did not file proof of claim. It obtained a state court judgment 5/87. Discharge was entered 7/87. No distributions have been made; there are no assets to distribute. Debtor filed a late claim on Creditor's behalf.
Laczko, in which the BAP adopted the strict view denying discharge for unlisted creditors, is not binding for this District. It was "not for publication" and it may have been overruled by Bowen, which allowed a Ch. 7 debtor to reopen his no-asset case to add an omitted creditor under restricted circumstances.
Laczko fails to reconcile the fact that §523(a)(3) does not differentiate timely-filed and tardily-filed claims, while §726(a)(2)(C) allows payments to tardily-filed unsecured claims on the same priority as timely-filed ones, and thus leads to an unnecessarily harsh result for no substantive reason. Also, Laczko fails to allow an honest-but-mistaken debtor a fresh start.
As in Bowen, exceptional circumstances exist here. The debt was unlisted only because of mistake or inadvertence; there were no assets for distribution; there was no fraud or intentional laches; there was no prejudice to the creditor except for costs and fees, which are nondischargeable for state court action prior to 7/31/87.
In re Brosman, (Pacific Mechanical), 3-86-00547; Homestate Insurance Brokers of Alaska v. Brosman, 3-86-00547-001; 9/12/90.
David Bundy (Guess & Rudd), Anchorage, for Plaintiff; Thomas Yerbich, Anchorage, for Defendant.
1 ABR 175: Ch. 13 dismissed (Ross).
Ch. 13 dismissed with prejudice, with leave to move for reconsideration.
Trustee moved to dismiss or convert based on Debtor missing 3 creditors meetings. Debtor moved for dismissal without prejudice.
The statement lists an IRS debt of $36,000, secured claims of $62,000, and no unsecured debt. Creditors have been stayed for 5 months while Debtor has failed to move toward confirmation.
In re Cooper, A90-00369, 9/22/90.
Mitchell Joyner, Anchorage, for Debtor; AUST Barbara Franklin, Anchorage; Beatrice Furman, Trustee.
1 ABR 178: Ch. 11, dischargeability, tenant deposits, priority claim, core proceeding, fiduciary trust, defalcation (Ross).
Partial summary judgments for Teamster Trust and Debtor. If the security deposit claim cannot be liquidated by negotiation, trial will be set.
Debtor was indebted to Teamster Trust's predecessor Nabalaska on a first trust deed on an apartment building. He sold the building to Wespac, which assumed the first deed and gave him a second deed. Wespac defaulted, and Debtor foreclosed judicially, but did not give notice to tenants. Nabalaska foreclosed nonjudicially 3 months later on the first deed, giving notice to tenants. Wise never received any of the deposits that Wespac collected, but he claims to have refunded $20,339 while he held title. He admits receiving $10,500 in deposits directly from renters, of which he refunded $2,050. He did not turn over the $8,450 balance to Nabalaska or Teamster Trust. Teamster Trust claims $33,501 for the assignments of tenants' rights in the deposits that it took upon conveyance of the property from Nabalaska.
Wise is liable for the Wespac deposits, even though he never received them from Wespac. Under AS 34.03.070(b) the landlord responsible for refund does not have to be the one who received the deposit, but can include one who holds the landlord's interest at the time a lease is terminated.
Liability for the Wespac deposits not paid over and not refunded can be the subject of a valid claim by Teamster Trust.
Successor liability is not an issue as to the deposits that Debtor received directly from tenants. Teamster Trust has a valid claim for these provided it has assignments; there is no evidentiary support.
An assignee is not barred from stepping into a priority position. If assignments are established, Teamster Trust is entitled to priority (up to $900 for each apartment tenant).
Even if the URLTA creates a fiduciary trust as Teamster Trust argues, Wise's actions have not been shown to be fraud or defalcation. Any claim arising from the Wespac deposits is dischargeable: Wise never received the deposits from Wespac and was in possession only 3-4 months before Nabalaska foreclosed.
Conversely, failure to pay the deposits that Wise collected directly qualifies for nondischargeability for a fiduciary for defalcation under AS 34.03.070.
In re Wise, F89-00101-HAR; Alaska Teamster-Employer Pension Trust v. Wise, F89-00101-003-HAR; 9/27/90.
Rebecca Copeland (Groh, Eggers & Price), Anchorage, for Teamster Trust; David Bundy (Guess & Rudd), Anchorage, for Debtor.
1 ABR 196: Ch. 11, nunc pro tunc attorney fees, accountant fees (Ross).
Fees denied without prejudice for procedural defects.
The U.S. Trustee was not served. The notice of application for order does not disclose the amount sought. An application for or order approving nunc pro tunc employment cannot be found.
In re Montgomery, A89-00502,
Albert Maffei, Anchorage, for Debtors.
1 ABR 198: Ch. 13, stay relief, custody proceeding (Ross).
Stay lifted to permit custody action to proceed.
The case has been pending since 1/90. Debtor has continued twice and received an extension. She may dismiss if she can sell her house; she has not been paying Trustee.
The bankruptcy should be finalized before the custody matter is heard. Maintaining the stay would artificially extend the conclusion of the custody case.
In re Wood, A-90-00083, 8/31/90.
Arona Blachman, Anchorage, for Debtor.
1 ABR 200: Ch. 11, cash collateral, postpetition sale proceeds, fisherman's lien, lien perfection, lien invalidation (MacDonald).
Boat creditors have a security interest in the proceeds from a postpetition sale of fish.
Debtor filed bankruptcy 6/4. F/V Mar Pacifico recorded a fisherman's lien 5/31; 4 other creditors filed fisherman's liens postpetition. Debtor shipped fish from the creditors to Clouston Foods prepetition and postpetition. Debtor argues that the liens are invalid under §545(2).
F/V Mar Pacifico's statutory lien could not be defeated by a bona fide purchaser in the Kodiak recording district. The other boat creditors are also perfected because perfection can be effective against an intervening bona fide purchaser before perfection.
The van of fish that Debtor shipped postpetition did not lose its encumbrance when it moved outside the Kodiak recording district.
Alaska law applies to determine the lien's validity as to fish delivered out of state. The fish were in Alaska when the security interest attached.
Any property that Debtor had outside the recording district on the petition date is subject to statutory lien invalidation under 11 USC 545(2). AS 34.35.930(c) only prefers the liens of fishermen in the recording district. If Debtor wants to invalidate any statutory liens, it must do so under Rule 7001. Any cash collateral order must encompass the fishermen's interests until the interests are properly invalidated.
In re Eagle Fisheries, A90-00496, 10/2/90.
Erik LeRoy, Anchorage, for Debtor; Thomas Yerbich, Anchorage, for F/V Mar Pacifico.
1 ABR 207: Ch. 11, accountant nunc pro tunc employment (MacDonald).
Retroactive employment of accountants denied.
The accountants' lack of knowledge that an order approving employment was required is not an "exceptional circumstance."
In re Hickey (Whitney Road Properties, Patco Leasing), A89-00939, 10/3/90.
Thomas Yerbich, Anchorage, for Debtor.
1 ABR 209: Ch. 11 dismissed, effective reorganization, bad faith, sanctions, stripdown (MacDonald).
Petition dismissed with prejudice for lack of ability to reorganize. Sanctions denied.
Debtor and her husband defaulted on a $3.4 million loan to build an apartment building. 3 attempts at workouts failed and they filed Ch. 7. Judge Ross refused to strip down the FDIC lien. The FDIC agreed to release the lien for $1.5 million; it has received $225,000. About $300,000 cash on hand could be applied and Debtor has a loose commitment to finance the balance. Tax and mechanic's liens total $180,000. Debtor received a Ch. 7 discharge, but the case remains open. FDIC moved for dismissal for bad faith and sanctions under Chisum.
Debtor has no possibility for effective reorganization. Even she admits it would be difficult to close the transaction within the §108(b) 60-day extension period.
Rule 9011 violations should be met on the merits rather than automatically imposed. At petition date Debtor and her attorney believed it was well grounded. Under a broad reading based on Santa Fe Development, it was not filed for improper purpose. The fact that her Ch. 7 is still open is not determinative of bad faith.
In re Larson (Fontainebleau), A90-00844, 10/10/90.
William Artus (Artus, Choquette & Williams), Anchorage, for Debtor; Michael Zahare (Bradbury, Bliss & Riordan), Anchorage, for FDIC.
1 ABR 212: Ch. 7, attorney fees (Ross).
Briefs ordered on the State of Alaska's motion for attorney fees against VWH Company.
If Alaska law is applicable, Alaska Civil Rule 82 fees, which the State sets at $5,982, will be awarded. If Washington law governs, and it provides for no fees, then VWH will not be subject to fees.
In re Kachemak Seafoods, 3-83-00044-HAR; Kachemak Seafoods v. VWH Company; Alaska Dept. of Commerce v. Sea-Bear Air Transport; 3-83-00044-008-HAR; 10/11/90.
William Stewart (McCarrey & McCarrey), Anchorage, for State; Gina Zadra (Davis, Wright & Tremaine), Seattle, for VWH.
1 ABR 214: Ch. 11, reconsideration (Ross).
Debtor's motion for reconsideration of 1 ABR 178 denied.
Although he did not even have the tenants' money, Debtor was liable for their deposits under the Alaska Residential Landlord and Tenant Act.
He did not provide continued occupancy for the tenants after Nabalaska closed. He could have used the same procedure in foreclosing that Teamster Trust did.
In re Wise, F89-00101-HAR; Alaska Teamster-Employer Pension Trust v. Wise, F89-00101-003-HAR; 10/16/90.
Rebecca Copeland (Groh, Eggers & Price), Anchorage, for Trust; David Bundy (Guess & Rudd), Anchorage, for Debtor.
1 ABR 217: Ch. 7, discharge, fraudulent intent, fishing permit, prepetition payments, postpetition transactions, failure to disclose, false oaths, harm to creditors (MacDonald).
Defendant's discharge denied.
Ward's Cove cannery provided checking and accounting services to Debtor. He failed to disclose in his schedule $30,000-$40,000 due him from Ward's Cove and filed as "not engaged in business" when he was actively working as a fisherman. He listed Ward's Cove as only an unsecured creditor and did not list his employees as creditors. The employees and others were paid postpetition from the Ward's Cove account. He undervalued his primary asset, an exempt limited-entry fishing permit, by more than $100,000.
Debtor deliberately concealed the Ward's Cove credit in an effort to defeat Trustee and ex-wife's claims. He made false oaths by signing schedules knowing that they were incomplete. He failed to keep all property as required by court order, but used it to his own benefit postpetition.
Determination of whether crew members were secured creditors is irrelevant. Debtor forfeited his right to discharge regardless of the amount of harm to creditors.
In re Lind, A89-00912; Waage v. Lind, A89-00912-001; 11/15/90.
Douglas Williams II (Artus, Choquette & Williams), Anchorage, for Waage; Larry Caudle (Caudle & Associates), Anchorage, for Debtor.
1 ABR 226: Ch. 7, dischargeability, fraud, failure to keep records, failure to explain loss of assets, relation back (MacDonald).
Debtors' motion to dismiss FDIC's dischargeability complaint will be granted as to fraud allegations unless FDIC amends with specific facts.
The conclusory allegations as to failure to keep records and explain loss of assets state claims for relief. The fraud causes are insufficient without statements of time, place, and nature of the alleged fraudulent activities.
Dismissal without leave to amend is not warranted, nor are the leading decisions on "relation back" under Rule 15(c) in accord with Debtors' position. Also, the creditor is not seeking to substantially change the nature of the original complaint.
In re Vockner, A90-00349; FDIC v. Vockner, A90-00349-002; 11/21/90.
Kevin Anderson & Michelle Boutin, Anchorage, for FDIC; Brian Durrell (Bogle & Gates), Anchorage, for Debtors.
1 ABR 231: Ch. 7, abstention, core proceeding, dischargeability, postpetition claims (MacDonald).
Recommended to US District Court that motion to abstain be denied.
Debtor, a CPA, filed a no-asset liquidation that was discharged 6/88. CPA Dewhirst, who had been listed as a secured creditor, sued Debtor 11/88 in state court alleging 10 counts relating to a covenant not to compete. Debtor successfully moved to reopen his bankruptcy case 3/89 and seeks an order holding Dewhirst and his lawyer in contempt for violating the bankruptcy discharge. Dewhirst moved for permissive abstention.
Debtor is not seeking adjudication of state law claims; he seeks to enforce the discharge injunction of §524. The fundamental purpose of the abstention statute is not violated by retention of jurisdiction. Core proceedings include determinations as to dischargeability, and this is a dischargeability action in substance.
Determination as to whether postpetition claims constitute violation of bankruptcy discharge involves federal bankruptcy law, not state contract law.
In re Mark, A88-00162, 11/26/90.
Hal Gazaway, Anchorage, for Debtor; Bernd Guetschow, Anchorage, for Dewhirst.
1 ABR 243: Ch. 11, stay relief, lease determination, nominal option price, unperfected security interest, valuation/dozer (Ross).
Relief from stay denied.
Wilder Const. leased a D-9 dozer to Debtor and by separate agreement gave Debtor the option to buy at the end of the lease term if payments were current. Debtor filed bankruptcy 11/89. One lease payment had been made. The option matured 7/90 and was not exercised. Debtor then invested $50,000 to refurbish the D-9. Wilder moved for relief to recover it for lack of adequate protection. Debtor argues that Wilder is not a lessor, but holds an unperfected security interest.
The lease and option form an integrated contract. The $3,850 option price is nominal (using either Wilder's $40,000 or Auctioneer Hess's $65,000 valuation), which establishes a security interest rather than a lease relationship. Even if the option price is not nominal, the parties contemplated a security interest; Wilder merely financed Debtor's purchase of the unit.
Debtor's inability to exercise the option because it was in default does not affect the character of the transaction.
Faulty documentation of the D-9 deal, not the bankruptcy, is the source of Wilder's grief.
In re Martinson Gravel & Crane, A89-01142-HAR, 10/29/90.
William Artus (Artus, Choquette & Williams), Anchorage, for Debtor; Randall Farleigh & Steven Shamburek (Farleigh & Shamburek), Anchorage, for Wilder.
1 ABR 257: Ch. 7, liquor license, tax lien (BAP).
Order by Judge Ross approving accounting is affirmed (unpublished order).
Ross approved distribution of proceeds from sale of Debtors' liquor license to: (1) administrative expenses, (2) Anchorage taxes, and (3) remainder pro rata to creditors. The IRS contends that it is entitled to all proceeds after payment of administrative expenses and Anchorage taxes.
Ninth Circuit precedent directs the Panel to look not to competing claims but to the nature of the debtor's rights in the license. Under Alaska law the only property right that Debtors held was the right to petition the ABC Board for transfer of the license. AS 04.11.360 provides that all debts or taxes must be paid before the license can be transferred. Tax liens are accorded no different status than liens of other creditors. Alaska liquor license statute provisions are not in conflict with federal law.
In re Kimura; IRS v. Battley, AK-90-1352 RPAs, 11/19/90.
Special AUSA Kay Hill, Anchorage; William Artus (Artus, Choquette, Williams & Allmaras), Anchorage, for Trustee Kenneth Battley; Gary Sleeper (Jermain, Dunnagan & Owens), Anchorage, for Alaska Hotel & Restaurant Employee Trust Funds; Peter Giannini (Giannini & Associates), Anchorage, for Alaska Distributors; Roy Longacre (Longacre & Associates), Anchorage, for K & L Distributors; Kevin Finnigan, Anchorage Legal Dept.
1 ABR 264: Ch. 7, stripdown, lien avoidance (BAP).
Judge Ross's dismissal of Debtor's adversary proceeding seeking to avoid a lien in his exempt residence is affirmed (unpublished order).
Ch. 7 Debtor sought to avoid under §506(d) the consensual lien of a bank. In re Lange held that a Ch. 7 debtor cannot use §506 to stripdown and avoid a lien on abandoned property. Its reasoning applies equally to exempt property.
In re Bailey; Bailey v. Mt. McKinley Mutual Savings Bank, AK-89-2047-PVAs, 12/14/90.
Ann Rhian, Fairbanks, for Baileys; Julian Rice, Fairbanks, for Bank.
1 ABR 268: Ch. 11, appeal, abstention, jury, core/related proceeding (Ross).
The Court will abstain from hearing this adversary proceeding. The order is appealable to US District Court.
Debtor challenges Juneau's use of an abandoned mining tunnel for water storage.
Discretionary abstention is appropriate because of the possibility that Juneau may have a right to a jury trial and the question of whether this Court may conduct a jury trial, and because the issues are at least partly related proceedings rather than core matters.
In re Alaska Trams; Alaska Trams v. Juneau, 1-87-0029-HAR, 1/2/90.
Lee Petersen, Anchorage, for Alaska Trams; George Lyle (Guess & Rudd), Anchorage, for Juneau.
1 ABR 277: Ch. 11 conversion to Ch. 7 (Ross).
Motion by Fireman's Fund Ins. and Home Ins. with concurrence of US Trustee to convert to Ch. 7 is granted.
After 4½ years in Ch. 11 confirmation is unlikely. Conversion will give creditors the best chance of getting paid without unduly hindering the proposed tourist attraction. Conversion may be more productive to development of the project than destructive.
In re Alaska Trams, 1-86-00028-HAR, 1/7/91.
Lee Petersen, Anchorage, for Alaska Trams; Eric Kueffner (Faulkner, Banfield, Doogan & Holmes, Juneau, for Fireman's Fund.
1 ABR 284: Ch. 7, procedure, stripdown, redemption (Ross).
Default judgment denied; Debtor may modify complaint to make necessary allegations to effect redemption or reopen the main case to bring motion under Rule 6018.
Debtor filed an adversary complaint to strip down Credit Union secured claim, apparently in an effort to redeem a car. Stripdown is unavailable in Ch. 7 except in aid of exemptions. The complaint does not state that the car qualifies for redemption or even ask for redemption. If redemption is sought, it and valuation of the claim could have been brought by motion under Rules 3012 & 6018.
In re Miller; Miller v. Navy Federal Credit Union, A90-00337-001-HAR, 1/3/90.
James Hill for Debtor.
1 ABR 287: Ch. 7, contractor's bond, estate property (MacDonald).
A CD posted with the State as a contractor's bond is property of the estate which must be surrendered to the Trustee. Funds recovered will be available for distribution to unsecured creditors.
In re GFI Corp.; Zerbetz v. Alaska and FNB Anchorage, J90-00014-001, 1/10/91.
1 ABR 296: Ch. 7, attorney fees (MacDonald).
Requested fees are allowed for Debtor's attorneys. They may apply their prepetition retainers to the fees earned, notwithstanding SBA's claim that the retainers are cash collateral subject to its security interest. Prepetition retainers, while property of the estate, are subject to the attorney lien. The postpetition transfer to Nogg was unauthorized and must be turned over.
In re Wilsyk Alaska, A89-01043, 1/16/91.
Russell Nogg, Anchorage, and Michael Oiffer (Shulkin, Hutton & Bucknell), Seattle, for Debtor; Cabot Christianson, Anchorage, Trustee; Jon DeVore, Anchorage, SBA.
1 ABR 301: Ch. 11, judgment on pleading, estate property (Ross).
Trustee's request for judgment on the pleading on Count II denied.
Trustee seeks turnover of funds paid to Debtor's insider for lease of a ship for oil spill work without court approval. To blindly assume that all proceeds of the contract are property of the estate and subject to turnover is not warranted. The Court does not elect to consider things outside the pleadings in deciding the motion.
In re Anchorage Nautical Tours et al; Zerbetz v. Veco, Cook Inlet Cruises, and Holta, A88-00831-001-HAR, 1/17/91.
Erik LeRoy, Anchorage, for Plaintiff; William Artus (Artus, Choquette & Williams), Anchorage, for Cook Inlet Cruises; Daniel Weber, Anchorage, for Veco.
1 ABR 304: Ch. 13, trustee fees (Ross).
Standing Trustee Beatrice Furman's motion to increase fees from 5% to 10% on cases confirmed before the US Trustee was certified in 11/88 is denied. 5% may be uneconomical, but the number of old cases have a limited life and Debtors are entitled to rely on the fees previously established. She may move to recover expenses under §§326(b), 330, or 1302(a), but not 586(e).
In re Walker, 3-84-00076-HAR; In re Storey, 3-86-00737-HAR; In re Johnson, 3-87-01056-HAR; 1/23/91.
Peter Giannini, Anchorage, for Walker; Brent Wadsworth, Anchorage, for Johnsons; Diane Vallentine (Gaitan & Cusack), Anchorage, for Storeys; Gordon Schadt, Anchorage, for Trustee Furman.
1 ABR 311: Ch. 7, discharge, fraud, mental anguish, willful/malicious injury (MacDonald).
Complaint for nondischargeability dismissed.
Plaintiff alleges fraud and willful & malicious injury in connection with difficulties obtaining releases on an airplane. But he suffered no pecuniary damages. The plane has appreciated in value, the liens have been released, and the plane was leasable at all times. His mental anguish damages are not allowable on the fraud count. There was no extreme and outrageous conduct that would entitle him to relief for intentional infliction of emotional distress, and no conversion which damaged him.
In re Blachman; Walker v. Blachman; A89-01167-001, 1/25/91.
Steven Shamburek (Farleigh & Shamburek), Anchorage, for Plaintiff; John Abbott, Anchorage, for Defendant.
1 ABR 316: Ch. 7, homestead exemption, property ownership (Ross).
Debtor Joan Ames is not entitled to a homestead exemption in her former house; it may be sold free & clear of interest of co-owners. Prison inmate Patrick Ames may object to sale of any interest that he may claim.
Joan filed Ch. 7 when her brother sought to recover a judgment for work he did in refurbishing the house. She did not list the house in her schedules or indicate that she held it for the benefit of her children. She subsequently quitclaimed the house to "Ames Children Trust," which she claims had been in existence since 1972 after a divorce judge ordered that the house be held for the children's adulthood. It is more likely that the judge ordered it retained for them to live in at that time while they were children. Her testimony that she held the property in trust was at best mistaken and at worst perjury. Validity of the inter vivos trust is extremely questionable.
On the date of petition she had an equitable interest in the property superior to any claims of her children, whether as heirs of William Ames through the "inter vivos trust" or because of any estoppel or waiver they assert because of her behavior. She is not entitled to a homestead exemption because she voluntarily and surreptitiously conveyed the house postpetition.
In re Ames; Adamson v. Ames Children Trust et al; 4-86-00169-002-HAR, 1/25/91.
Valerie Therrien, Fairbanks, for Plaintiff Trustee; Robert Sparks (Satterberg Law Office), Fairbanks, for Defendants.
1 ABR 340: Ch. 11, reopen (Ross).
Alaska USA Federal Credit Union's motion to reopen this dismissed case is denied.
Alaska USA seeks to avoid being whipped around by Debtor's serial bankruptcy filings. Its frustration is justified, but it has consented to dismissal and the Court will not reopen on the eventuality that Debtor might hinder its reacquiring title. Any subsequent filing would be the case in which to raise the bad-faith issues alluded to.
In re Gross, 3-86-00598-HAR, 1/28/91.
Larry Caudle, Anchorage, for Debtor; Marshall Coryell, Anchorage, for Alaska USA.
1 ABR 344: Jury (Ross).
Amwest has requested a jury trial. Judge MacDonald has held that bankruptcy court cannot conduct a jury trial. The Supreme Court has yet to decide the issue.
Given the complexity of this adversary proceeding, the amount of money involved, and the uncertain authority of a bankruptcy court to conduct a jury trial, it may be unwise to continue this case in Bankruptcy Court. Since there is a pending action in US District Court mirroring this adversary proceeding, District Court could accommodate the jury request in that case.
In re Buckner Drilling; Buckner Drilling v. Homer; Amwest Surety Ins. v. Homer;M A90-0001-001, 2/1/91.
Edwin Perry (Tonkon, Torp, Galen, Marmaduke & Booth), Portland, and Robert Bundy (Bogle & Gates), Anchorage, for Debtor; Stephen Smith, Seattle, and Joan Travostino, Anchorage (Preston, Thorgrimson, Shidler, Gates & Ellis), for Homer; Joseph Yasbeck (Allen, Kilmer, Schrader, Yasbeck & Chenoweth), Portland, and Parry Grover (Davis, Wright, Tremaine), Anchorage, for Amwest; Gordon Stewart, Madras, Ore., for Robert Buckner.
1 ABR 351: Ch. 7, costs (MacDonald).
Debtor's motion for costs and expenses involved in moving a boat is denied. He is neither a trustee nor debtor-in-possession and has no standing to pursue a §506(c) claim.
In re Mitchell (Western Alaska Brokerage, F/V Rising Sun), A90-00019, 2/1/91.
David Rankine (McNall Law Offices), Anchorage, for Debtor; William Artus (Artus, Choquette & Williams), Anchorage, for Trustee Kenneth Battley; Anthony Ginster (Teske & Associates), Seattle, for Creditor Coxen.
1 ABR 353: Ch. 7, contempt, discharge, automatic stay (MacDonald).
Dewhirst and Wallack are ordered to show cause why they should not be held in contempt for violating §524(a) by filing a post-discharge civil action against Debtor in State Court to enforce a prepetition covenant not to compete. Dewhirst shall show cause why he should not be sanctioned for violations of §362(h) by taking payments from Debtor's compensation after the bankruptcy filing.
Debtor filed a "statement of executory contracts" purporting to reject the agreement. Although he did not have standing to reject executory contracts, Trustee did not assume the agreement and therefore it was deemed rejected. Such rejection is deemed to constitute a breach of the contract immediately before the date of petition filing. Breach of the agreement constitutes a dischargeable "claim."
In re Mark, A88-00162, 2/4/91.
Hal Gazaway, Anchorage, for Debtor; Bernd Guetschow, Anchorage, for Dewhirst; Sanford Gibbs (Hagans, Brown, Gibbs & Moran), Anchorage, for Wallack.
1 ABR 356: Ch. 13, dismissal, failure to list creditor (MacDonald).
Dismissed for cause for, among other things, failing to list the IRS as a creditor. Although Debtor disputes the IRS claim, that is not grounds for failing to list the largest creditor and constitutes perjury.
In re Hymes, F90-00607, 2/4/91.
Debtors, pro se; Special AUSA Robert Crowther, IRS.
1 ABR 359: Ch. 13, confirmation, bad faith, transaction costs, disposable income test, reasonably necessary (MacDonald).
Debtor filed Ch. 7 which included a condo with encumbrances by NBA and ATD. She failed to make payments for 16 months. Following Ch. 7 discharge she tried to settle with ATD but failed. NBA then tried to foreclose. She filed Ch. 13 prior to foreclosure sale. NBA and ATD object to confirmation because Debtor failed to make payments while living in the condo, failed to collect rent from her roommate and apply it to the first trust deed, and does not need a $100,000 condo.
The value of the condo increased from $87,500 in 4/89, date of the Ch. 7 filing, to $102,500 in 7/90, date of the Ch. 13 filing. Transactional costs of 7% are appropriate for 7/90 and 10% for 4/89 due to changes in market conditions. NBA's position has improved somewhat by the lapse of time, despite its failure to receive payments. Nor has ATD been injured by the delay; it was totally unsecured in 4/89 as well as 7/90.
Debtor incorrectly contends that no one can raise the disposable income issue as ATD's unsecured claim was discharged in the Ch. 7. Debtor's retention of the condo is reasonable; her actual housing expense is only half the monthly payment of $1,118 due to her receipt of half the payment from her roommate, the interest part of the payment will substantially reduce her taxes, and a 2-bedroom condo in relatively poor condition does not appear to be a luxury item given Alaska's unique, expensive standards. While this case explores the upper reaches of "reasonably necessary," it does not cross the line.
In re Kowalczuk, A90-00715, 2/7/91.
David Rankine (McNall Law Offices), Anchorage, for Debtor; Richard Ullstrom (Routh, Crabtree & Harbour), Anchorage, for NBA; Stephen Dodge (Bartlett & Dodge), Anchorage, for ATD.
1 ABR 365: Ch. 7, union trust funds, oral modification (Ross).
A purported oral modification of the Compliance Agreement between Alaska Fence and Alaska District Council of Laborers which would exclude a Trust Fund claim for benefits for residential work cannot be enforced. There is no evidence of any written agreement modifying the Compliance Agreement, which must be in writing.
In re Alaska Fence, 3-87-00388-HAR, 2/12/91.
Albert Maffei, Anchorage, for Trustee Frank Avezac; Gary Sleeper (Jermain, Dunnagan & Owens), Anchorage, for the Trust Fund.
1 ABR 371: Ch. 11, clarification of confirmation order, wrongful death, airplane crash (Ross).
The Brandon claim for compensatory damages was not discharged by confirmation of the Ch. 11 Plan.
The Court previously estimated, for purpose of confirmation, Stewart Brandon's estate's wrongful death claim at $600,000 for compensatory damages (1 ABR 16). The estate subsequently won a $2.8 million verdict. Ryan now seeks a declaration that the confirmation order discharged the death claim.
The order specifically excludes the claim from discharge: "The discharge provisions of the Order, including, but not limited to, paragraph 10 and A and B above, do not apply to or effect the pending state court claims of the Brandon estate against the Debtor." Ryan argues that this language was inserted merely to answer the estate's concerns that it would not be in violation of the discharge injunction as it prosecuted its death claim in state court. The estate argues that it was to provide that a judgment would not be discharged and to the extent that the insurance did not cover the judgment it was not foreclosed from seeking relief against Ryan's assets.
Wise or not, it is permissible to confirm a plan without discharging a plan. That is what this Court ordered in response to Brandon's concerns, the literal wording of the Plan, and the Plan's failure to address the contingency of a large judgment beyond policy limits. This Court has jurisdiction to interpret its own orders. The intent of the order is that should recovery not be available for compensatory damages under the $1 million policy, the excess was not discharged.
In re Ryan Air Service, A88-00075-HAR, 2/21/91.
Roy Longacre (Longacre & Associates) and Lloyd Ericsson (Martin, Bischoff, Templeton, Ericsson & Langslet), Anchorage, for Debtor; John Hedland & Sara Heideman (Hedland, Fleischer, Friedman, Brennan & Cooke), Anchorage, for Estate; Jan Ostrovsky (Bogle & Gates), Seattle, for Unsecured Creditors' Committee; Peter Giannini, Anchorage, for Baker & Hostetler.
1 ABR 389: Ch. 13, confirmation denied, tax protestor, bad faith (MacDonald).
Confirmation denied, case dismissed.
The Plan of Debtor, a convicted tax protestor, provides for payments of $198/mo for 36 months. It would provide a 7% dividend to the IRS on its $91,317 claim. The claim is unsecured and would be dischargeable in Ch. 7 but due to his prior bankruptcies he cannot file another Ch. 7 until 1994. This is his third Ch. 11 petition in 3 years. His motivation and sincerity are highly suspect. He is not the "honest but unfortunate" debtor entitled to relief.
In re Newhall, A90-00823, 2/25/91.
Patrick Sampair (MacPherson & McCarville), Phoenix, and David Rankine, Anchorage, for Debtor; Stephen Baker, Anchorage, IRS.
1 ABR 396: Ch. 7, stay pending appeal, notice of appeal (Ross).
Stay pending appeal of judgment authorizing sale of property (1 ABR 316) is denied.
Joan Ames mailed a notice of appeal on the deadline date, but it was not filed until 3 days later; it is untimely under Ramsey (9th Cir. 1981).
In re Ames; Adamson v. Ames Children Trust; 4-86-00169-002-HAR, 2/25/91.
Valerie Therrien, Fairbanks, for Plaintiff; Douglas Williams (Artus, Choquette & Williams), Anchorage, for Ameses.
1 ABR 400: Appellate procedure (Kleinfeld).
Bankruptcy Court decision affirmed.
AHFC appeals from an order confirming Ch. 13 Plan which split its claim, treating part as secured and part as unsecured, pursuant to Hougland (9th Cir. 1989). AHFC asks this Court to overrule Hougland. But a district court cannot reverse the appellate court.
Alaska Housing Finance Corp. v. Kurth, A89-374, 2/26/91.
Chris Johansen, Anchorage, for Debtor; Ralph Cushman, Anchorage, AHFC.
1 ABR 402: Inadequate docket entry (Ross).
Douglas Williams appeared for Defendants and moved to enter final judgment 2/25/91. 3½ years earlier a judgment was filed in favor of Plaintiff-Trustee avoiding a postpetition quitclaim by Debtor. The docket entry merely notes that a judgment was entered and does not state its substance. Defendants argue that it does not comply with Rules 79(a) or 5004(a) and 9021.
The docket entry is clearly deficient. But all that is required is to direct the Clerk to make entries in compliance with the rules. Then Defendants can seekreconsideration of the judgment or appeal it.
In re Ames; Copus v. Ames Children Trust; 4-87-0028-HAR, 3/4/91.
Valerie Therrien, Fairbanks, for Plaintiff; Franklin Fleeks, Fairbanks, and Douglas Williams (Artus, Choquette & Williams), Fairbanks, for Defendants.
1 ABR 408: Ch. 11, fees (Ross).
Debtor's counsel is ordered to comply with fee application requirements, apply for fees on a job cost basis, and submit a budget for anticipated expenditures.
In re Restaurants Northwest, A91-00152-HAR, 3/8/91.
Roger Beaty & Terry Draeger (Beaty, Draeger, Locke & Troll), Anchorage, for Debtor.
1 ABR 413: Ch. 7, fees (Ross).
Debtor's counsel's bill ($104,086 fees, $4,504 costs), while large, is not unwarranted, and is approved. The Trustee is authorized to assign malpractice claims to Ulin Dann for a further reduction of $12,500.
In re Olsen (Olsen Logging), 5-84-00009-HAR, 3/13/91.
Bernd Guetschow, Anchorage, for Trustee Gordon Zerbetz; Daniel Bruce (Baxter & Bruce), Juneau, for Pacificorp Credit; Phillip Hickey (Ulin, Dann & Lambe) Seattle, previous counsel for Debtor.
1 ABR 417: Ch. 7, title, undue influence, discharge, fraud, fees (MacDonald).
Donna White and her son Shane Derryberry seek a declaration that the subject house is theirs; Theodore Wiley counterclaims for judgment placing title in himself. Wiley seeks denial of discharge as to White and Derryberry and to their claim of exemption on the house.
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 fees as to the title aspect but not for the dischargeability action. As neither White nor Derryberry have any interest in the property their claim of exemption is improper.
White, a glib 42-year-old divorcee, befriended Wiley, an 89-year-old lonely bachelor new to Anchorage and with no family in Alaska. In a few months she persuaded him to put up $46,000 toward purchase of the residence. White herself placed $11,000 toward it. She also persuaded him to leave the premises to her and Derryberry in his will, put up a $20,000 CD as security for her travel business, and execute a power of attorney in her favor. There was a confidential relationship between them and the deed which he executed in her favor was the product of undue influence.
White made a number of false statements knowingly and fraudulently regarding her relationship with International Travel Experts.
In re White; White v. Wiley; Derryberry v. Wiley; A90-00829-001, 3/15/91.
John Fitzgerald (Koval & Featherly), Anchorage, for Wiley; George Weiss, Anchorage, for Derryberry; Donna White, pro se.
1 ABR 433: Ch. 7, discharge, false oaths (MacDonald).
Derryberry's discharge is denied because he misrepresented the status of his association with International Travel Experts.
In re Derryberry; Wiley v. Derryberry; A90-00830-001, 3/18/91.
John Fitzgerald (Koval & Featherly), Anchorage, for Wiley; George Weiss, Anchorage, for Derryberry.
1 ABR 438: Ch. 7, discharge, divorce (MacDonald).
Debtor's ex-wife's complaint is dismissed.
The divorce Court orally awarded residential property to Debtor, but ordered him to execute a $27,500 note for his ex-wife's interest in it. He filed Ch. 7 after the oral order but before written findings were entered, and never executed the note. The oral findings were binding, and Debtor's obligation to his ex-wife, whether secured or not, was a property settlement obligation which is dischargeable in bankruptcy.
In re Yerrington, A90-00789-001, 3/25/91.
Mitchell Joyner (Miller, Joyner & Associates), Anchorage, for Plaintiff; Gergory Oczkus, Anchorage, for Debtor.
1 ABR 445: Ch. 13, interest, child support (Ross).
The interest rate to be used for the IRS secured claim will be that set out in §26 USC 6621.
The Court will not adopt a per se rule barring a Ch. 13 debtor from classifying unsecured prepetition child support payments in a separate class which may receive a larger distribution than a separate class of general unsecured creditors. But the separate classification can be considered as one factor in determining if the plan has been proposed in good faith and meets the confirmation standard under §1325(a)(3).
In re Fillingim, A90-00555-HAR, 4/3/91.
Gregory Oczkus, Anchorage, for Debtor; Robert Crowther, Anchorage, IRS; Asst. AG Mary Gilson, for the Child Support Div.
1 ABR 447: Ch. 7, abstention, divorce (MacDonald).
The dispute involves distribution of divorce trust funds for support of the divorced couple's retarded son. The divorce dispute has been through the state courts numerous times. For this Court to adjudicate marital claims nearly 13 years after the divorce decree would create a schism between bankruptcy courts and state courts and let the Trustee inflict substantial hardship upon an ex-wife and retarded son.
In re Hinchey; Avezac v. Palmier et al; 3-87-00136-001, 4/8/91.
Hal Gazaway, Anchorage, for Plaintiff; David Gorman & Hugh Wade (Wade & DeYoung), Anchorage, for Defendants.
1 ABR 459: Ch. 7, homestead (fishing boat) (Ross).
Debtor's claim that his fishing vessel was exempt as a homestead is denied.
The Court does not believe that Debtor had a bona fide intention of making the boat his permanent residence at the time of filing Ch. 7.
In re Dobson (Nine Life Charters), J-90-00521 HAR, 4/10/91.
William Olmstead, Juneau, for Debtor; Cabot Christianson, Anchorage, for Trustee Gordon Zerbetz.
1 ABR 465: Ch. 7, trustee expenses (Ross).
All expenses claimed by the Trustee will be allowed except that "secretarial expense" shall be limited to $500 rather than the claimed $4,256 (76 hours at $56/hr).
In his remaining cases as panel trustee Frank Avezac is claiming exorbitant amounts for a "secretary," which he explains is a paraprofessional with accounting skills, Vicky Tyo. The justification he claims in this case is that the estate had $1.1 million+ accounts receivable and Tyo's services were needed to bill them out. He established that the estate recovered only $27,000, all before Tyo began her collection effort. He has not attempted to show that these accounts were collectable, what their aging was, and why it was necessary to pay $56/hr to send the bills out.
His trusteeship in this and other cases was marked by contentiousness in dealing with the Estate Administrator. He said he hired Tyo to assist with cases, but the Court finds that he hired her principally to do the trustee's work. The trustee cannot choose to serve and subcontract the job out to another person and collect costs for use of that person and the trustee's commission, too.
In re Greg's Plumbing & Heating, 3X-85-00462, 4/2/91.
Ralph Cushman, Anchorage, for Trustee Avezac.
1 ABR 472: Ch. 7, divorce, maintenance/property division, discharge (Ross).
Complaint by ex-wife dismissed; discharge granted.
The ex-wife contends that fees and an installment obligation awarded to her should be nondischargeable as support. However, the tenor of the decree indicates that the judge was trying to arrive at a just property division rather than award support.
There is no §727 case. Despite her allegation that he said he would file to avoid paying support, he has filed an extensive explanation that bankruptcy was filed only after all avenues were explored.
In re McKelvie; Wing v. McKelvie; 4-87-0043-HAR, 4/11/91.
David Bundy (Guess & Rudd), Anchorage, for ex-wife; Barry Jackson, Fairbanks, for ex-husband.
1 ABR 485: Ch. 11, stay, pending state action (Ross).
Stay lifted for State.
There was no stay which would bar Alaska from recovering premises held by Debtor since the lease had been terminated before the petition was filed. Stay is also lifted to extent necessary to permit state court litigation to continue.
In re Bell & Campbell (B&C Enterprises), A91-00139-HAR, 4/15/91.
Phillip Weidner, Anchorage, for Debtor; Asst. AG Virginia Rusch.
1 ABR 488: Ch. 7, discharge, fraud, damages, costs/fees (MacDonald).
$168,885 judgment for Plaintiffs; debt is exempt from discharge. Costs but not fees.
Morrows bought May's landscaping business based on fraudulent financial statements. They are entitled to $120,000 damages as that was the difference between value of the business (0) and purchase price, and to $48,885 consequential damages. Punitives are denied.
In re May; Morrow v. May; A89-00343-001, 4/26/91.
Paul Davis, Anchorage, for Plaintiffs; Carl Frasure II, Anchorage, for Debtor Laura May; David May, Amchitka, pro se.
1 ABR 496: Ch 7, discharge, divorce, secured property (MacDonald).
Ex-husband's debt to ex-wife is discharged as a personal liability, but is enforceable to the extent that it is secured by real property. Ex-wife's claims against MOA are dismissed.
Ex-wife alleges that the debt owed by ex-husband is nondischargeable as support and that their former employer Anchorage wrongfully released retirement funds, deferred compensation, and accrued leave to him.
Basis of the divorce award was supposed equity which ex-husband possessed in a house. Such property settlement is dischargeable as personal liability. However, her claim remains enforceable to the extent that she has a consensual lien securing her property settlement rights.
MOA correctly disbursed benefits to ex-husband.
In re Whitfield; Whitfield v. Gabler and Anchorage, A88-00581-001, 4/26/91.
Helen Simpson (Simpson & Thompson), Anchorage, for ex-husband; Ann Gabler, pro se Defendant; Asst. Municipal Atty. Rebecca Cohen, Anchorage.
1 ABR 503: Ch. 7, discharge, student loan (Singleton).
Decision of visiting Bankruptcy Judge Thomas James, Chicago, that Debtor is entitled to discharge because of undue hardship reversed.
Judge James erred in finding that Debtor would suffer hardship if required to repay his student loan in reasonable installments. He also misapplied Brunner, which requires a 3-part test: minimal standard of living over significant part of repayment period and good-faith efforts to repay.
Alaska Commission on Post Secondary Education v. Jester, A90-235 Civil, 5/1/91.
Asst. AG Thomas Slagle, Juneau; James Johnston, Anchorage, for Jester.
1 ABR 510: Ch. 7, attorney fees, administrative expenses (Ross).
Bank's motion for attorney fees to be designated administrative expense is denied without prejudice to the bank filing a motion allocating fees/costs to the various facets of the counterclaim by Debtors with service to all interested parties.
Nominal fees/costs for the bank filing this stakeholder's action may be justified, but the estate should not have to pay for the vast majority of litigation which is the result of the counterclaim.
In re Olsen; First Bank v. Olsen v. Dodson and State Farm Fire & Casualty, 5-84-00009-001-HAR, 5/7/91.
Joseph Moran (Staley, DeLisio, Cook & Sherry), Anchorage, for the bank; Bernd Guetschow, Anchorage, for Defendant Gordon Zerbetz; Gregory Motyka, Anchorage, for State Farm; Raymond & Gladys Olsen, pro se Debtors/Defendants; James Dodson, pro se Third Party Defendant.
1 ABR 513: Ch. 7, disqualification (Ross).
Creditor Richards & Johnson's motion to disqualify denied.
Jane Pettigrew represented Debtor before she became Judge Ross's law clerk. She has never participated in decisions, research, or discussions in this case since becoming clerk.
In re Lindgren, F90-00108-HAR, 5/9/91.
Kenneth Ringstad, Fairbanks, for Richards & Johnson; Gregory Oczkus, Anchorage, for Debtor.
1 ABR 517: Ch. 11, nunc pro tunc attorney fees (Ross).
Application to employ Smith, Coe & Patterson nunc pro tunc is denied.
The firm offered no excuse for not having filed an application for more than 1½ years.
In re Martinson Gravel & Crane, A89-01142-HAR, 5/10/91.
William Artus (Artus, Choquette & Williams), Anchorage, for Debtor; Bruce Rausch, Anchorage, for Smith, Coe & Patterson.
1 ABR 519: Ch. 11, status conference (Ross).
Debtor's request for status conference or scheduling of litigation denied.
Without pending litigation or contested proceedings calling for rulings, any decision at a status conference would be akin to an adversary ruling without an actual case or controversy.
In re Gold King Mines, 3-84-00175-HAR, 5/21/91.
Charles Kasmar (Kasmar & Slone), Anchorage, for Debtor; Cabot Christianson, Anchorage, for Trustee Bennie Leonard.
1 ABR 521: Ch. 7, proof of claim, fraud, mootness (MacDonald).
Plaintiff's claim dismissed as moot.
Fay Forshey obtained a $499,046 state court judgment against Rickses on her claim that she broke her legs falling through a hole in a 4-plex being built by John Ricks. They were denied a new trial on their claim of newly discovered evidence of fraud. They filed for Ch. 11, which was converted to Ch. 7. They then sued Forshey in this Court, alleging that the judgment was obtained by fraud and demanding damages in the amount of the judgment. Judge Ross dismissed the complaint on the basis that the state court decisions were res judicata. District Judge Holland affirmed as to dismissal of Rickses' claim of denial of due process and their request for money damages, but reversed as to their objection to allowance of Forshey's claim and remanded for a hearing on the issue of whether the judgment was obtained by fraud and whether the claim should therefore be disallowed.
Allowance or disallowance of claims is meaningless because there is no property of the estate and no cash to distribute. Ross granted Forshey relief from the stay long ago on Rickses' real property and any other assets have been abandoned.
In re Ricks; Ricks v. Forshey; F88-00121-001, 5/23/91.
Gerald Stinson and Terrence Thorgaard, Fairbanks, for Rickses; Kenneth Ringstad, Fairbanks, and Joseph Paskvan (Hoppner & Paskvan), Fairbanks, for Forshey.
1 ABR 528: Ch. 7, exemptions, (CSRS, PERS, child support) (Ross).
Unsecured creditor's objections to exemptions denied.
Debtor claims that 3 assets are exempt: her share of her ex-husband's Civil Service Retirement System benefits which she received under a Qualified Domestic Relations Order in her divorce, her Alaska PERS benefits, and unpaid child support owed to her by her ex-husband.
Debtor's interpretation of §8346(a) that her interest in the CSRS benefits is covered by the anti-alienation provision is consistent with legislative history and literal wording of the statute. It may also be that her interest is excluded from the estate as a spendthrift trust.
The PERS account was exempted when Debtor selected the state exemptions.
Reported bankruptcy cases hold that child support owed to a debtor is not property of the estate.
In re Henderson, F89-00525-HAR, 5/23/91.
Kenneth Ringstad, Fairbanks, for Debtor; Marc Grober, Nenana, for Creditor Victor Rentschler.