Alaska Bankruptcy Reports - Digest Volume 2

  Menu    2 ABR 1: Ch. 13, transaction costs, mortgage insurance, appellate procedure (Kleinfeld).

Judge Ross reversed, affirmed. Ross reduced value of a house by 7% for transaction costs if the property was sold. Since the property will not be sold, the transaction costs should not have been subtracted.

He correctly determined that mortgage insurance should not have been included as part of the mortga-gee's secured claim.

First Guaranty also argues that Hougland (9th Cir. 1989) should not be followed. But a district court must follow a circuit court decision.

First Guaranty Mortgage v. Huber, 5/7/91.

Richard Ullmstrom (Routh, Crabtree & Harbour), Anchorage, for First Guaranty; Chris Johansen, Anchorage, for Huber.

  Menu    2 ABR 4: Ch. 7, discharge, foster care (Ross).

Judgment against Debtor in favor of the State for foster care for his child is nondischargeable, although not owed "to a spouse, former spouse, or a child of the debtor" in the literal words of 523(a)(5).

Nelson v. State [In re Nelson], 5/30/91.

Barry Jackson, Fairbanks, for Debtor; Asst. AGs Rebecca Snow & Richard Musick.

  Menu    2 ABR 10: Ch. 7, trustee negligence, mental damages (MacDonald).

Claim for damages for negligence for Trustee Lauber's failure to timely liquidate and distribute denied, but $2,500 judgment for fees incurred by Lauber's failure to provide information. Trustee's third-party claim against his lawyers dismissed.

Debtor Kaufman alleged negligence by Lauber for failing to timely liquidate a beer/wine license and note from her bankrupt Juneau restaurant. She seems to forget the economics that led to her bankruptcy. There is little interest for $30,000 beer/wine licenses in small communities during recessionary times. Lauder could have liquidated early for a reduced sum. He utilized his business judgment, however, and totally liquidated all assets within a 33-month recessionary period, which does not appear unreasonable, and sums obtained were good.

The issue of reasonable care must be viewed in light of realities of the trustee system. The Court will not ascribe a standard akin to attorney malpractice to a trustee in a remote area of southeastern Alaska.

However, Lauber frequently violated his duty to provide information concerning the estate and its administration to Kaufman and her lawyer. His repeated failure to respond to her reasonable requests precipitated this suit and caused her to expend $2,500 fees. While she suffered mental distress as a result of Lauber's negligence, damages for mental distress are not recoverable.

Lauber's third-party claim against his lawyers fails since he was not negligent in liquidation or distribution and they are not responsible for his failure to provide information.

Kaufman v. Lauber [In re Kaufman (Bellezza Ristorante)], 6/4/91.

Mark Choate, Juneau, for Debtor; Walter Featherly (Koval & Featherly), Anchorage, for Lauber; Robert Blasco (Robertson, Monagle & Eastaugh), Juneau, for Third-Party Defendants.

  Menu    2 ABR 25: Ch. 7, divorce, judicial lien, property settlement, attorney fees (MacDonald).

Debtor's motion to avoid judicial liens for $27,500 for a divorce property settlement and $3,000 for ex-wife's attorney fees is granted except for the $2,000 which the scheduled value exceeds the homestead exemption.

Mrs. Yerrington claims that she has an ownership in the house as tenant-in-common. But the divorce judge granted her an "equitable interest" "to secure a $27,500 debt due and payable within one year." He awarded the house to Debtor as his sole & separate property. Mrs. Yerrington's interest in the property is an avoidable judicial lien. Farrey is distinguishable because during the marriage Debtor never conveyed an interest in the house to her.

Although the fees were awarded in connection with a child support dispute, the judgment is nonetheless an avoidable "judicial lien."

In re Yerrington, 6/7/91.

Gregory Oczkus, Anchorage, for Debtor; Mitchell Joyner (Miller, Joyner & Associates), Anchorage, for Mrs. Yerrington.

  Menu    2 ABR 30: Ch. 11, transaction costs (MacDonald).

Transaction costs are disallowed since Debtor plans to retain the collateral and does not envision sale.

Hartzberg v. Alaska Div. of Investments et al [In re Hartzberg], 6/10/91.

David Rankine (McNall & Rankine), Anchorage, for Debtor; Steven Shamburek (Farleigh & Shamburek), Anchorage, for Defendant Henry Taylor; Asst. AG Elizabeth Vasquez.

  Menu    2 ABR 32: Ch. 7, filing time (Ross).

Motion to dismiss due to untimeliness denied.

The dischargeability complaint, having timely reached the Clerk's office, shall be deemed timely though not stamped in until the next day (the day after the bar date).

Norwood v. Dowd [In re Dowd], 7/16/91.

Marshall Gilmore, Salem, Ore., for Plaintiff; Gregory Oczkus, Anchorage, for Defendants.

  Menu    2 ABR 34: Ch. 7, clerical error, abandonment (MacDonald).

Abandonment order corrected to provide that only scheduled property was abandoned.

The order mistakenly left out "scheduled" before "property of the estate." The clear intent was to abandon only scheduled assets, not concealed, unscheduled assets such as Debtor's share of a $300,000 malpractice settlement.

In re Pace [Sewards Folly], 6/18/91.

Thomas Yerbich, Anchorage, for Debtor; William Artus (Artus, Choquette & Williams), Anchorage, for Trustee Kenneth Battley.

  Menu    2 ABR 39: Judgment (Ross).

$5,447 judgment for Plaintiff for purchase and repair of truck.

Swenson Trucking & Excavating (MJ Rentals) v. Adamson [In re Industrial Insulation (Clearwater Drilling)], 6/25/91.

James DeWitt, Fairbanks, for Plaintiff; Robert Noreen, Fairbanks, for Defendant.

  Menu    2 ABR 41: Ch. 11, interim attorney fees, nunc pro tunc employment (Ross).

Interim fees of $5,000 allowed to Robert Noreen (plus $5,000 in the related In re Burnett), subject to disgorgement if nunc pro tunc employment is not approved and this is more than he will have earned. He provided no cogent breakdown and it is uncertain that he has been approved as attorney for the estate. Nonetheless, he is charging an extremely low rate of $100/hr and the Court is aware that he has spent substantial time on this case.

In re Polaris Investment, 6/25/91.

Robert Noreen, Fairbanks, for Debtor.

  Menu    2 ABR 45: Ch. 11, stay, voiding judgment, Native allotment, annulment of stay, jurisdiction (Holland).

Summary judgment by this Court in Chuitt v. Torrey did not violate the bankruptcy stay, or if it did there is cause to annul the stay.

Dennis Torrey, a non-Native, contracted to build a cabin for Patrick Chuitt, a Native; Chuitt was to convey 5 acres of his allotment to Alice Torrey, a Native. Chuitt backed out and filed an ejectment action against Torreys. Torreys, due to pending divorce, counterclaimed separately for specific performance. This Court granted Alice's motion and ordered Chuitt to apply for a gift deed in her favor. Dennis filed for Ch. 7, listing the parcel as an asset. He contends that the summary judgment violated the automatic stay.

Since Dennis was in an offensive posture regarding Alice's motion, seeking judgment in his favor on his claim, judgment was not barred by 362(a)(1). Nor was the parcel "property of the estate," since the BIA had not approved a transfer of any interest to Dennis.

Alternately, annulment of the stay would be proper since the underlying dispute is a non-core proceeding and the same parties could otherwise relitigate the same issues.

Torrey (Chuit River Lodge) v. Bismark [In re Torrey], 6/20/91.

  Menu    2 ABR 56: Ch. 7, attorney fees (Ross).

Fee request denied.

Fees should not be borne by the estate for Debtor's lawyers' endeavors post-conversion where benefit to the estate is not apparent.

In re Preblich, 7/31/91.

Gregory Oczkus, Anchorage, for Debtor; Cabot Christianson, Anchorage, for Trustee.

  Menu    2 ABR 58: Ch. 13, TRO, stripdown, mortgage insurance (Ross).

Debtor's motion for TRO denied.

Debtor had stipulated to lifting of the stay if a cure payment were not made to Goldome in 25 days. When he could not make the payment he asked for a short extension, which Goldome refused. He filed this adversary action to enjoin foreclosure, arguing that his payments are now current and it would be more equitable to have his debtor-creditor relationship resolved in the Ch. 13 confirmation process. This argument would prevail in another case, but not here. Debtor has a history of sporadic payments, confirmation is far from assured, and a deadline stipulation should not be lightly turned aside. It is enough that a lender must suffer loss of its insurance coverage when its secured claim is stripped down without having to also monitor a delinquent borrower.

Lester v. Goldome Realty Credit Corp. [In re Lester], 8/6/91.

Chris Johansen, Anchorage, for Debtor; Richard Ullmstrom (Routh, Crabtree & Harbour), Anchorage, for Goldome.

  Menu    2 ABR 62: Abstention (Ross).

Abstention denied.

MBL, which is in a receivership proceeding in New Jersey, asks this Court to honor the New Jersey court's order enjoining any other proceeding. This Court abstained from an adversary proceeding against a surety in liquidation in Rosson, based on the Burford doctrine. Rosson is distinguished because, along other things, this case does not involve an attempt to collect on a policy or bond from a beleaguered insurer; it is an adversary proceeding involving a bankruptcy issue -- whether MBL over-collected on its adequate protection payments.

Sadco Enterprises v. Mutual Benefit Life Ins. [In re Sadco Enterprises et al], 8/28/91.

Kenneth Ringstad, Fairbanks, for Debtors; Mark Lieberman (Rosenthal & Schanfield), Chicago, and Fred Odsen (Hughes, Thorsness, Gantz, Powell & Brundin), Anchorage, for MBL.

  Menu    2 ABR 68: Ch. 11, attorney fees, paralegal fees, costs (Ross).

$28,139 fees & costs awarded out of $39,797 requested.

The application for 213 hours of attorney fees did not meaningfully categorize tasks. Rather than reconstruct the time claimed, the Court will determine what it believes is appropriate in the context of this case --- a simple liquidation plan in a holding action pending conclusion of contract litigation against ASHA. A blended rate of $150/hr for 125 hours is awarded.

A random sampling indicates that half of the paralegal fees claimed should be deemed secretarial work.

Lawyers are encouraged to participate in motion practice telephonically to avoid travel costs. But phone equipment in Fairbanks was not up to snuff until 2 years ago. Given the substantial cuts in fees, the Court will allow the costs as claimed.

In re Moneymaker Const., 9/3/91.

Stephen Crispen (Wade & DeYoung), Anchorage, for Debtor; Joseph Sheehan, Fairbanks, for Creditor James Thurman; Jon DeVore (SBA).

  Menu    2 ABR 76, 80: Preliminary injunction, 11th Amendment, jurisdiction, estoppel (Ross).

Ryan's motion for preliminary injunction denied.

Ryan asks the Court to enjoin the State from conducting a bid for lease of a parcel at St. Mary's airport.

The Court does not reach a conclusion on the 11th Amendment argument.

Ryan is a reorganized debtor. The 9th Circuit has indicated that a bankruptcy court does not have the power to enjoin actions of a nondebtor postconfirmation. In any event, Ryan has not established probability of success on the merits; detrimental reliance is lacking in its claim that the State should be equitably estopped. (Supplemental memo: Ryan seems to have been talking more about promissory estoppel than equitable estoppel; but it admits that no actual promise by the State has been identified.)

Ryan Air Service v. State [In re Ryan Air Service], 2 ABR 76 9/6/91.

Ryan Air Service v. State [In re Ryan Air Service], 2 ABR 80 9/6/91.

Roy Longacre, Anchorage, for Debtor; Asst. AGs Carolyn Jones & Brian Bjorkquist.

  Menu    2 ABR 82: Ch. 13, tax lien, pension, spendthrift trust (MacDonald).

Debtor's interest as a beneficiary of an ERISA retirement trust is subject to a federal tax lien. Summary judgment for the US.

Debtor is beneficiary of a valid spendthrift trust created by a union pension plan. The pension is not property of the estate. But his interest constitutes a right to payment and thus is a valuable property right subject to a federal tax lien.

Anderson v. US [In re Anderson], 9/9/91.

Gregory Oczkus, Anchorage, for Debtor; Kay Hill (IRS), Anchorage.

  Menu    2 ABR 89: Ch. 7, discharge, fraud, punitives, attorney fees (MacDonald).

Mert Caswell's $20,000 commission on the sale of equipment plus interest is excepted from discharge as he was defrauded of it by Jerald Briske.

Caswell's claims for contract, bad faith, etc. are barred by the automatic stay. Punitives and attorney fees are not recoverable in dischargeability actions based on fraud.

Caswell v. Briske [In re Briske], 9/13/91.

Ronald Flansburg (Boyko, Breeze & Flansburg), Anchorage, for Caswell; Hugh Wade (Wade & DeYoung), Anchorage, for Debtor.

  Menu    2 ABR 99: Ch 13, avoidance of undersecured portion of trust deed lien against residence, appellate procedure (9th Circuit, unpublished).

Judge Holland and Bankruptcy Court affirmed: Ch. 13 debtor may avoid the "undersecured" portion of a trust deed lien against debtor's principal's residence.

AHFC asks the Court to overrule Hougland (9th Cir. 1989). But only an en banc court may reject our precedent unless some intervening Supreme Court opinion has undermined it.

Alaska Housing Finance Corp. v. Love, 9/9/91.

  Menu    2 ABR 103: Ch. 7, financing statement, security agreement, UCC-1, preference (MacDonald).

The Lien of David Murray on assets of Debtor Health Corp. is avoided pursuant to 547 with certain exceptions.

This is an action by a bankruptcy trustee to invalidate an ex-husband's security interest in franchise agreements and other corporate assets. The Court finds for the Trustee.

Despite minor defects, Debtor's financing statement substantially complies with the UCC. And although Debtor has not signed a document entitled "security agreement," the financing statement, note, and related documents are sufficient to constitute a security agreement. But David's security interest is invalid because he failed to properly file a UCC-1 in the state where Debtor maintained its chief executive office (Alaska, as opposed to Washington where he filed the UCC-1). The Alaskan UCC filing is voidable as a preference.

Barstow (Trustee) v. Murray [In re The Health Corp. [Nutri/System)], 9/23/91.

Erik LeRoy, Anchorage, for Barstow; Harry Goldbar, Anchorage, for Murray.

  Menu    2 ABR 122: Ch. 7, jurisdiction, discharge, tax lien (MacDonald).

Summary judgment for the US.

Ch. 7 Debtors seek to avoid or limit a federal tax lien on a 401(k) pension plan. The estate has been fully administered and Debtors' interest in the pension plan has been abandoned to them.

The Court has jurisdiction. While abandonment may properly result in loss of jurisdiction in some cases, jurisdiction is proper when issues relating to discharge and the effect of discharge under 506(d) are pre- sented.

Debtors concede validity of the lien, but contend that there is a need for a valuation hearing. However, there is no need for a hearing because there is no Ch. 7 cramdown in Alaska. Even though the value of the interest in the plan may fluctuate, it remains subject to the lien.

Miranda v. US [In re Miranda], 9/25/91.

Stephen Greer, Anchorage, for Debtors; Robert Branman (Tax Div.), Washington, DC.

  Menu    2 ABR 127: Tax lien, liquor license (BAP, unpublished).

Judge Ross affirmed: Debtor's Alaska liquor license is property to which a federal tax lien may attach, but the lien is subordinate to the "liens" or "holds" allowed under AS 04.11.360 (1 ABR 129).

US v. Stone (Alaska Hotel & Restaurant Trust Funds, K&L Distributors, et al) [In re Stone], 9/18/91.

Robert Branman (Tax Div.), Washington, DC; Barry Jackson, Fairbanks, for Debtor; Gary Sleeper (Jermain, Dunnagan & Owens), Anchorage, for Alaska Hotel & Restaurant Trust Funds.

  Menu    2 ABR 138: Ch. 7, tax lien, pension (MacDonald).

The federal tax lien against the pension of a retired associate justice of the Alaska Supreme Court is not avoidable in bankruptcy.

Connor v. US [In re Connor], 9/26/91.

Gregory Oczkus, Anchorage, for Debtor; Robert Branman (Tax Div.), Washington DC.

  Menu    2 ABR 143: Ch. 7, proof of claim, fraud, mootness (MacDonald).

Debtors' motion to reconsider dismissal of this proceeding as moot (1 ABR 521) and to decide whether Forshey's judgment against Debtors was obtained by fraud is denied.

Whether considered on grounds of mootness or the merits, the judgment of this Court remains correct.

Ricks v. Forshey [In re Ricks], 9/27/91.

Terrence Thorgaard and Gerald Stinson, Fairbanks, for Debtors; Kenneth Ringstad and Joseph Paskvan (Hoppner, Paskvan & Taylor), Fairbanks, for Forshey.

  Menu    2 ABR 153: Ch. 7, attorney fees (Ross).

Debtor's attorneys have applied for interim fees of $3,792, explaining that fees are high because Debtor is contesting dischargeability of an IRS claim. That is not something that the estate should pay for. $1,250 is allowed.

In re Grove, 10/1/91.

Mitchell Joyner (Miller, Joyner & Associates), Anchorage, for Debtor.

  Menu    2 ABR 156: Ch. 7, voluntary dismissal (Ross).

Debtor's motion to dismiss is denied without prejudice.

The "cause" is that "subsequent debts have arisen which are dischargeable," but he gives no details. Leach (9th Cir. BAP, 7/23/91) controls: a voluntary Ch. 7 debtor is entitled to dismissal so long as it will cause no legal prejudice to interested parties. Based on the skimpy information in the motion, it should be denied without prejudice.

In re Stevens, 10/2/91.

Chris Johansen, Anchorage, for Debtor.

  Menu    2 ABR 159: Ch. 7, procedure (Ross).

Debtors' motion to avoid lien on their residence is denied without prejudice. The cursory motion, without any supporting memorandum or affidavits, does not meet the minimal standards for motion practice.

In re Corbin (Ed's Construction & Repair, Camai Shepards, Topp Weight Loss Centers of Alaska),10/2/91.

Jeff Carney, Wasilla, for Debtors.

  Menu    2 ABR 162: Ch. 11, nunc pro tunc accountant employment (Ross).

Debtors' application for employment of Cox & Associates as accountants is denied without prejudice. There is no indication that the motion was noticed to anybody, Cox is a creditor of Debtors, and Debtors have not explained the delay. Their lawyer must comply with the statutes and rules or their effort to reorganize will be impeded.

In re Burnett (Arctic Fire, Golden Nugget Motel, Wally's Real Estate), 10/7/91.

Robert Noreen, Fairbanks, for Debtors; Jon DeVore (SBA); John Burns (Birch, Horton, Bittner & Cherot), Fairbanks, for Key Bank of Alaska.

  Menu    2 ABR 166: Ch. 11, attorney employment, conflict of interest (Ross).

Debtor-in-Possession Alaska Towboat seeks to employ Preston, Thorgrimson as attorneys. Preston also represents Klawock Timber, a 50% shareholder of Debtor, in a civil suit against Security Pacific Bank and Weyerhaeuser. Preston's argument that the civil suit is unrelated to and will not affect this bankruptcy is accepted, but if the disclosure proves to be incomplete and there is a relationship that it has not foreseen which is inherent in the dual representation, its subsequent fee application will be closely scrutinized.

In re Alaska Towboat Corp., 10/8/91.

Joan Travostino (Preston, Thorgrimson, Shidler, Gates & Ellis), Anchorage, for Preston; John Frank (Hughes, Thorsness, Gantz, Powell & Brundin), Juneau, for Weyerhaeuser.

  Menu    2 ABR 173: Ch. 7, recovery of settlement, abandonment (MacDonald).

Trustee Battley is entitled to malpractice settlement proceeds.

Debtor Pace filed a malpractice claim in connection with sale of his interest in a nightclub. His lawyer handling the malpractice claim did not obtain authority to pursue the action on behalf of the estate and was not employed by the Trustee. Pace's bankruptcy schedules were never amended to reflect the claim. Although an interim report mentioned "suit against attorney" as an asset remaining to be liquidated," the Trustee closed the estate and filed a general motion for abandonment. The malpractice defendants subsequently settled.

While conceding that the malpractice action was property of the estate, Pace contends that the suit was so inextricably intertwined with the note and liquor licenses that abandonment of those assets constituted abandonment of the suit. However, there is no statute permitting abandonment of assets found to be "inextricably intertwined," and no authority which has found unscheduled assets to be abandoned simply because they were related to another asset which was abandoned. Abandonment of a note and liquor licenses does not abandon a malpractice claim.

Battley v. Pace, Havelock, and Strachan [In re Pace (Seward's Folly), 10/15/91.

Thomas Yerbich, Anchorage, for Defendants; William Artus (Artus, Choquette & Williams), Anchorage, for Plaintiff.

  Menu    2 ABR 183: Ch. 13, proof of claim, timeliness, discharge, student loan (Ross).

Proofs of claim for student loans filed by C-AN were not timely filed and should be disallowed.

The proofs were filed after the claims bar date. C-AN sent forms to Debtor's lawyer before the bar date but neglected to file them with the Court or Trustee. It did not ask Debtor's lawyer to file them and Debtor's attorney made no representation that he would. They were misdirected and not timely filed. The debtor is not one of the authorized substitute parties for receiving a filing listed in Rule 5005(b). Delivery of a proof of claim to a Ch. 13 debtor does not qualify as filing. (If the case is converted to Ch. 7, the untimely proof of claim will become timely.)

That the claims are not allowed may not mean that they will be discharged upon completion of the Plan, and may make the Plan unfeasible. The effects of 1328(a)(2) require briefing.

In re Mandel, 10/18/91.

Chris Johansen, Anchorage, for Debtor; Peter Giannini (Giannini & Associates), Anchorage, and Gail Shortell, Anchorage, for C-AN.

  Menu    2 ABR 193: Ch. 7, tax lien, pension (MacDonald).

Summary judgment for the US on Debtors' effort to avoid federal tax liens on a 401(k) savings & investment plan and a pension plan.

Debtor's rights to money constitute rights to property which are subject to federal tax liens. That his rights may come about through his status as a beneficiary of a spendthrift trust does not defeat the lien.

Raihl v. US [In re Raihl], 11/19/91.

Erik LeRoy, Anchorage, for Plaintiffs; Robert Branman (IRS), Washington, DC; Michael Mills (Bankston & McCollum), Anchorage, for Trustee William Barstow.

  Menu    2 ABR 198: Ch. 11, confirmation, absolute priority (MacDonald).

Confirmation denied.

Debtor cannot meet the requirements of the absolute priority rule and contrary to Debtor's contention there is no "new value" exception to the rule. In any event, Debtor has failed to establish amount & source of payments of new value to unsecured creditors and has failed to show that his proposed 17% dividend plan payments are reasonable compensation.

In re Boyd, 6/20/91.

David Rankine (McNall & Rankine), Anchorage, for Debtor; Richard Ullstrom (Routh, Crabtree & Harbour), Anchorage, for Seattle Mortgage; AUSA Elizabeth O'Leary for HUD.

  Menu    2 ABR 200: Ch. 7, relief from stay, divorce (MacDonald).

Motion for relief from stay granted.

Debtor retained a valuable military pension in the divorce and his former spouse received little or nothing. She was unrepresented in the divorce. The state court vacated the property division. Debtor filed Ch. 7 8 days later and now resists termination of the stay as requested by his former spouse. There is no legitimate reason for denying relief from stay.

In re Talbot, 12/6/91.

Daniel Weber, Anchorage, for Debtor; James Johnston, Anchorage, for Alexandria Talbot.

  Menu    2 ABR 204: Ch. 7, reopen (Ross).

Ordered that case be reopened and US Trustee appoint a trustee.

If allegations in the motion by Daerim America, although not a creditor, are true there may be assets that have escaped administration due to alleged failure to schedule corporate shares Daerim claims he owned or an interest in a suit.

In re Bowers, 12/5/91.

Jay Seymour (Bogle & Gates), Anchorage, for Daerim; George Vogt, Kodiak, for Debtor.

  Menu    2 ABR 206: Ch. 7, discharge exception/objection, fraud, defalcation as fiduciary (MacDonald).

Complaint objecting to discharge dismissed.

Walds loaned Shelvers money to develop a time-share. The project went bad and Shelvers filed Ch. 7.

Walds seek exception to discharge based on fraud. While Shelvers made a number of false statements with intent to deceive Walds, Walds did not rely on the statements. Thus the elements of fraud have not been proven. Nor was there a fiduciary relationship which was breached. Walds' trust was born of friendship. While the friendship was betrayed through nonpayment of the loan, the debt is not excepted from discharge.

Nor were there fraudulent transfers or concealments which would invoke 727(a)(2), nor failure to keep adequate books under 727(a)(3), nor failure to satisfactorily explain loss of assets under 727(a)(5).

Wald v. Shelver [In re Shelver], 12/11/91.

Frederick Odsen (Hughes, Thorsness, Gantz, Powell & Brundin), Anchorage, for Waldos; David Bundy (Guess & Rudd), Anchorage, for Debtors.

  Menu    2 ABR 219: Ch. 7, reinstatement of trust deed, jurisdiction (Ross).

Motion to reinstate trust deed denied; reconsideration denied.

Debtor gave a deed-in-lieu-of-foreclosure for the benefit of Wilsons to Transamerica Title Ins. Just before the title company recorded it Debtor filed Ch. 7. Wilsons' motion to reinstate the deed was denied. Their motion for reconsideration is denied because the Court probably does not have jurisdiction in this no-asset case, Wilsons have cited no authority for reinstatement of a trust deed which they say was merged before bankruptcy, and notice to judgment lien creditors is inadequate.

In re Jordan, 12/13/91.

Brett Wood, Fairbanks, for Debtor; Bryan Merrell (Groh, Eggers & Price), Anchorage, for Wilsons.

  Menu    2 ABR 224: Ch. 7, exemption, state supplemental benefit plan, state supplemental annuity plan, state deferred compensation plan (MacDonald).

Debtor's motion to avoid judicial lien pursuant to 522(f) denied.

Debtor, a state trooper, moved to avoid his former wife's judicial lien in his state benefit system and deferred compensation accounts. He cannot claim an exemption in either the state supplemental benefit plan or the state supplemental annuity plan because neither is property of the estate. He cannot exempt his interest in the state deferred compensation plan, although it is an asset of the estate, because it does not qualify for exemption under either of the state exemption statutes on which he has relied. His former wife's judicial lien does not impair assets in which he would otherwise be entitled to claim an exemption.

In re Foster, 12/30/91.

Daniel Bruce (Baxter, Bruce, Brand & Rodriguez), Juneau, for Debtor; Mark Choate, Juneau, for Jacqueline.

  Menu    2 ABR 234: Ch. 7, discharge, divorce (MacDonald).

Debtor's obligation to pay ex-wife $332/mo arising from divorce decree is nondischargeable.

Although the payments listed in the decree were in the nature of property division (of a state supplemental benefit system account), the parties' true intent was to provide for her immediate support & welfare.

Foster v. Foster [In re Foster], 12/30/91.

Mark Choate, Juneau, for Jacqueline; Daniel Bruce (Baxter, Bruce, Brand & Rodriguez), Juneau, for Debtor.

  Menu    2 ABR 244: Punitives, fees (Ross).

Punitives and fees denied.

The Court previously entered final judgment for Plaintiff Lucus that his claim against Debtor was not dischargeable. Lucus now seeks punitives and fees.

The evidence was not egregious enough to award punitives, even though the trial was essentially a default matter without Debtor appearing.

While Lucus included a claim based on trespass, the adversary principally concerned dischargeability, a federal cause in which fees are generally not allowable.

Lucus v. Cobb [In re Cobb (Cobb Enterprises, Cobb Mining, Cobb Trucking & Equipment)], 12/31/91.

Grant Stewart (McCarrey & McCarrey), Anchorage, for Plaintiff; James DeWitt (Guess & Rudd), Fairbanks, for Defendant.

  Menu    2 ABR 248: Ch. 7, discharge exception/objection, fraud, fraudulent transfers, false oath, failure to explain loss of assets (MacDonald).

Debtors engaged in fraudulent conduct in procuring a loan from Cummins Financial to build a tourist boat. However, Cummins failed to link the fraudulent statements with damages allegedly incurred. It eventually received the benefit of its bargain: a first lien on a completed vessel. While it sold the vessel at a loss, that easily could have occurred absent the misrepresentations. Its exception to discharge complaint is disallowed.

Cummins did produce substantial evidence supporting its objections to discharge. Debtors' allegedly "minor" errors show a pattern of consistent misrepresentation and concealment in an attempt to mislead the Court, creditors, and Trustee. Their discharge is denied.

Cummins Financial v. Norman [In re Norman], 1/2/92.

Jan Ostrovsky (Bogle & Gates), Seattle, for Cummins; Scott Dattan, Anchorage, for Debtors.

  Menu    2 ABR 259: Ch. 7, attorney fees (Ross).

Douglas Harris is allowed $4,628 fees & costs pursuant to application, but this shall be treated as an offset against his $5,000 prepetition retainer. He may petition to justify the additional $5,000 requested.

All fees must be documented.

In re Bradley Const., 1/8/92.

Douglas Harris, Bellevue, Wash., for Debtor; Bernd Guetschow, Anchorage, Trustee.

  Menu    2 ABR 262: Ch. 7, attorney fees (Ross).

Debtor's attorney must refund $4,500 to the Trustee of the amount held as a prepetition retainer.

John Rice applied for $9,025 in addition to $11,001 received from Debtors prepetition. Trustee objects to the fees as grossly excessive and requests disgorgement of $6,000. FDIC also objects to the fees as excessive, not justified under lodestar analysis, and not for benefit of the estate. Rice contends that $4,903 charged against the retainer for 1988 work was not directly related to filing the bankruptcy and that his fees were driven up by the Trustee's and FDIC's litigiousness. However, his work on Debtors' exemption dispute and discharge case should not be borne by the estate, especially when the flavor of the evidence is that Debtors were caught trying to manipulate the bankruptcy process.

The Court will accept Rice's version of the facts and find that the bulk of the work he did before 1989 did not directly relate to bankruptcy. But a reasonable post-1988 fee is $1,500, especially in light of the fact that the 1988 work, if not directly bankruptcy connected, involved closely related debtor-creditor matters. The $1,500 is roughly equivalent to 2 days of work on this case after bankruptcy was contemplated, at Rice's $125/hr rate. Billing from 1989 is not informative enough for a line-by-line analysis, nor should the Court have to do that where the statement is so far from reasonable to begin with.

In re Williamson (Corner Deli), 2/11/92.

John Rice, Juneau, for Debtors; Bonnie Stratton (Hartig, Rhodes, Norman, Mahoney & Edwards), Anchorage, for FDIC; Daniel Bruce, Juneau, Trustee.

  Menu    2 ABR 269: Ch. 7, postpetition transfer, statute of limitations, fraud (Ross).

Summary judgment avoidance of transfers.

Trustee alleges that Debtors conveyed land to their son & daughter-in-law without notice and that he did not discover the conveyances until more than 2 years after the transfers. Defendants contend that Trustee's motion to set aside the postpetition transfers is time-barred. A party should not be permitted to secretly receive an unauthorized transfer from the estate and then raise the defense of statute of limitations.

In ruling on Trustee's motion for summary judgment the Court views the facts most favorable to Defendant, despite the badges of fraud: unauthorized transfer, suspicious documentation, transfer to a close relative. However, Defendants have submitted no supporting testimony. Trustee submitted the affidavit of his attorney, who likely has personal knowledge, but acknowledging his affidavit might disqualify him from acting as the estate's attorney since he would be a witness. Trustee's motion is supported by an admission of Debtors that he had no knowledge of the transfers until some time in mid-91. Although the Court tried to give Defendant John Olsen an opportunity to rebut the admission he would not take advantage of it. Sale or use of the property out of the ordinary course of business requires notice & hearing. There was none. Summary judgment for Trustee.

Zerbetz v. Olsen [In re Olsen], 2/12/92.

Bernd Guetschow, Anchorage, for Zerbetz; John & Olivia Olsen, pro se.

  Menu    2 ABR 278: exemption, pension, spendthrift trust (Ross).

Hearing continued for additional briefing and information.

Trustee objects to Debtor's claim to exemption for a pension with the Municipality of Anchorage. Anchorage and Debtor contend that it is a spendthrift trust under Kincaid (9th Cir. 1990). If the Court ultimately determines that it does not qualify under Alaska spendthrift trust standards the next question is whether it is exempt under 522(d)(10)(E). The Court feels at this point that Debtor does not qualify for the exemption, based on the Hotchkiss factors. Even if the pension is not exempt there is a question as to whether Trustee can get to it due to whatever restrictions exist under the trust agreement or other legal impediments.

In re Jury, 2/24/92.

David Rankine (McNall & Rankine), Anchorage, for Debtors; Gregory Oczkus, Anchorage, Trustee.

  Menu    2 ABR 288: Ch. 7, discharge, student loan (Ross).

Student loan nondischargeable.

Debtor claims entitlement to hardship discharge. He has not worked in 3 years but is only 37, in good health, and trained as a welder and other trades. He has not shown that his problems will persist for a significant time. His main complaint is that he cannot get off welfare since working would result in less income. If nothing else, the State has available part of his Permanent Fund dividend. It has indicated willingness to defer or reduce payments and cannot reach any substantial part of his assets while he is in dire straits.

Petrini v. Alaska Postsecondary Education Commission [In re Petrini], 2/26/92.

Debtor, pro se; Asst. AG Alexis Gabay.

  Menu    2 ABR 294: Jury trials (Ross).

Trustee alleges fraudulent transfer of Louisiana property. Under Louisiana law Defendant would be entitled to a jury. The parties have stipulated to withdrawal of this case to the US District Court.

Because the Alaska Bankruptcy Court is not logistically geared to conduct jury trials and bankruptcy courts are waiting for the Supreme Court to decide the issue left unanswered in Granfinanciera, it is recommended that all core proceedings in which jury trials are requested be withdrawn to the US District Court.

Battley v. Mickelsen [n re Vockner], 2/27/92.

Cabot Christianson, Anchorage, for Plaintiff; Richard Haggart (Maloney & Haggart), Anchorage, for Defendant.

  Menu    2 ABR 298: Recovery of tax overpayment (Ross).

Debtor may utilize reconsideration procedure in pursuit of tax overpayment.

Haida Corp. has sued the IRS to recover $154,436 which it claims it paid in error. The IRS was paid, along with other unsecured creditors of Haida, after it levied on Haida to collect the Ch. 11 plan payment due to delinquent taxpayer Coleman Drilling. Coleman had filed a proof of claim as an unsecured creditor of Haida and Haida did not at that time contest the claim.

The US has not waived sovereign immunity under 106(c) to allow entry of a judgment for money damages. However, 106(a) does provide a basis for such waiver with respect to compulsory counterclaims that are property of the estate. Favoring bankruptcy policy over tax policy, the IRS should be treated as a creditor for purposes of 106(a) even though it utilized a tax levy. Contrary to the IRS's assertion, its wrongful levy procedure and related 9-month statute is not the exclusive remedy. The IRS stepped into Coleman's shoes so far as subjecting itself to a reconsideration of the claim; a 502(j) motion for reconsideration is an appropriate procedure for Haida to pursue.

Haida Corp. v. Coleman Drilling, IRS, and Zerbetz [In re Haida Corp.], 2/28/92.

Cabot Christianson, Anchorage, for Plaintiff; Robert Branman (Tax Div.), Washington, DC; Special AUSA Kay Hill, Anchorage; Bernd Guetschow, Anchorage, for Trustee Zerbetz.

  Menu    2 ABR 315: Ch. 13, dismissal, (BAP, unpublished).

Dismissal by Judge MacDonald affirmed.

MacDonald dismissed on motion of the IRS for 5 reasons: bad faith filing, perjury in the Ch. 13 petition, failure to cooperate with Trustee, unreasonable delay prejudicial to creditors, and failure to make postpetition payments. Each finding is supported by virtually unrefuted evidence.

Hymes v. Citibank Mastercard, IRS, and Furman [In re Hymes], 2/4/92.

Debtors, pro se; Robert Branman (Tax Div.), Washington, DC.

  Menu    2 ABR 323: Ch. 13, automatic stay, foreclosure, mortgage insurance, good faith (US District Judge Singleton).

Judge Ross's refusal to include value of mortgage insurance in the claim and denial of relief from automatic stay affirmed. Remanded for further findings on good faith.

Lomas Mortgage and Union Planters Bank appeal an order confirming Joseph Fischer's Ch. 13 plan for repayment of his debt that is secured by real estate. Fischer filed Ch. 13 to halt Lomas's nonjudicial foreclosure of a trust deed on a condo.

Lomas contends that it was not adequately protected because mortgage insurance was not included in valuation of its interest. Value of the property should be the same whether analyzed under 506 or 361. Thus value of the creditor's interest that must be adequately protected does not include the mortgage insurance.

Lomas also contends that Fischer has no equity in the condo and that it is not necessary to the reorganization, so that it should have been granted relief from the stay under 362(d)(2)(B). This Court predicts that when the Ninth Circuit faces this issue it will conclude that this subsection does not apply to Ch. 13. Alternately, the Court finds that the property is necessary to effective rehabilitation.

If allowed to foreclose, Lomas would receive $13,000 in mortgage insurance proceeds and Union would receive $11,000. Both contend that valuation of their secured claims should be based on what a creditor would receive if the property were liquidated. Fischer contends that because he retains the property the proper valuation is current market value. The Ninth Circuit is likely to agree with the majority of courts that agreements between creditors and third parties should not affect valuation of the property. Under this view, the proper value is wholesale or market value, the value the creditor could expect to recover from the debtor, not amounts the creditor could receive from third parties.

Union contends that Fischer proposed his plan in bad faith. It argues that he was not in need of bankruptcy relief but only wished to strip down the mortgages. Fischer responds that he had a serious cash flow problem that could only have worsened, causing him to lose everything. Review of Ross's determination is frustrated by lack of detailed findings. It appears that a single factor --- total devotion of disposable income to the plan --- was considered dispositive. That is not sufficient inquiry. Remanded for further findings on the issue of good faith in accordance with guidelines.

Lomas Mortgage USA and Union Planters National Bank v. Fischer [In re Fischer], 2/4/92.

Richard Ullstrom (Routh, Crabtree & Harbour), Anchorage, for Lomas and Union; Stephen McKee (McNall & Rankine), Anchorage, for Fischer.

  Menu    2 ABR 350: Ch. 7, stay pending appeal (Ross).

Motion for stay pending appeal denied.

F/Vs Pacific Star and Topaz contest distribution of a brokerage fee to Toby Cook and property taxes to Kodiak Island. Granting of a stay is discretionary. They have not shown likelihood of success as to the fee and only speculative showing of irreparable harm. If they are successful as to the taxes the Borough will be able to repay.

In re Eagle Fisheries, 3/9/92.

Cabot Christianson, Anchorage, for Trustee; Thomas Yerbich, Anchorage, for F/Vs Sisu, Pacific Star, and Topaz; Michael Mills for Cook; Bradley Meyen, Anchorage, for Kodiak Island; Sara Heideman, Anchorage, for ISA; Asst. Munic. Atty. Peter Hallgrimson; Jon DeVore (SBA).

  Menu    2 ABR 353: Ch. 7, stay pending appeal (Ross).

2 ABR 350 is modified for further consideration of the argument that it is inappropriate to pay post-petition property taxes on grounds that any such lien is automatically stayed.

In re Eagle Fisheries, 3/9/92.

  Menu    2 ABR 355: Ch. 11, postconfirmation tax refund (Ross).

Motion for determination of entitlement to postconfirmation federal tax refund denied on the basis that the Court does not have or should not exercise jurisdiction.

Debtors seek a refund of fuel taxes which they had previously received as middlemen, but which the IRS now restricts to the end user. The trustee or debtor-in-possession is not seeking the refund. When a debtor confirms a Ch. 11 plan it should begin cutting ties with the bankruptcy process.

In re Callan, 3/25/92.

Albert Maffei, Anchorage, for Debtors; Robert Branman (Dept. of Justice), Washington, DC; Kay Hill (IRS), Anchorage.

  Menu    2 ABR 360: Ch. 7, attorney employment (Ross).

Application by Debtor for authority to employ attorney denied.

327(a) does not require such approval. Only the trustee, which includes a debtor-in-possession pursuant to 1107(a), must get authority.

In re Alaska Intercity Lines, 3/27/92.

Berndt Guetschow, Anchorage, for Debtor; Michael Mills (Bankston & McCollum), Anchorage, for Trustee.

  Menu    2 ABR 362: Ch. 7, reopen, discharge, PI damages, jurisdiction (Ross).

Debtor's motion to reopen denied.

Debtor moves to reopen to remove a pending Superior Court PI action to this Court to establish dischargeability of PI damages for which she is allegedly liable to Joel Townsend.

The motion will be denied because the matter has been pending in Superior Court for 2 years, that court has concurrent jurisdiction to determine dischargeability, there appears to be insurance that would justify continuing the matter in state court, and if Debtor intends that this Court hear the entire litigation it would have to be withdrawn in part to US District Court to try the PI action.

In re McDonald, 3/30/92.

Phillip Moberly (Bradbury, Bliss & Riordan), Anchorage, for Debtor; Bernard Kelly (Kelly, Crossman & Associates), Anchorage, for Townsend.

  Menu    2 ABR 369: Ch. 11, attorney fees, jurisdiction (Ross).

The Court has subject jurisdiction to hear the fee application of Debtor's special counsel Walter Garretson and will not abstain in favor of a Bar Association fee arbitration.

The contested fees stem from settlement of a state court suit, proceeds of which were to be major source of funding for the confirmed Ch. 11 plan. Debtor contested the fee application and filed an arbitration demand.

In re Martinson Gravel & Crane, 4/3/92.

David Freeman & Hugh Wade (Wade & DeYoung), Anchorage, and William Artus (Artus, Choquette & Williams), Anchorage, for Debtor; John Siemers (Burr, Pease & Kurtz), Anchorage, for Garretson.

  Menu    2 ABR 373: Ch. 7, disqualification/recusal (Ross).

Jim Robinson's motion of prejudice for recusal denied.

The Court has no proprietary feelings about Robinson's bankruptcy matters or any particular desire to hear them, but finds the motion to recuse unwarranted.

In re J.R. Marine, 4/16/92.

Jim Robinson, Arizona State Prison, pro se; William Artus (Artus, Choquette & Williams), Anchorage, for Trustee Kenneth Battley; Dietra Ennis, Anchorage, for Charlene Robinson.

  Menu    2 ABR 386: Taxes, Native corporation (MacDonald).

The issues are whether Chugach, a Native corporation, may carry back a net operating loss (NOL) suffered in 1990 to its 1987 tax year to offset income assigned to it in transactions providing for sale of its NOLs, and whether the IRS may disallow the assignment of income to Chugach to the extent that Chugach does not have sufficient deductions available in its 1987 tax year to offset the income assigned to it in connection with its NOL transactions.

Chugach's motion for partial summary judgment on that part of its dispute regarding carryback of 1990 losses to offset excess 1987 income is granted. The assignment of income doctrine or "spring back" theory shall not apply to deny the benefit or use of those carried back losses.

The IRS's motion for partial summary judgment on that part of the dispute regarding "spring back" of excess income is granted to the extent of any excess income remaining after application of the 1990 NOL carryback. Returning this excess income to the assignor corporations does not deny the benefit or use of losses or credit earned to Chugach.

In re Chugach Alaska Corp., 5/5/92.

Robert Crowther & Peter Giannini (Giannini & Associates), Anchorage, and John Taurman & Michael Thomson (Vinson & Elkins), Washington, DC, for Debtors; David Bundy (Bundy & Christianson), Anchorage, for Unsecured Creditors Committee; Thomas Sawyer & Stephen Fuerth (US Justice Dept., Tax Div.), Washington, DC.

  Menu    2 ABR 395: Ch. 7, late proof of claim (Ross).

Debtor's motion to delay distribution of dividends to allow filing of a proof of claim by Gakeys denied.

Debtor knew of the Gakey problem a year ago when he was sued and could have sought a 523(a) ruling or suggested that Gakeys file a tardy claim at that time. It is more equitable to let the Trustee make his final distribution than reward Debtor for his lack of diligence.

In re Dzienkowski, 5/7/92.

Bruce Rausch, Anchorage, for Debtor; Moshe Zorea, Anchorage, former attorney for Debtor; Michael Mills (Bankston & McCollum), Anchorage, for Trustee William Barstow.

  Menu    2 ABR 398: Attorney fees, discharge (BAP, unpublished).

Bank is not entitled to fees in discharge litigation. MacDonald affirmed.

The bank claimed fees pursuant to credit card contract. But the bankruptcy litigation concerned not the debt, but its dischargeability. The Code does not provide for fees to a creditor prevailing in dischargeability litigation.

Key Bank of Puget Sound v. Martin [In re Martin], 5/12/92.

Russell Winner (Winner & Associates), Anchorage, and William Weinstein (Weinstein, Hacker, Matthews & Young), Seattle, for the bank; Warren Taylor II, Fairbanks, for Debtors.

  Menu    2 ABR 402: Ch. 7, late proof of claim, reconsideration denied (Ross).

Debtor's motion to reconsider denial of motion to defer distribution of dividends (2 ABR 395) denied.

Debtor or his lawyer was too lax and too late to disrupt distribution on the eve of disbursement. Whatever relief he may be entitled to will probably have to be invoked by an adversary complaint.

In re Dzienkowski, 6/4/92.

Bruce Rausch, Anchorage, for Debtor; Michael Keenan, Anchorage, for creditors Gakeys; Michael Mills (Bankston & McCollum, Anchorage, for Trustee Barstow.

  Menu    2 ABR 407: Ch. 11, absolute priority, fair & equitable, cramdown, new value, money's worth (Holland).

MacDonald's orders granting FNMA relief from automatic stay and denying confirmation (2 ABR 198) affirmed.

Debtor Boyd proposed writing down his debt to the value of his 4-plex, and also contribute $1,000/mo for 72 months to his creditors, arguing that he qualifies for an exception to the absolute priority rule because he is adding new value.

In light of Ahlers (USSC 1988) there is a new value exception to the rule. However, Debtor's promised payments do not constitute new value; they are not secured by valuable collateral and are not the equivalent of money in hand.

Boyd v. Seattle-Mortgage, 6/9/92.

David Rankine (McNall & Rankine), Anchorage, for Boyd; Richard Ullstrom (Routh & Crabtree), Anchorage, for Seattle-Mortgage.

  Menu    2 ABR 414: Ch. 13, transaction costs, mortgage insurance, prepetition arrearage, modification of unsecured claim (Holland).

MacDonald reversed as to deducting transaction costs, affirmed in excluding mortgage insurance from secured claim, reversed as to allowing curage of arrearages over longer period than the Plan, and affirmed as to modification of the unsecured portion of the lien on Debtors' home.

Judge MacDonald confirmed Perrons' Ch. 13 Plan over Goldome's objections. He reduced the mortgage balance to the appraised value, deducted hypothetical transaction costs, and ruled that Perrons need not cure the prepetition arrearage. They were allowed to retain the property and maintain their scheduled mortgage payments.

Perrons intend to retain their home. Under 506(a) transaction costs should not have been deducted in determining the extent of Goldome's secured claim.

This Court concurs with Judge Singleton's reasoning in 2 ABR 323; Goldome's mortgage insurance was properly excluded from its secured claim.

On the facts of this case, curage of arrearages during the term of the Plan is mandatory.

The most important question is whether a debtor can modify the unsecured portion of a secured creditor's claim, an issue involving interplay between 506 and 1322(b)(2). MacDonald correctly concluded that Perrons may bifurcate Goldome's lien and modify the unsecured portion.

Goldome Realty Credit Corp. v. Perron, 6/9/92.

Chris Johansen, Anchorage, for Debtors; Richard Ullstrom (Routh & Crabtree), Anchorage, for Goldome.

  Menu    2 ABR 431: Ch. 7, abandonment, stay, fraud on the court (Muecke).

Ross's decision denying Trustee's motion to vacate abandonment affirmed.

The record supports Judge Ross's conclusion that at the time of abandonment the asset was overburdened and the estate did not suffer. Nonetheless, the Trustee argues that the judgment is void because the parties violated the automatic stay and committed fraud on the Court.

The Trustee concedes that the trustee of a trust deed has the right to ask the Bankruptcy Court to lift stay. The real question in this case is whether a secured creditor, before seeking relief from the automatic stay, may enter into contracts premised on the Bankruptcy Court ultimately granting a lift of stay. Such actions are permissible. Therefore there was no violation of the automatic stay.

Nor was there fraud on the Court. There is no evi-dence that the motions to lift stay and for abandonment were part of a plan to improperly influence Ross. There was no perjured testimony, bribery, or attempt to have someone "improperly" influence the Judge. If any fraud was committed, it was against the Trustee and creditors. The Trustee may have a separate remedy.

James v. Fischer Development et al [In re Gaudiane], 7/5/92.

Barry Jackson, Fairbanks, for Debtors; Trustee Jeanette James.

  Menu    2 ABR 453: Ch. 7, tax lien, liquor license (Ninth Circuit).

Ross's and BAP's (1 ABR 257) determination that trade creditors are entitled to priority payment from proceeds received upon transfer of liquor license, even if the competing claim is a federal tax lien, reversed.

Applying federal law, the priority Alaska reserved to third-party trade creditors pursuant to 04.11.360(4) over a prior federal tax lien is invalid and unenforceable.

Because 360(4) creates no property interest in third persons insofar as federal tax liens are concerned, the contrary ruling of BAP in this case is reversed and Stone (1 ABR 129) is overruled on this point.

US v. Battley et al [In re Kimura], 7/10/92.

Gary Allen (Dept. of Justice, Tax Div), Washington, DC; Roy Longacre (Longacre & Associates), Anchorage, for K&L Distributors; Peter Giannini (Giannini & Associates), Anchorage, for Alaska Distributors; Asst. Anchorage Municipal Atty. Scott Brandt-Erichsen; Gary Sleeper (Jermain, Dunnagan & Owens), Anchorage, for Alaska Hotel Trust; Asst. AG Teresa Williams.

  Menu    2 ABR 467: Ch. 7, discharge, DUI debt (MacDonald).

Dismissed for failure to state a claim under 523(a) (9).

Allstate's claim is for property damage to an insured vehicle which was hit when Debtor, driving while intoxicated, ran a roadblock. It contends that it stated a claim under the version of 523(a)(9) in effect in 1986 when the debt was incurred. However, Congress intended that application of the 1990 amendment would be determined by the date of petition, not the date of debt. Thus the current version controls.

Nor is the amended version a dramatic change of existing law that should not be applied retroactively; it is a clarification that the type of debt excepted from discharge is one "for death or personal injury."

Allstate Ins. v. Steinborn [In re Steinborn], 7/7/92.

Louise Veerman & Blake Call (Guess & Rudd), Anchorage, for Allstate; Bruce Rausch, Anchorage, for Debtor.

  Menu    2 ABR 471: Ch. 11, certification (Ross).

Because there is likely to be an appeal on multiple issues and since the matter will probably be fully adjudicated in August, a Rule 54(b) certification as to a fee application by Debtor's construction litigation lawyer Walter Garretson is not appropriate.

In re Martinson Gravel & Crane, 7/8/92.

Hugh Wade (Wade & DeYoung), Anchorage, and William Artus (Artus, Choquette & Williams), for Debtor; John Siemers (Burr, Pease & Kurtz), Anchorage, for Garretson.

  Menu    2 ABR 474: Ch. 13, stay, cure of arrearages, sanctions (MacDonald).

Motion to dismiss denied. Debtor's motion for sanctions granted in part.

Carita Rowland filed for judicial foreclosure on Debtor's house. Although title remained in Debtor at the time the petition was filed, Rowland evicted Debtor. Rowland seeks dismissal so she can foreclose, on grounds that Debtor has not filed a plan within 15 days of petition and has filed this case to extort property from her. Debtor contends that he has the right to cure arrearages and asks the Court to fine Rowland $150 for each day that she delays surrendering the property.

As Rowland has not foreclosed her lien she is not in title to the property. But the Court cannot direct her to turn it over because an appropriate adversary proceeding has not been filed. An evidentiary hearing will be held to determine whether her violations of the stay were willful and the amount of any damages.

Debtor's plan does not sufficiently detail the amounts which he must pay to cure the arrearages. He shall serve an amended plan.

In re Christensen, 7/10/92.

Jeff Carney, Wasilla, for Debtor; Carita Rowland, pro se.

  Menu    2 ABR 482: Ch. 7, tax lien, judicial retirement pay (BAP, unpublished).

Monthly post-petition retirement pay of former Alaska Supreme Court Judge is after-acquired property and cannot be levied by the IRS to satisfy discharged prepetition tax debts. MacDonald (2 ABR 138) reversed.

Connor v. IRS [In re Connor], 9/2/92

Gregory Oczkus, Anchorage, for Connor; Robert Branman (Justice Dept., Tax Div.), Washington, DC.

  Menu    2 ABR 488: Ch. 7, divorce, post-dissolution interest, judicial lien (BAP).

Although the wife's post-dissolution interest in the house is a judicial lien, the husband did not possess an interest to which a lien attached, before it attached. MacDonald (2 ABR 25) reversed.

The divorce judge awarded the wife an "equitable ownership interest" in the property. The husband filed Ch. 7 and Judge MacDonald avoided the wife's judicial lien.

The wife argues that the divorce judge granted her an ownership interest, not a judicial lien. But the federal definition of "judicial lien" must control for bankruptcy purposes.

The fact that the husband had an interest in the property both before and after dissolution is not determinative. The decree destroyed the previous interests and created new ones.

Yerrington v. Yerrington [In re Yerrington], 9/4/92.

Mitchell Joyner (Miller, Joyner & Associates), Anchorage, for the wife; Gregory Oczkus, Anchorage, for the husband.

  Menu    2 ABR 496: Ch. 7, homestead exemption, property ownership (BAP, unpublished).

Ross (1 ABR 316) affirmed on all issues: Joan Ames was record holder of tract F on date petition was filed; the estate had a superior interest in the tract over claims of the Ames Children Trust and Ames children individually; Ames forfeited her exemption with respect to tract F when she voluntarily transferred it postpetition; the sale to Otis is final pursuant to 363(m).

Ames et al v. Battley (Trustee) [In re Ames], 9/4/92.

Valerie Therrien, Fairbanks, for Battley; Robert Sparks, Fairbanks, for Ames children; Joan Ames, pro se.

  Menu    2 ABR 516: Ch. 7, recovery of settlement, abandonment (BAP, unpublished.

MacDonald's award to Trustee of half the settlement proceeds from a malpractice action between Debtor Pace and his former lawyers (2 ABR 173) affirmed.

Abandonment of the New Pines night club's note did not constitute abandonment of the malpractice claim.

Pace, Havelock, and Strachan v. Battley (Trustee) [In re Pace (Seward's Folly)], 9/10/92.

Thomas Yerbich, Anchorage, for Pace et al; William Artus (Artus, Choquette & Williams), Anchorage, for Battley.

  Menu    2 ABR 525: Ch. 7, taxes, Native corporation (MacDonald).

Chugach must pay AMT and environmental taxes. It cannot deduct attorney fees for child custody proceedings.

The issues are whether imposition of AMT and environmental taxes for 1987 denies Chugach, a Native corporation, benefit or use of its tax losses & credits in violation of the "special legislation" in 1804(e)(5) of the Tax Reform Act of 1986, and whether it may deduct costs incurred in connection with Native custody matters pursuant to the Indian Child Welfare Act as ordinary & necessary expenses of its trade or business. The Court finds for the IRS on both issues.

In re Chugach Alaska Corp. et al, 9/17/92.

Robert Crowther & Peter Giannini, Anchorage, and John Taurman & Michael Thomson (Vinson & Elkins), Washington, DC, for Debtors; David Bundy (Bundy & Christianson), Anchorage, for Unsecured Creditors Committee; Stephen Fuerth & Thomas Sawyer (Justice Dept., Tax Div.), Washington, DC.