This Chapter 7 case was reopened on March 21, 1989, after the debtor filed a motion to reopen the case and for an order to show cause regarding contempt. The debtort's motion to show cause seeks sanctions against Tom E. Dewhirst on account of a state court civil action which Dewhirst filed, after debtort's discharge, to enforce a covenant not to compete purportedly entered into, pre-petition, by debtor. Mark also seeks sanctions for violations of the automatic stay.

        The briefs of the parties have been thoroughly reviewed, and the court recognizes the dispute between debtor and Dewhirst as to whether a covenant not to compete was ever entered. The debtor contends that the non-competition covenant which he signed in February, 1987 at the time he executed the contract to purchase Dewhirst's accounting business was superseded and replaced, under the doctrine of accord and satisfaction, by the agreement the parties entered into in January, 1988 for Dewhirst's quiet repossession of the business. Dewhirst's statement of facts, on the other hand, alleges that the parties specifically agreed, on         1 ABR 354  February 6, 1988 and after Dewhirst had repossessed the business, that debtor would be bound by the non-competition agreement which had been signed in February, 1987. The debtor filed his Chapter 7 petition on February 16, 1988, and filed a "Statement of Executory Contracts" on May 2, 1988 purporting to reject the non-competition agreement he had signed in February, 1987. The debtor's discharge was entered June 8, 1988, and Dewhirst subsequently filed a civil action against debtor in state court to enforce the non-competition agreement.

        Although debtor did not have standing to reject executory contracts, the trustee in his chapter 7 bankruptcy did not assume the non-competition agreement and, therefore, assuming such an agreement is in fact executory, it was deemed rejected. 11 U.S.C. § 365(d)(1). Such a rejection is deemed to constitute a breach of the contract immediately before the date of the filing of the petition. 11 U.S.C. § 365(g)(1).

        The breach of the non-competition agreement Constitutes a "claim" which is dischargeable in bankruptcy. See, Order of Judge Ross at DN 42 in In re Lindgren, F90-00108 (D. Alaska March 16, 1990), citing In re Aslan, 65 B.R. 826 (Bankr. C.D.Cal. 1986), Ohio v. Kovacs, 105 S.Ct. 705 (1985). As in the Lindgren case, the non-competition agreement in the instant case contains a liquidated damages clause. Accordingly, Dewhirst held a claim within the meaning of 11 U.S.C. §101(4)(b) against the debtor which has now been discharged.

        1 ABR 355 
[T]he final version [of Section 101(4)(B)], as passed and signed into law, is intended to include as a claim a right to an equity remedy for breach of performance if the breach gives rise to an alternative right to payment. If the only remedy allowed by law is nonmonetary, the equitable remedy is not transformed into a claim and it survives the rejection of the executory contract.

        On the 22nd day of February, 1991, at the hour of 9:00 a.m., in Courtroom 2 - Room 126, 605 W. 4th Avenue, Anchorage, Alaska, Tom E. Dewhirst and Kenneth L. Wallack shall appear and show cause why they both should not be held in contempt in accordance with Bankruptcy Rule 9020 for violating 11 U.S.C. § 524(a) by commencing a civil action against Mark in state court; Tom E. Dewhirst shall appear and show cause why he should not be sanctioned for violations of 11 U.S.C. § 362(h) by taking payments of $1,000.00 monthly from Mark's compensation after Mark's bankruptcy filing of February 16, 1988.

       Dated:    February 1, 1991.

DONALD MacDONALD IV
United States Bankruptcy Judge