1 FINDINGS OF FACT -

1.1 The Procedural Background -

1.1.1 The debtor, Ava Jourdan, filed a chapter 7 bankruptcy on December 16, 1992.

1.1.2 The related bankruptcy of In re Royalty Company, Inc., No. A91-00885-HAR was filed as a chapter 11 case on November 1, 1991, and converted to chapter 7 on April 20, 1993. Jourdan is the sole shareholder of Royalty Co.

1.1.3 Plaintiff, Charles Elder, filed this adversary complaint challenging the dischargeability of a debt owed him by Ava Jourdan under §§ 523(a)(2), (4), and (6) of the Bankruptcy Code alleging damages of over $500,000 (a claim under § 523(a)(3) does not appear to be applicable). Elder also alleged challenges to Jourdan's discharge under §§ 727(a)(3), (4), and (5) of the Bankruptcy Code, but has not presented evidence on those counts (Docket Entry 1, filed March 11, 1993).

1.1.4 Ava Jourdan denied the pertinent allegations of the dischargeability complaint. The parties litigated whether she was entitled to offsets against any dischargeability judgment. See, pleadings       3 ABR 318  at Docket Entry 34 and 44, alleging as an affirmative defense that she had certain offsets.

1.1.5 Jourdan also asserted 16 separate counterclaims in her Second Amended Counterclaim (Docket Entry 67, filed July 2, 1993). One of the principal allegations in the counterclaim is that Elder had orally agreed to support her for life. A second aspect concerned a written agreement called Addendum to Purchase Agreement dated December 30, 1985, in which Elder was obligated to pay off a mortgage on the single family dwelling at Lot 10, Block 16, College Village Subdivision, Addition No. 9, Plat 67-68, Anchorage Recording District, Alaska, 1725 Amherst Court, Anchorage, AK (referred to in these findings and conclusions as the "Residence") if he failed to give all his real estate business to Jourdan or her company.

1.1.6 The court determined that the allegations regarding the written contract regarding the Residence and the allegations of an oral contract for services were closely related to Elder's complaint for nondischargeability. These are Causes of Action Nos. 1, 2, 5, and 10 (see, Order Allowing Filing of Second Amended Counterclaim and Determination of Which Issues Will Be Tried at Dischargeability Trial, Docket Entry 61, filed August 6, 1993). Other allegations in the Second Amended Counterclaim regarding damages arising out of alleged pornographic pictures, defamation, murder threats, Elder's fraudulent transfers, wire tap, damages due to Elder's false RICO claims, emotional distress, interference with business, interference with her rights as a grandparent, a RICO claim (Causes of Action Nos. 3, 4, 6, 7, 8, 9, 11, 12, 13, 14, 15, and 16) were severed for future resolution, possibly in another court.

1.1.7 Jourdan requested a jury trial on the issues to be tried (i.e., those not severed as described in ¶ 1.1.6), and the court determined that it had jurisdiction to hear the matter as a non-jury matter.

1.2 Continuances Requested by Jourdan -

1.2.1 Trial was set to commence on August 23, 1993. Jourdan requested a continuance for noncompliance with discovery requests and because of health problems. The court determined that Elder had substantially complied with discovery, and that if Jourdan prevailed, the court would allow Jourdan additional discovery and keep the case open to allow       3 ABR 319  testimony on any issues which lack of discovery caused her prejudice.

1.2.2 At the commencement of the trial on August 23, 1993, the court asked what witnesses the parties actually intended to call, and Elder indicated that his three witnesses would be Jourdan, himself, and Evonda Fagnani (Jourdan's daughter). Jourdan indicated she had four witnesses: herself, Rita Thomas (a friend), Jimmie Parchman (a friend), and Jack Larson (an Anchorage Police officer). The court heard testimony for each of these parties.

1.2.3 On August 25, 1993, after two days of trial, Jourdan requested a continuance because of illness. The court indicated that it would restrict Jourdan from producing further exhibits since they had not been produced and marked pursuant to the Pre-trial Scheduling Order. The court also indicated that, from testimony heard to date, if it were closed, the court was leaning on ruling against Jourdan on her alleged oral contract and ruling that the written contract regarding the residence was unconscionable. The court asked for an offer of proof which Jourdan said she was unprepared to give at that time. The trial was continued to the next day, August 26, 1993.

1.2.4 On August 26, 1993, Jourdan called and said she had been admitted to the cardiac unit at Humana Hospital. The court held a telephonic conference to determine the status of when she would be able to continue on trial, and Ms. Jourdan was quite upset that she was being pressured into trial. At that hearing, the court determined that it would be possible to alleviate the stress of being in trial somewhat if Jourdan's testimony were presented by written declaration. The court continued the trial date to Friday, October 8, 1993, at 9:00 a.m. Ms. Jourdan objected to giving Elder's attorney advance notice of what her testimony would be so that he could prepare in advance for her cross-examination. He agreed, however, that all he would need would be to read over the declaration a half an hour before the trial. So Ms. Jourdan was to produce the declaration by 8:30 a.m. on October 8, 1993, for Vincent Vitale, Elder's attorney. The court's copy was to be delivered in camera to my law clerk by September 30, 1993. The declaration has not been done.

1.2.5 Ms. Jourdan filed a lawsuit against me in the U.S. District Court on September 30, 1993, alleging bias and prejudice against       3 ABR 320  her, and requested that the trial be continued. She submitted affidavits of doctors that she was under extreme stress and was very sensitive to medication she was taking. I have indicated to the parties that I do not recall ever having met either Jourdan or Elder outside the context of this adversary proceeding or the two related main cases. I have no personal, business, or any other relation with either except to be the judge in these matters. I have no knowledge of their disputes except through the pleadings in the cases and the adversary proceeding and the proceedings in court. I have developed no extra-judicial animosity or bias toward Jourdan because of Elder's position in the community, offer of compensation to me, or because Jourdan is a woman and Elder is a man. I have no preference to rule for Elder as opposed to Jourdan except to the extent that I believe his version of their relationship is more accurate than hers. To be sure, I have pointed out weaknesses in various positions taken by Jourdan in various of the proceedings, but these conclusions (whether they were legally right or wrong) were as a result of matters that came out of these ongoing cases and not from outside sources. I find that there are no grounds for my recusing myself from this case and that Jourdan should not achieve this result merely by suing me.

1.2.6 Notwithstanding mental and physical pressures described by Jourdan and her doctors, Ms. Jourdan was able to produce multi-page legal documents in the U.S. District Court case, in this adversary, and in the Royalty Co., Inc. case, the related case involving the Residence, and in this case.

1.2.7 At the continued trial on October 8, 1993, Elder's attorney indicated that he was unwilling to agree to a further continuance. The court observed Mr. Elder when he testified in August, 1993, and determined that his physical problems out strip Ms. Jourdan's mental and physical problems. Mr. Elder is wheelchair bound, having suffered a stroke in 1975 and a more recent fall which injured several vertebrae. At the time he testified, he had not been out of the house for six weeks and was in a weakened condition. He was attended by a male nurse at the trial.

1.2.8 Weighing the equities, I found that a continuance should be denied and the evidence closed. I have heard the testimony       3 ABR 321  from all witnesses and have hundreds of exhibits. I have heard the examination of both principal parties, Elder and Jourdan, and gave Ms. Jourdan the opportunity outside of the pressures of the courtroom to present a written declaration about the merits of her defense and her counterclaim against Elder. She elected not to do so. Although she then offered to comply within a couple weeks, she has had sufficient time and enough grace periods from this court.

1.2.9 The matter had been set in state court for a trial between Elder and Jourdan in December, 1992, but was stayed by her filing the chapter 7 in this case. The related case of Royalty Co., Inc., which was filed before the individual case, was premised on Ms. Jourdan obtaining a successful verdict against Elder in state court. She was denied a continuance of the state court trial in December, 1992, and chose to file a chapter 7 to stop that trial.

1.2.10 At every opportunity to complete a hearing on the merits of her claims against Elder, Jourdan has indicated that her medical problems with herself and her son prevent her from going forward. Jourdan may have mental and/or medical problems which make it difficult for her to go forward and the trial is stressful for her. She indicates that she is destitute, has little or no medical insurance, and is relying on a successful verdict against Elder for her support. Nonetheless, and notwithstanding the medical affidavits, the trial was very close to being concluded, and I believe that she was capable of concluding the trial or at least of producing the declaration ordered on September 1, 1993 (Docket Entry 90). Also, notwithstanding the medical affidavits, I believe her claims that she is so mentally and physically incapacitated that she cannot go forward with the trial are in material part contrived.

1.2.11 Notwithstanding the denial of the continuance, I have heard the testimony of each party identified at the beginning of the trial to be called as a witness. Jourdan was questioned thoroughly about the oral contract for lifetime support and the written contract regarding the residence. It is difficult to see what else or new she might add, and when asked to offer proof what additional evidence bearing on those subjects she might produce, she could not or would not say.

1.3 The Dischargeability Complaint by Elder and the Claim for Offset and Counterclaims of Jourdan Against Elder -

1.3.1 Elder's suit is premised on Jourdan's alleged breach of a fiduciary duty, embezzlement, wrongful taking of his money, or misrepresentation in a transfer of $542,398 from Elder to Jourdan. (See Charles Elder's Trial Brief, Docket Entry 79, filed August 23, 1993, and Plaintiff's Trial Exhs. "G" and "H" which are 1991 affidavits by Jourdan).

1.3.2 Elder met Jourdan in late 1982 or early 1983. According to his testimony, they had an intense romantic relationship for about six months but after that it dwindled off. He claims that Jourdan is mentally and emotionally unstable and that she began demanding money from him with the threat that, if her wishes were not fulfilled, she would do physical harm to him, to a friend named Janice Laird, and later on Ms. Laird's child, as well as herself. Elder testified that he was well-to-do and that money did not mean that much to him, and he preferred just to bow to the threats that he testifies were akin to blackmail rather than fight them.

1.3.3 Jourdan testifies she met Elder around Christmas in 1982, when she saw him at the Captain Cook Hotel in Anchorage and was struck with his military bearing. They became romantically involved, but maintained separate residences at all times. Jourdan had two minor children at the time. Elder provided her with rent money and other support before any contractual relationship existed. She said Elder would make statements to her like: "Sweets, take what you need." He paid to set her up in a business location for her real estate brokerage, Anchorage First Realty, Inc. Jourdan learned Elder may have been seeing other women in 1983 and the beginning of 1984, and became very upset. She testified there were several "implied contracts" arising out of her demand that Elder make some permanent commitment to her. The pertinent one in her defense against the dischargeability complaint and in support of her counterclaim was entered into in about May, 1984. The contract was formed orally, according to her, at Elder's Alyeska or British Petroleum (BP) office and involved an intense session of several hours in which she demanded to know if she was in or out of Elder's life, and if she was in what provisions would be made to provide her with a residence and support. Jourdan testified of a prior agreement regarding support which appears to have been superseded by the May, 1984 agreement.

1.3.4 Elder denies that he promised her lifetime support, but acknowledges that he gave her money from time to time basically under threats of violence to him and others he cared about.

1.3.5 Elder suffered an accident-induced stroke in 1975. His mental faculties were not impaired, but he suffered loss of the fine motor control of his extremities. This made it very difficult for him to write. He often signed checks in blank which he gave to Jourdan, mostly with explicit instructions as to the amount to be inserted, the payee, and the use of the funds.

1.3.6 For a period of time from 1984 to 1990, Elder would give Jourdan blank checks which she would use to pay for the operation of a four-plex which Elder purchased in 1984 through Ava Jourdan's brokerage. See, for example, Defendant's Trial Exhs. 1, 101-106 and Plaintiff's Exh. G. The checks often included an extra amount over and above the amount necessary to pay the mortgage payments and costs of the four-plex which never produced enough cash to carry itself.

1.3.7 Jourdan acknowledged that she saw Elder more in the earlier years of their relationship, but by 1984 she saw him only once a week. She maintained her own residence with her two minor children. She did, however, stay over at Elder's on a number of occasions. In early 1985 the two began to see each other less and less. Jourdan felt that it was due to Elder seeing other women. Elder was in fact maintaining several other relationships at this time with other women.

1.3.8 On December 30, 1985, a transaction was closed in which the Royalty Co., Inc. bought the Residence. This was used as Jourdan's personal abode. The down payment was made by Elder and he purchased it from another BP employee and sold it at a loss to Royalty Co., Inc., probably for the purpose of taking a tax loss.

1.3.9 Jourdan claims that this was to be her personal dwelling promised to her by Elder, but I find that Elder considered the property still to be his. He testified that he thought the property had been deeded back to him by Royalty Co., but it has not. I find that he did not consider the house to have been a gift to Jourdan or Royalty Co. when it was purchased. He demanded and claimed the deduction for depreciation on the Residence on his personal income tax returns and in his 1988 divorce from his wife listed the Residence as part of his       3 ABR 324  property.

1.3.10 In the contract between Elder and Jourdan and First Realty Co., her brokerage, there was a clause that Elder would do all his real estate transaction through Ms. Jourdan's brokerage, or if he did not, he would pay off the mortgage for about $164,000 against the Residence. See Addendum to Purchase Agreement dated December 30, 1985, in Notice of Filing December 21, 1995 Agreement (Docket Entry 55 filed August 6, 1993). The contract was drafted by Jourdan, and Elder testified that he did not realize that the clauses were contained in the agreement. I find that the agreement is unconscionable given that Jourdan was a real estate professional and had a fiduciary responsibility to Elder, notwithstanding the personal relationship of the parties. It literally provides that unless Elder does all his real estate business through Jourdan's brokerage, he has to pay off a mortgage on an expedited basis. There is no apparent benefit to Elder, and I believe he signed the addendum which was drafted by Jourdan based on his reliance that she was handling a transaction involving the purchase of a residence for his benefit. I find that the addendum is unenforceable so far as it requires Elder to pay off the mortgage. I find that Elder's position as a BP Petroleum official or lobbyist does not debar a defense of unconscionability.

1.3.11 By 1986 through 1990 the relationship dwindled even further. In 1986 Jourdan saw Elder probably two times per month, apparently mostly for business reasons. In 1987 she performed personal services (unspecified) when asked over, and saw him maybe once a month for several hours. By 1988 she saw him only every other month for an hour or so.

1.3.12 Elder became more niggardly with the money he gave Jourdan and tried to bargain for a reduction. He would write the checks out, nonetheless, in blank and allow Jourdan to fill them in.

1.3.13 Feeling that the relationship was coming to an end, Jourdan unilaterally and without permission of Elder, filled in a check dated October 11, 1990, for $19,000.00, approximately $15,000.00 greater than the usual checks. (Plaintiff's Exh. D). This was in effect her war chest to carry her over while she negotiated a settlement with Elder for her "lifetime support".

1.3.14 She sent Elder demand letters on October 2 and 3, 1990 (Plaintiff's Exhs. B and C), suggesting a settlement of $750,000 (Plaintiff's Exh. A). Elder at that point decided that he would give no further funds to Ms. Jourdan. These documents reflect an intense, unnatural bitterness concerning a relationship of Elder and a Janice Laird. In the October 2, 1990, letter (Plaintiff's Exh. B) she states "I kept on letting you support me because I thought someday we'd get back together like we were from October 1982 to May 1984." It supports my ultimate finding that Elder did not agree to support Jourdan for life at the very instance the romance, according to her, was cooling. The truth is probably closer to Elder's version that the passion had only lasted for 6 months (i.e. into mid-1983), or certainly no more than 2 years in total, and that what remained was a conglomeration of a business relationship and buying off Jourdan's harassment.

1.3.15 In late 1990, Jourdan sued Elder in state court, Civil Action No. 3AN 90-9248 Civil to enforce the alleged contract for support and written contract to pay off the mortgage on the Residence.

1.3.16 Foster Mortgage Corporation began a foreclosure against the Residence, and Jourdan filed a chapter 11 case for Royalty Co., Inc. November 1, 1991. Ultimately, a plan was proposed by Royalty Co. in its chapter 11. The theory of the proposed plan was to win the lawsuit against Elder, and thus win the release of any claim he might have to the Residence and somehow pay off her other creditors.

1.3.17 The Jourdan v. Elder state court action was set for trial in the state court in December, 1992. As it came close to the time for trial Jourdan requested and was denied a continuance based on a medical emergency of her son. Just before the trial date, she filed a chapter 7 in which the present adversary proceeding is taking place.

1.3.18 When the relationship of Jourdan began to deteriorate, as early as 1985, she began to stalk Elder and Janice Laird, his female companion. Jourdan and her friends have made numerous drive-by visits to Elder's residence and Laird's residence. She has attempted to implicate Laird and Elder in connection with alleged illegal gambling and/or unlawful sexual activities. She has carried a personal weapon in her car at the time of a number of these drive-bys. She alleges a conspiracy against her by Elder and/or Laird to defeat her rights.

1.3.19 I find that there was no contract for lifetime support. Jourdan's testimony about exactly what services she was to perform was sparse and evasive. She was questioned about this extensively by Elder's attorney and was not credible. It is unlikely that Elder would have committed to a lifetime of support with respect to a romantic relationship which was terminating. Elder flatly denies he promised to support her for the rest of her life. Elder is a womanizer and has a number of relationships going on at any one time. I find, however, that the allegation that he paid all the funds he is claiming in fear for his life or that of his friends is overstated. He did sign checks in blank and gave them to Jourdan, and this belies the suggestion of total fear. I do not doubt, however, that the threats were a factor in his paying off Jourdan for a number of years, either because he hoped to avoid the aggravation she was producing or through some sense of fear or nervousness about the bizarre behavior alluded to in ¶ 1.3.18 of these findings. However, I think the payments were of a voluntary enough nature, except for the final one where Jourdan took $19,000.00, that they are dischargeable. Elder, in light of the tentative ruling of the court, agreed to the dismissal of all his dischargeability claims except for the final check.

1.3.20 I find that the sum of $15,000.00 is nondischargeable in that Jourdan took and converted this money to her own use without authorization of Elder. This is the portion of the October 11, 1990, check for $19,000 which exceeded the approximate $4,000 which Elder consented that she could take.

1.3.21 There is no offset available to Jourdan for the alleged May, 1985, contract for lifetime support because I find that no such contract existed. It is more probable than not that Elder paid money to Jourdan first out of affection and then to avoid confrontation with her, but I do not believe that he promised, at the time their relationship was expiring, to pay her lifetime support.

2 CONCLUSIONS OF LAW -

2.1 The dischargeability action and compulsory counterclaims which were tried, as described in ¶ 1.1.6 of the findings, are core proceedings. 28 USC § 157(b)(2)(J).

2.2 By consent of plaintiff Elder, the counts of the complaint to       3 ABR 327  deny defendant Jourdan's discharge under 11 USC § 727(a) and the dischargeability of any of Elder's claims against her under § 523(a) are dismissed, except for a claim that the check taken by Jourdan on about October 11, 1990, for $19,000.

2.3 Jourdan converted $15,000 of Elder's money when she filled in and cashed the check for $19,000 on about October 11, 1990, and this was a willful and malicious act or misappropriation by a fiduciary which is nondischargeable under §§ 523(a)(4) or 523(a)(6) of the Bankruptcy Code. Elder is entitled to a judgment for $15,000 with interest at 10½% from October 11, 1990, to January 21, 1994, and the federal judgment rate on that total amount from January 22, 1994. In re Cecchini, 780 F2d 1440, 1443 (9th Cir 1986); Ragsdale v Haller, 780 F2d 795 (9th Cir 1986); and 28 USC § 1961.

2.4 There is no enforceable express or implied contract for lifetime support which would offset the damages awarded in ¶ 2.2 of the conclusions of law. Altman v Alaska Truss & Mfg. Co., Inc., 677 P2d 1215, 1226 (Alaska 1983); Martens v Metzgar, 524 P2d 666, 672 (Alaska 1974). Compare, Wood v Collins, 812 P2d 951, 956 (Alaska 1991); Kohler v Flynn, 493 NW2d 647 (ND 1992); and Bergen v Wood, 18 CalRptr2d 75 (CalApp 2nd 1993). See, also, AS 09.25.010(1) (raised, however, only in Elder's trial brief).

2.5 The court has jurisdiction to enter such a ruling without regard to Jourdan's request for a jury trial. See, Order Denying Defendant's Motion for Jury Trial on Dischargeability Issues dated August 6, 1993 (Docket Entry 63), citing In re Hallanhan, 936 F2d 1496, 1502-08 (7th Cir 1991) and comparing In re Jensen, 946 F2d 369 (5th Cir 1991). See, also, In re Harris v U.S. Fire Ins. Co., _____ BR ______, 1994 WL 8689 (ED Va 1994).

2.6 The Addendum to Purchase Agreement dated December 30, 1985, described in ¶ 1.3.10 of the findings is unconscionable and unenforceable insofar as it purports to impose a duty of Elder to pay off the mortgage interest on the Residence which she inserted in the contract without his being aware of it. AS 08.88.381; Drake v Hosley, 713 P2d 1203, 1207 (Alaska 1986); Black v Dahl, 625 P2d 876, 879 (Alaska 1981); and Vockner v Erickson, 712 P2d 379, 381 (Alaska 1986).

2.7 There is no just reason to delay entering a final judgment on       3 ABR 328  this partial resolution of this case and the court directs entry of a final judgment based on these findings of facts and conclusions of law. FRCivP 54(b) and FRBP 7054.

2.8 Each party shall bear their own attorney fees and costs for this adverary proceeding to date.

DATED: January 21, 1994

HERBERT A. ROSS
U.S. Bankruptcy Judge