UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA

These consolidated cases come before the court on a variety of motions. The primary motion for resolution, however, is the proposed settlement of the claims of Bernard McCoy, trustee of the Irven LeRoy Smith inter vivos trust and personal representative of the estate of Nettie Smith under Fed. R. Bankr. P. 9019. Larry Compton, the chapter 7 trustee of these consolidated cases, seeks to settle the trust claims by the allowance of an unsecured claim in the sum of $2,272,065. He proposes settlement with the estate of Nettie Smith for $150,000. The debtor opposes the settlement and seeks dismissal of the consolidated bankruptcy cases. I find for the trustee on all issues.

Background

Linda Smith (Linda) is the natural daughter of Irven LeRoy Smith and a former trustee of his trust. Nettie Smith was Irven's wife and Linda's stepmother. Bernard McCoy (Bernard) is Nettie's son, Irven's stepson, the current trustee of the trust, and the personal representative of Nettie's Estate. He is also a trust beneficiary. Both Irven and Nettie are now deceased.

Irven LeRoy "Chuck" Smith (Irven) ventured to Alaska in the late 1940's. He ran the 3 1/2 Club bar in Sitka for many years with his wife       4 ABR 100  Nettie. He owned heavy equipment that he used in conjunction with a gravel business. Irven also purchased real estate for investment purposes. Bernard and Linda spent very little time with him as children. Both were raised separately outside Alaska by other relatives.

Irven suffered from Huntington's Chorea, a degenerative disease which impaired his speech, movement and brain functions. In late 1982, he decided to sell the 3 1/2 Club and retire to Reno, Nevada. After moving to Reno, he established the Irven L. Smith inter vivos trust ("the trust") on March 1, 1984, in Reno. He conveyed most of his property to the trust. First Interstate Bank of Nevada was named trustee. Income from the trust was to be used primarily for the benefit of Irven and Nettie during their lifetimes. After their deaths, L. Diana Smith, (Linda's full sister), Lloydene Campbell, Linda, Bernard, and Sally H. Smith were to receive the balance of the trust.

The trust agreement was modified on May 24, 1984, to allow Linda to serve as co-trustee with the bank. The bank later resigned as trustee in 1986. Linda is a college graduate who taught overseas prior to becoming a realtor in Anchorage during the 1970's. She was to assist in the development and sale of the trust's real estate. She created a limited partnership, Sitka Projects, Ltd., in March of 1984. The partnership had two general partners: Linda Smith with a 38% interest, and Smith Management Corporation ("SMC") with a 2% interest. SMC was owned 100% by Linda. The trust was a limited partner in Sitka Projects, Ltd., with a 60% interest.

Shortly after its formation, Sitka Projects bought two lots from the trust for $40,000. One lot was then returned to the trust. Sitka Projects sold the remaining lot to the Post Office for $1,010,000 cash in August of 1985. The disposition of funds from this sale remains a mystery. Linda contends that Sitka Projects realized a gain of $733,000 from the sale. She also admits taking a $100,000 commission for the sale. At no time, however, has Linda ever prepared an accurate, documented accounting of the sale proceeds.

In September of 1986, Linda agreed to purchase all of the trust's real property, including the trust's partnership interest in Sitka Projects, Ltd. She executed a note for $741,000 to the trust and assumed $165,000 of indebtedness. Linda's obligations to the trust were secured
      4 ABR 101  by the real estate she had purchased. Irven apparently agreed to the sale, despite warnings from his Salt Lake attorney and First Interstate's resignation as co-trustee. Irven signed some of the sale documents as trustee for the trust. He signed other documents as settlor for the trust. After receipt of the trust's property, Linda promptly encumbered it to Rainier Bank for $950,000 and subordinated the trust's security interest to the bank's.

Irven's health was in decline throughout these transactions. In 1989, he took a car and drove from Reno to Utah in a vain search for a relative. He was hospitalized there in a nursing home. Linda, who controlled all finances, never allowed him to return to his Nevada home. Linda prevented Nettie from visiting him at the nursing home. Nettie was ill and short of cash. She lived on miserly rations from Linda and $200 a month from Social Security.

Linda defaulted on the Rainier Bank loan in the fall of 1989. She gave the bank a deed in lieu of foreclosure on the remaining Sitka properties and obtained free and clear title to an Anchorage warehouse solely in her name.

Irven's health declined. In March of 1989, Linda faxed Irven's attorney, Jeff Woodbury, stating that her father was incompetent and expressing concern that he wanted to leave the rest home. Linda then created a "global agreement" on January 1, 1990, which relieved her of her $950,000 liability to the trust. She executed the agreement in four separate capacities: individually, as attorney-in-fact for the trust, as trustee, and as managing general partner for the partnership. Irven's health continued to deteriorate, and he died at the rest home in September, 1990.

Nettie was desperate for cash and also in poor health. Shirley and Bernard McCoy became very concerned about Irven and Nettie. They visited Nettie and found her living conditions deplorable. They investigated the trust assets and found that Linda owned most of the trust property. They initiated an Alaska state court action to protect trust assets and provide for Nettie's needs. In February of 1990, Linda appeared and contested the allegations, never advising the court of the "global agreement."

Following a hearing, Superior Court Judge Duane Craske ruled against       4 ABR 102  Linda in every respect. He found that Irven and Nettie should have been receiving substantial income, but that neither of their needs were being met. He stated:

8.) Linda Smith is in a fiduciary capacity as Trustee of the Irven Smith Intervivos Trust. Linda Smith is in a conflict of interest position due to her being the major debtor of the Trust.

9.) Linda Smith has breached her fiduciary duty as Trustee by not placing the Trust's interests above her own, in failing to meet her personal financial obligations to the Trust and, in failing to have the Trust move against Linda Smith to obtain the arrearages owed to it.

10.) The Trust Beneficiaries have raised a genuine concern on the merits and the assets of the Trust need to be examined promptly due to the unmet needs of Nettie and Irven Smith.

11.) The Trustee has improperly failed to provide an accounting to the Beneficiary Nettie Smith though requested, and circumstances are such at [sic] to require an award of full attorney fees to Nettie Smith for professional fees accrued in attempting to obtain an accounting.

12.) Sufficient facts have been shown to convince the Court that Mrs. Smith is a person in need of protection and that an interim protective arrangement, without initial appointment of Conservator is warranted under AS 13.26.205 and a full accounting of the acts of Linda Smith with respect to the affairs of Nettie and Irven Smith should be ordered, and that the Court should retain jurisdiction pending receipt and consideration of the accounting.

Plaintiff's Exhibit No. 62, pp. 3-4. (Findings of Fact and Conclusions of Law, filed March 5, 1990, in In the Matter of Nettie Smith, Case No. 1SI-90-7 PR, in the Superior Court for the State of Alaska, First Judicial District at Sitka.)

Linda never provided a true accounting. On August 9, 1990, she was removed as trustee of the trust and Bernard McCoy was substituted as trustee. Linda had served as trustee from 1984 to 1990, with the exception of a few months during 1988. During her tenure at least $2,000,000 in trust assets were dissipated. In 1991, Bernard filed a separate civil action against Linda and SMC for breach of fiduciary duty       4 ABR 103  and conversion in Alaska state superior court.

Linda responded in kind by filing a civil action in Nevada state court against Bernard, both individually and as trustee. Through a variety of claims, Linda sought the removal of Bernard as trustee and the recovery of over $400,000 for her "work" for the trust and $676,000 in "loans" to the trust.

Linda again lost on every claim. The Nevada court stated:

Let me say that ordinarily court is not like television; ordinarily, cases are presented in such a shade of gray as to require the Court to give grave attention to minute details, and to consider and sometimes ponder at length prior to making a decision, with not one side being clearly right and not one side being clearly wrong, and the matter being resolved somewhere in the middle.

This isn't one of those cases. This is a very black and white case. I find the plaintiff has very little credibility. I'm glad that we have a system that allows individuals to present themselves physically in court for an observing of demeanor, candor and forthrightness. And in this case, all factual issues have either not been proven or cannot be believed.

       . . . .

One of the primary matters of fact offered by the plaintiff as evidence in support of the allegation of an agreement is that she gave up so much in order to devote herself full-time to her father's affairs. And I don't think, frankly, that there was ever enough to do that, that this would have been a full-time job. She was in business for herself, full-time, no doubt.

Turning to the quantum meruit implied contract for the reasonable value of her services, I believe she provided no benefit to the trust. I believe that the plaintiff acted in conflict with the interests of the trust and its legitimate purpose, and placed her own interests ahead of all else, even down to the evidence of her exceedingly cold decision to separate her father in his failing health from all his family, and to leave him in the middle of nowhere, in Utah. This sort of self-serving, self-dealing conflict of interest brings her to the Court with the dirtiest hands I've ever seen. I've never seen a case like it.

Plaintiff's Exhibit No. 26, p. 194 ln. 18-24; p. 195, ln. 1-7; p. 196,       4 ABR 104  ln. 5-22. (Transcript of Proceedings, March 31, 1993, Linda M. Smith, Plaintiff, v. The Irven Leroy Smith Intervivos Trust, Bernard McCoy, et al., Defendants. Case No. CV91-7280, Dept. No. 3, in the Second Judicial District Court of the State of Nevada, In and For the County of Washoe, The Honorable Deborah A. Agosti, District Judge.) Linda's every claim was denied with prejudice. She had no claim as to the trust, nor did she have any rights against Bernard individually.

Bernard's state court action in Sitka progressed very slowly. Linda constantly delayed the proceedings with legal maneuvering and the retention and discharge of numerous attorneys. Finally, in July of 1994, Judge Larry Zervos entered a thoughtful and well-reasoned decision granting summary judgment against Linda on a variety of claims. First, he found against Linda on the issue of breach of fiduciary duty. He found no factual dispute regarding Linda's duties to the trust and her breaches of those duties. He did not grant summary judgment on the liability for the Post Office transaction, however. Second, he granted summary judgment against Linda as to all counterclaims asserted by her against Bernard McCoy as trustee and personally. These counterclaims were simply a rehash of her unsuccessful Nevada claims. Third, he granted summary judgment on the issue of conversion through Linda's execution of the global agreement. He reserved the issue of damages for trial, however. "[A]lthough this case presents facts clearly suitable for a punitive damages award, the court hesitates to make such an award without the benefit of hearing directly from Linda and the argument of counsel." Trustee's Exhibit No. 28, p. 31, ln. 20-22. (Decision on Summary Judgment, Bernard McCoy, Plaintiff, v. Linda M. Smith, et al., Defendants. Case No. 1SI-91-202CI, in the Superior Court for the State of Alaska, First Judicial District at Sitka.) Additionally, in a separate pleading, he entered a default judgment against Smith Management Corporation, stating:

Linda has been involved in this case or the probate matter since 1990. She knew about the motion to amend shortly after it was written on January 27, 1994. She was served with the amended complaint on March 10, 1994. She has been repeatedly warned that the matter will not be continued because of her persistent inability to retain and maintain counsel. This matter has been continued twice and a further continuance will not       4 ABR 105  be fair to the plaintiffs. Discovery is closed, the time for motion work is closed, the plaintiffs are fully prepared for trial.

Linda has repeatedly violated direct court orders. She was ordered to prepare an accounting and supply opposing counsel with documents pertaining to the Trust. A Report concerning the Trust was filed eight months late but an accounting has never been filed. The request for documentation has been going on since 1990 and it has never been fulfilled. Twice the court has compelled Linda to respond to discovery requests and to this date - weeks from trial - she still has not complied.

Plaintiff's Exhibit No. 27, p. 20, ln. 7-21; p. 21, ln. 1-2. (Decision on Motion to Set Aside Default, for Discovery Sanctions, and to Suppress Linda Smith's Deposition, filed July 18, 1994, Nettie Smith and Bernard McCoy in his capacity as Trustee for the Leroy Irven Smith Intervivos Trust and in his Capacity as Personal Representative of the Estate of Nettie Smith v. Linda Smith, et. al., Case No. 1SI-91-202 CI, in the Superior Court for the State of Alaska, First Judicial District at Sitka.)

Linda and SMC filed for bankruptcy relief on August 3, 1994, just prior to the often delayed Sitka state court trial. Her bankruptcy schedules and statements were misstated in many respects. They failed to reflect the true value of assets owned by Smith Management. For example, the Smith Management schedules listed a warehouse located on West 47th Avenue as having a fair market value of $266,000. The chapter 7 trustee has received an offer of $475,300 for the property. There are similar discrepancies with regard to other properties. Additionally, in a botched attempt at a fraudulent transfer, Linda placed the stock of Smith Management Corporation in the hands of one Stanley Davis. Davis renounced any interest in the stock and relinquished it to the chapter 7 trustee. Linda made other misstatements as well regarding assets of the consolidated estate.

The Settlement

The Ninth Circuit has adopted considerations outlined by the Eighth Circuit for evaluating settlements:

In determining the fairness, reasonableness and adequacy of a proposed settlement agreement, the court must consider:

(a) The probability of success in the litigation; (b) the difficulties, if any, to be encountered in the matter of collection; (c) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; (d) the paramount interest of the creditors and a proper deference to their reasonable views in the premises.

In re Flight Transportation Corporation Securities Litigation, 730 F.2d 1128, 1135 (8th Cir. 1984) (citations omitted), cert. denied, ___ U.S. ___, 105 S.Ct. 1169, 84 L.Ed.2d 320 (1985). Accord, Matter of Jackson Brewing Co., 624 F.2d 605, 607 (5th Cir. 1980) (court must review the particular facts and circumstances with adequate detail and explanation to determine (1) the probability of success in the litigation, with due consideration for the uncertainty in fact and law, (2) the complexity and likely duration of the litigation and any attendant expense, inconvenience and delay, and (3) all other factors bearing on the wisdom of the compromise).

In re A & C Properties, 784 F. 2d 1377, 1381 (9th Cir. 1986), cert. denied, 479 U.S. 854 (1986). The burden of proof is on the party proposing the compromise. Id. The bankruptcy court must follow A & C Properties when evaluating settlements. In re Woodson, 839 F.2d 610, 620 (9th Cir. 1988).

In this case, the standard set forth in A & C Properties must be applied to evaluate the two settlements proposed by the bankruptcy trustee: 1) settlement of the trust claims against the estate for $2,272,065; and 2) settlement of the Nettie Smith estate claims against the estate for $150,000.

The proposed settlement of the trust claims will be evaluated first. The court must first determine the probability of the bankruptcy estate's success in defending against the trust claims in the state court litigation pending before Judge Zervos. In determining the probability of success, I will first consider the liability issues, then damages. I rate the overall probability of the bankruptcy estate's success on liability issues as less than 5%, for a number of reasons. First, in nearly every instance where Linda has presented her side of these liability issues to a court, she has lost. They don't appear to be
      4 ABR 107  "close" decisions. Rather, they were "black and white." Each judge considering Linda's defalcations under the trust has ruled against her. After hearing Linda's version of her administration of the trust, I can see why. She has no credibility. No one corroborates her stories, nor has she presented the documentary evidence that could easily have absolved her of any wrongdoing long ago. The conclusion is inescapable: there is no defense to the trust's liability claims against Linda. In fact, the liability claims are so clear-cut that most were subject to summary judgment before Judge Zervos. Additionally, SMC was defaulted by Judge Zervos for its failure to respond to the amended complaint. SMC is subject to 100% liability in the state court action. From the standpoint of the two consolidated bankruptcy estates, the state court case is a loser. Liability is not an issue that can be defended.

The next issue to be considered is the potential for damages to be awarded against the estate. There has never been a total and complete adjudication of the trust's damages against Linda. The Reno court ruled against Linda on any claims she may have against the trust, but did not adjudicate the amount of her liability to the trust. The first trust claim arises out of the Post Office transaction in 1986. Linda removed property from the trust to create a limited partnership in which she held a 40% interest. This transaction appears highly questionable in and of itself. Linda obtained a 40% interest in a $1,000,000 parcel of property for no apparent consideration. The 40% portion of the sale is not a part of proposed settlement, however. Only 60% of the sales price, or $606,000, is attributed to damages in the settlement. This 60% equals the trust's interest in the partnership. The trust's potential damages on this claim are based on two alternative theories: breach of fiduciary duty or conversion. Because Linda has never supplied a credible explanation or accounting for the disposition of the funds from the sale of the Post Office property, attributing damages of $606,000 appears conservative, under either theory. Linda, as trustee of the trust, is liable for all funds because of her failure to account.

As noted in IIA Scott on Trusts, § 172:

A trustee is under a duty to the beneficiaries of the trust to keep clear and accurate accounts. His accounts should show what he has received and what he has expended. They should       4 ABR 108  show what gains have accrued and what losses have been incurred on changes of investments. If the trust is created for beneficiaries in succession, the accounts should show what receipts and what expenditures are allocated to principal and what are allocated to income.

If the trustee fails to keep proper accounts, all doubts will be resolved against him and not in his favor. The trustee alone is in a position to know all the facts concerning the administration of the trust, and obviously he cannot be permitted to gain any possible advantage from his failure to keep proper records.

2A William F. Fratcher, Scott on Trusts § 172, pp. 452-453 (4th Ed. 1987) (footnotes omitted).

"To keep an accurate account is one of the primary duties of a trustee." "The general rule of law applicable to a trustee burdens him with the duty of showing that the account which he renders and the expenditures which he claims to have made were correct, just and necessary. . . . He is bound to keep clear and accurate accounts, and if he does not the presumptions are all against him, obscurities and doubts being resolved adversely to him." This common-law duty is sometimes restated in statutory form. "It shall be the duty of agents, trustees, administrators, guardians, receivers, and all other fiduciaries to keep their accounts in a regular manner, and to be always ready with them supported by proper vouchers; neglect of this duty shall be ground for charging them with interest on balances on hand, and with costs."

G. Bogert, The Law of Trusts and Trustees §962, at p. 19 (rev. 2d ed. 1983) (footnotes omitted).

Assuming Linda was a trustee, and resolving every presumption against her due to her failure to account, damages to the trust of at least $600,000 would be awarded. Alternatively, assuming Linda wasn't the trustee, she converted trust assets to her own use. She controlled the partnership account and disbursed more than $1,000,000 in proceeds from the sale of the Post Office property, never accounting for the proceeds. Accordingly, under either theory of liability, Linda (and the bankruptcy estate) would lose. Damages of $600,000 for the Post Office sale are reasonable.

The trust's damages arising from Linda's execution of the global agreement are substantial. Linda absolved herself of approximately $916,000 in debt to the trust through this agreement. Actual damages may have been greater. She has admitted that her actions resulted in the direct loss of real property worth $1.2 million to the trust. The settlement uses a principal of $916,000 for damages. That sum is conservative given the circumstances.

The trust would be entitled to interest under Alaska law at 10.5% per annum from the time the damages accrued until the date the bankruptcy petitions were filed, August 8, 1994. At the 10.5% rate, more than $1,000,000 in interest has accrued on the trust claims.

The final element of the trust's claims is punitive damages. I concur with Judge Zervos: the facts of this case are clearly suitable for punitive damages. Linda's actions were clearly malicious and despicable. She robbed her father and stepmother of the security they sought to enjoy in their retirement. She left her father alone and miserable in a rest home far from his wife. She arranged to exclude his wife from visiting him, for fear her plunder of trust assets would be exposed. She used the trust as her personal checking account with no regard for the welfare of anyone but herself. She has lied repeatedly, delayed numerous proceedings with double-talk and generally manipulated the court system to her advantage. Under these facts, I feel an award of punitive damages in an amount at least equal to compensatory damages for the two major transactions is easily justified, even under Alaska's clear and convincing standard contained in AS 09.17.010.

I conclude that the trust claims have a settlement value of $3,820,000. This includes: (1) $606,000 for damages from the Post Office transaction; (2) $916,000 for damages from the global agreement; (3) interest of $1,000,000; and (4) punitive damages of $1,500,000. I have multiplied these amounts by a liability factor of .95 to determine a settlement value for the trust claims. The settlement value I have given the trust claims exceeds the trustee's proposed settlement by nearly $1.5 million, without any allowance for costs and attorney's fees allowable under Alaska Civil Rule 82. The proposed settlement is reasonable in amount. I also conclude that the probability of success for the consolidated bankruptcy estates in defending the trust claims in the       4 ABR 110  pending state court litigation is very low.

A review of the other factors a court must consider in evaluating a settlement further supports the conclusion that the trustee's settlement of the trust claims should be approved. The next factor to consider is the difficulty of collection. This consideration does not apply to a case where the estate is not a plaintiff.

The third factor for consideration is the complexity, expense, inconvenience and delay which would arise from the litigation. My review of the state court proceeding leads me to conclude that the issues are complex and that much inconvenience and delay will surround their resolution. This is certainly borne out by the history of the various state court cases. Linda has delayed the Sitka proceedings on innumerable occasions. Substantial attorneys' fees have and will continue to accrue. The trustee would be put in the unenviable position of relying on the testimony of Linda. He estimates that several hundred thousand dollars could be spent on defending the case. The entire estate could be liquidated, as it now stands, in defending against the trust claims. Under the circumstances, the settlement is well warranted.

Finally, in evaluating a settlement the court is to consider the paramount interest of creditors and properly defer to their reasonable views. Bernard is the largest single creditor in these consolidated bankruptcy cases and the only creditor actively pursuing the debtor. Obviously, he prefers the settlement to continued litigation in the hope of salvaging some benefit to the beneficiaries of the trust.

I conclude that the settlement of the trust claims is reasonable and within the criteria set forth by the Ninth Circuit. The motion for approval of settlement of the trust claims for the sum of $2,272,065 is justified, reasonable and will be granted.

The same factors must be considered by the court in evaluating the proposed settlement of the Nettie Smith estate claim. The Chapter 7 trustee and the Nettie Smith estate seek allowance of a $150,000 claim in settlement of claims for emotional and physical distress, and for compensatory and punitive damages. These claims arise out of Linda's neglect of Nettie during her final years. Nettie was involuntarily separated from her husband, she was evicted from her home, and forced on welfare until her death on Feb. 13, 1994.

I view the estate's probability of success in defending against the Nettie Smith estate claims as low. Unquestionably, Linda took money that was intended for Nettie's care and support. Nettie suffered grievously because of Linda's actions. Again, the difficulty of collection is not at issue because this is a claim against the estate. The litigation would necessarily be difficult because of Linda's failure to account for trust assets. I foresee an inordinate amount of accounting expert witness work to adequately reconstruct the appropriate trust benefits to Nettie during her lifetime. There would be a good deal of delay due to the discovery issues and distances involved. Given a present estate of $300,000 to $400,000, and considering that the trust claim settlement will be approved, there is nothing to be gained by defending the Nettie Smith estate claim. Moreover, while determining appropriate compensatory damages would be difficult and costly for both sides, the issue of punitive damages would not be difficult. As before, Linda's actions were malicious, aggravated and outrageous. In my view, her actions toward Nettie are indefensible and ones that meet Alaska's clear and convincing standard of proof. Under these circumstances, a settlement of $150,000 is a bargain that will spare the estate from substantial expense and large exposure. The settlement of the Nettie Smith estate claims for $150,000 is reasonable and in the best interests of the estate. The trustee's motion to approve this settlement will also be granted.

Linda's Arguments

In opposition to the trustee's proposed settlements and in her own defense, Linda has advanced several arguments. The arguments are sweeping and generally unsupported by the evidence.

First, Linda argues that this court lacks jurisdiction to consider this settlement. She contends Bernard lacks authority to enter the proposed trust settlement because he was not legally appointed trustee of the trust. She says insufficient notice of the state court proceeding which resulted in Bernard's appointment was provided to the trust beneficiaries. Linda has failed to provide any evidence from the state court record to support this contention. Further, Linda herself not only was given notice of the state court proceeding, but appeared and defended the action before Bernard was appointed. The state court order       4 ABR 112  appointing Bernard as trustee was entered in August, 1990. This order was not appealed.

Linda also contends the state court's appointment of Bernard is invalid because the trust's settlor, Irven, was still alive at the time and he was not given notice of the proceeding. Again, no evidence from the state court record has been provided to substantiate this alleged notice defect.

Linda next contends that the state court lacked jurisdiction to regulate the trust, under AS 13.06.060(5), because the trust was not registered in Alaska and therefore was not subject to administration in this state. Linda overlooks that AS 13.06.060(2) gives the state courts jurisdiction over "the property of nonresidents located in this state or property coming into the control of a fiduciary who is subject to the laws of this state." A substantial portion of the trust property was located in Alaska, nonresidents Irven and Linda were its primary beneficiaries, and it's trustee, Linda, is subject to the laws of the State of Alaska. Accordingly, the fact that the trust wasn't registered in Alaska did not deprive the state court of jurisdiction.

Linda's attempts to collaterally attack the state court order appointing Bernard as trustee by alleging lack of jurisdiction and defects in notice are all unsupported by the evidence. Given the lack of credibility in her testimony, I view Linda's attacks on the order appointing Bernard as a final effort to further forestall adjudication of issues which have been long pending, first in the various state court proceedings and now before this court. Linda had notice of the initial state court proceeding which resulted in Bernard's appointment as trustee. She failed to appeal the order or otherwise contest it in the 5 years since it's entry.⁽¹⁾ She is estopped from raising these issues now.

Finally, Linda attacks the proposed settlement of the Nettie Smith       4 ABR 113  Estate claim on the grounds that there is no basis for that claim. She contends that, under Alaska law, a claim for mental suffering could not be established for Nettie Smith. However, the Nettie Smith estate claim is not comprised of mental suffering alone. As described in the motion to approve the settlement, the claim is for Nettie's emotional and physical distress as well as compensatory and punitive damages resulting from Linda's malfeasance in handling the trust. At a minimum, Nettie's estate would be entitled to compensatory damages equal to the funds she would have received from the trust during her lifetime absent Linda's misconduct. Further, one state court has already indicated that Nettie would be entitled to recover attorney's fees incurred in obtaining an accounting from Linda. An accounting was ordered in 1990 and has yet to be provided. Under the circumstances of this case, regardless of how the components of the Nettie Smith estate claim are labeled, damages well in excess of the settlement amount are well within the realm of possibility. Linda's objections to the Nettie Smith estate settlement are meritless.

Remaining Motions

In addition to the motion for approval of the settlements, there are a host of related motions that must be decided. The first motion to be addressed is the debtors' renewed motion to dismiss. The debtors have no cause for dismissal. Dismissal would substantially prejudice the estate's largest creditors. The history of delay and abuse of the judicial system by Linda Smith has been chronicled. Dismissal would simply result in more delay and prejudice to the primary creditors of the estate. Similarly, there are no legitimate reasons to impose any stays. The estate should be administered now in accordance with the requirements of the Code. Adversary proceedings should be litigated to their conclusion. All motions for dismissal or stay will be denied.

The debtor has moved to remove Larry Compton as Chapter 7 trustee. She has no grounds for the motion. Mr. Compton has simply followed his duties under the Bankruptcy Code. That is not cause for removal of a trustee.

The Romig Park Improvement Co. seeks to compel the Chapter 7 trustee to assume an executory management contract. Randall Farleigh, attorney for the company, indicated that the motion had been settled. Mr.       4 ABR 114  Farleigh and Mr. Giannini shall submit a proposed order.

All of the trustee's motions for sale of real and personal property will be granted, including any requests for shortened notice. The trustee has received offers far in excess of the scheduled values of the real estate. He has marketed the property diligently and fairly. There are no legitimate reasons to disallow the sales.

Conclusion

The settlements proposed by the Chapter 7 Trustee and Bernard McCoy are reasonable and will be approved. Because of my approval of the settlements, the debtor's remaining motions are not well taken. The estate shall be liquidated in accordance with the Bankruptcy Code. The trustee's motions to sell real and personal property will be granted.

A separate order and judgment will be entered consistent with this memorandum.

DATED: April 18, 1995.

BY THE COURT
DONALD MacDONALD IV
United States Bankruptcy Judge

1.       4 ABR 112  The court notes that Linda's sister, L. Diana Smith, initiated a state court action in January, 1995, seeking removal of Bernard and again alleging failure to notice the trust beneficiaries. The bankruptcy trustee has petitioned for removal of that action, and Diana Smith has moved for remand. Other than this recent attack by Diana, the court is unaware that any of the other trust beneficiaries have previously raised the issue of deficient notice, although Bernard has been acting trustee since August, 1990.