5 ABR 1: Ch. 13, full faith & credit, valuation, res judicata (Ross).
5 ABR 1: Ch. 13, full faith & credit, valuation, res judicata (Ross).
Ex-husband has valid judgment or judicial lien on Debtor's property where the Diamond H Ranch is located, as a result of a domestic relations judgment in Superior Court.
Debtor argues that the business was operated as a partnership and should be so treated in dissolution. It is not necessary to address that issue; it is sufficient that Judge Gonzalez granted a judgment in favor of Frank against Linda directly and tied it to the Diamond H land, rightly or wrongly.
The exact amount of Frank's secured claim created by this lien must be established in Bankruptcy Court since the Superior Court determination is for a date too remote to bind this Court in terms of res judicata.
Frank McQueary v. Linda McQueary (In re Linda McQueary [Diamond H Ranch]), 6/25/97.
Gregory Oczkus, Anchorage, for Frank; Diane Vallentine, Anchorage, for Linda.
5 ABR 6: Ch. 13, child support (Ross).
CSED's motion for relief from stay to proceed against Debtor for past-due child support granted.
At the confirmation hearing I indicated that the gravamen of Pacana (9th Cir. BAP 1991) concerned whether it was appropriate to grant priority classification to spousal support in light of the fact that there was no statutory authority at that time to do so. However, Pacana is more correctly read to provide that spousal support payments are not includable in a Ch. 13 plan.
In re Moreno, 6/30/97.
Brock Weidner, Juneau, for Debtor; Asst. AG Dan Branch.
5 ABR 11,
15: Ch. 13, proof of claim filing time, notice, child support, priority creditor (Ross).
The Court initially ruled that DSHS had failed to timely file a proof of claim for child support, but after noticing that it was using a different address than the one that appeared on the mailing matrix, invited a motion to reconsider, which DSHS filed.
DSHS did not receive notice of the bankruptcy filing giving the date of the §341 meeting and a notice of the necessity of filing proof of claim, nor did it get a copy of the plan and notice of the hearing. It did receive some notice that Debtor was in a Ch. 13 case by virtue of the notice it received that he was seeking an extension to file schedules and a plan. While lack of formal notice is not a defense if a creditor learns about the bankruptcy in time to file a proof of claim, DSHS did not know it was on a mailing matrix by virtue of Debtor's motion to extend time. It was in effect lulled into believing that it was on the matrix and due process requires allowance of its late-filed claim.
This is a priority claim filed by Debtor for $100. The claim was amended in the amount of $4,493 as a priority claim for payment of support. The priority is apparently based on §507(a)(7). There is an unexplained difference between §507(a)(7) (priority of distribution of spousal support claims) and §523(a)(5) (their dischargeability). For some reason, §507(a)(7) excludes assigned claims whereas §523(a)(5) includes spousal support claims assigned to a state for collection. DSHS may not be a priority creditor. But see Beverly (Bankr. WD Mo 1996) in which the Court held that a nondischargeable Ch. 13 support claim was a priority claim, even though it had been assigned for collection to a state agency. In any event, Debtor's objection will be treated as applying to both proofs of claim.
In re Johnson, 5/19/97 In re Johnson, 6/6/97
Gregory Oczkus, Anchorage, for Johnson; Asst. AG Scott Davis.
5 ABR 19: Ch. 11, divorce, option to purchase shares, classification, equitability of encumbrance (Ross).
In the divorce action between Debtor James Dodson and his wife Robin each was given the right to buy the other's 25% of DGC stock. It will be left to Judge Greene to resolve the dilemma of each exercising their options.
Robin is classified into a separate class. There are other impaired classes which have accepted the plan, and her claim is subject to being declared nondischargeable under §523(a)(15). An adversary proceeding is pending and the classification avoids the need to hold a trial on the issue.
Robin is an unsecured creditor. Greene ordered a pledge of James's DGC shares to secure his obligation to hold Robin harmless by paying debts assigned to him and payment of notes owed to her. This judicially mandated pledge is subject to avoidance as a preference.
The proposed encumbrance of the DGC stock by Denali State Bank is not inequitable to Robin. The plan provides a way to pay her in full for her $225,000 claim while letting James continue to operate.
In re Dodson, 6/5/97.
David Bundy (Bundy & Christianson), Anchorage, for Debtor; William Artus (Artus & Choquette), Anchorage, and Joseph Sheehan, Fairbanks, for Robin; Christopher Zimmerman, Fairbanks, for Denali State Bank.
5 ABR26: Ch. 7, "tardy" claim under §726(a)(2)(C), "timely" claim for purposes of §523(a)(3)(A) (Ross).
Debtors filed an adversary proceeding to establish dischargeability of claims of creditors who were not scheduled or listed in time to file a timely claim under FRBP 3002(c). A claims bar date was set in the main case and this is an asset case from which there will be property to distribute to creditors with allowed claims. Because no distributions have yet been made by the trustee, the creditors may still file a "tardy" claim under §723(a)(2)(C) since they had no knowledge of the bankruptcy in time to file a "timely" claim, and can file claims prior to distribution which will qualify them for the second tier of distribution, after the first-tier priority claims under §726(a)(1). Thus they can receive distribution with "timely" filed claims under §726(a)(2)(A), (B).
Ferrara v. Hawkins et al [In re Ferrara], 7/25/97.
William Artus (Artus & Choquette), Anchorage, for Debtors; Bernd Guetschow, Anchorage, for Defendant Hawkins; Daniel Weber, Anchorage, for Defendants Thayers; Michael Mills (Bankston & McCollum), Anchorage, for Trustee William Barstow.
5 ABR 38: Ch. 7, collateral estoppel (state court judgment) (Ross).
Summary judgment for Defendant: collateral estoppel does not apply. AS 09.68.116, which was the basis of the state court default judgment, does not address essential elements for nondischargeability under any of the sections listed under §523(c).
Meyer v. Braman [In re Braman], 8/12/97.
Peter Aschenbrenner (Aschenbrenner Law Offices), Fairbanks, for Meyer; Barry Jackson, Fairbanks, for Debtor.
5 ABR 42: Ch. 7, jurisdiction (objection to discharge), fraudulent transfer, nondisclosure, exemption (pension)
(9th Circuit) (unpublished).
Judge Holland's affirmance (3 ABR 371) of Bankruptcy Court's denial of discharge affirmed.
There is no jurisdictional defect. Sea Lion filed a timely motion for extension and Bankruptcy Court's finding of "cause" was not clearly erroneous.
Bankruptcy Court did not err in denying discharge pursuant to §727(a)(2) based on fraudulent transfer of property and nondisclosure of assets.
Cummings v. Sea Lion Corp. [In re Cummings], 5/14/97.
Lee Peterson, Anchorage, for Debtor; Kevin Clarkson, Anchorage, for Sea Lion.
5 ABR 44: Ch. 11, taxes, refund claim, equitable recoupment (Ross).
Debtor is barred from claiming an offset against the IRS's proof of claim because he did not file for a refund within the statutory time.
IRS's POC was filed while the statute was still open for Debtor to have sought a refund which became available when earlier tax years were adjusted. A timely POC might support an equitable recoupment claim even though a refund has not been timely sought otherwise, provided that the offset arises from the same transaction. If it arises from a different transaction, the offset is only allowable if it is itself timely claimed. The refund in this case arises from a different transaction and was not timely claimed, and therefore cannot offset the IRS's POC.
In re Wagner, 9/2/97.
Karl Walter, Colorado Springs, Colo., for Debtor; Stephen Baker (IRS), Anchorage.
5 ABR 55: Ch. 7, sanctions, petition filed for improper purpose (MacDonald).
Eklutna is entitled to Rule 9011(a) fees against Debtor.
Debtor's petition had marginal legal basis and was filed for an improper purpose. Property transfers and bankruptcy filing following her termination by Eklutna, which claimed that she had given herself and several employees excessive severance pay and salary, indicate bankruptcy "estate planning" of the highest order.
In re Fullenwider, 9/4/97.
Joan Travostino (Preston, Gates & Ellis), Anchorage, for Debtor; Sean Halloran (Hartig, Rhodes, Norman, Mahoney & Edwards), Anchorage, for Eklutna.
5 ABR 65: Ch. 11, maritime wage lien, taxes (Ross).
Employment taxes should be deducted from a fund dedicated to paying maritime wage lien claimants before the net is paid to the seamen.
The seamen have a second priority maritime lien, after in custodia legis expenses. Resolution centers on accommodating maritime lien law with tax laws, not bankruptcy law.
In re Cold Sea International, Midas Asset Management, and Atlas Asset Management, 9/15/97.
Thomas Bucknell & Edwin Sato (Bucknell Stehlik), Seattle, for Debtors; Steven Shamburek (Farleigh & Shamburek), Anchorage, for wage claimants; Beard, LeDoux, Stacey & Trueb, Anchorage, for injured seamen; Stephen Baker (IRS), Anchorage.
5 ABR 70: Ch. 7, wrongful death, withdrawal of reference, abstention, remand, maritime law (MacDonald).
Recommended that wrongful death Defendant/ Debtor Durheim's motion to transfer (withdraw reference) and Plaintiffs' motion to abstain and remand be granted.
Plaintiffs filed a wrongful death claim against Durheim in State Superior Court. Durheim has a $1 million liability policy. Just before close of discovery Durheim filed Ch. 7, following which Plaintiffs moved for relief from stay, which was granted. Defendants then removed to Bankruptcy Court and asked that the case be transferred to US District Court. Plaintiffs then moved to abstain and remand to State Court.
Wrongful death claims are excluded as core proceedings, absent permissive abstention the district court must order that PI tort and wrongful death claims be tried either in the district court where the bankruptcy is pending or in the district court where the claim arose, and a bankruptcy judge can only conduct a jury trial with consent of the parties. Notwithstanding maritime law, abstention is warranted pursuant to Tucson Estates.
Santos and Ehrenfried v. Durheim and Alaska Aquatics of Anchorage [In re Durheim], 9/29/97.
Thomas Evans (Hicks, Boyd, Chandler & Falconer), for Durheim and Alaska Aquatics; Daniel Fitzgerald (Atkinson, Conway & Gagnon), Anchorage, for Santos and Ehrenfried; George Kapolchok, Anchorage, for third-party defendant Norton.
5 ABR 78: Ch. 7, wrongful death, withdrawal of reference, abstention, remand, maritime law (Singleton).
As recommended by Judge MacDonald (5 ABR 70), this Court will abstain.
Congress and the Supreme Court have made clear that no admiralty or maritime claim brought in a state court under the "savings to suitors" clause can be removed to federal court even if admiralty or maritime law will provide the rule of decision. Court decisions have extended this prohibition on removal to actions brought under the Jones Act.
Santos and Ehrenfried v. Durheim and Alaska Aquatics of Anchorage [In re Durheim], 10/24/97.
Thomas Evans (Hicks, Boyd, Chandler & Falconer), for Durheim and Alaska Aquatics; Daniel Fitzgerald (Atkinson, Conway & Gagnon), Anchorage, for Santos and Ehrenfried; George Kapolchok, Anchorage, for third-party defendant Norton.
5 ABR 85: Ch. 7, attorney-client privilege, work-product privilege (Ross).
Trustee's motion for turnover of Winfree & Hompesch's files granted in part, denied in part.
Winfree & Hompesch is a potential target for a suit related to representation of WPI, Bonham, and/or APFC, all of whom appear to have perpetrated a massive securities fraud. §542(e) requires a lawyer holding recorded information about a debtor's property or financial affairs to turn over or disclose the information to the trustee, subject to any applicable privilege. W&H (succeeded by Winfree & Associates), has asserted on behalf of Bonham, APFC, and WPI an attorney-client privilege and a work-product privilege. Bonham has also asserted the attorney-client privilege.
Even if W&H's only client was Bonham, the crime-fraud exception to the attorney-client privilege waives the privilege with respect to the representation which involved WPI and APFC. W&H may independently claim a work-product privilege, even if Bonham cannot because of the crime-fraud exception. The work-product privilege will only protect opinion work product as opposed to fact work product. 4 documents relating to WPI and APFC should be protected by the opinion work-product privilege; the rest are to be made available to the trustee. On the other hand, the claim of privilege with respect to the Haskins Trust documents has not been overcome; those documents need not be turned over. Nor need W&H turn over its malpractice insurance policies.
In re Bonham (World Plus), 10/29/97.
Cabot Christianson & Gary Spraker (Bundy & Christianson), Anchorage, and James DeWitt (Guess & Rudd), for Trustee; David Carlson (Clapp, Peterson & Stowers), Fairbanks, for Winfree & Hompesch.
5 ABR 102: Ch. 7, dischargeability (malicious injury to property), sanctions (Ross).
Judgment for Debtor. $500 fees awarded to Debtor.
Debtor gave a deed-in-lieu of foreclosure to the builder. The deed did not specifically purport to transfer title to a spa. A state court suit is pending as to who has the best lien on the spa. Debtor did not act wilfully & maliciously to injure Norwest's property. At best there is a brief breach of contract.
Prosecution of this dischargeability proceeding appears substantially unjustified. Fees are appropriate.
Norwest Financial Alaska v. Brommels [In re Brommels], 10/15/97.
Paul Paslay, Anchorage, for Norwest; Darin Goff (Miles & Goff), Anchorage, for Brommels.
5 ABR 105: Ch. 7, tax lien, bona fide purchaser (9th Circuit).
Trustee's motion to avoid federal tax lien on promissory note pursuant to §545(2) and IRC 6323(b)(1) "denied" (Ross, 4 ABR 89, reversed, BAP affirmed).
Giving §§ 6321 and 6323 the dominant position they deserve, we hold (in a case of first impression in this circuit) that the powers conferred by §545(2) on the trustee as a hypothetical bona fide purchaser are not sufficient to satisfy conditions of IRC 6323. As the 6th Circuit has held, a good faith purchaser is not necessarily a purchaser "for adequate and full consideration."
Battley (Trustee) v. US [In re Berg], 8/14/97.
Gregory Oczkus, Anchorage, for Battley; Gary Allen et al (Justice Dept.), DC.
5 ABR 109: Ch. 7, attorney fees (Ross).
Motion to reconsider and amend decision regarding attorney fees granted.
Plaintiff moved to reconsider summary judgment to Defendant and award of fees.
The Court incorrectly assumed the complaint contained a count under 11 USC §523(a)(2). It did not, therefore attorney fees under §523(d) were improper.Plaintiff's conduct was not egregious, therefore attorney fees will not be awarded under any other theory.
The decision granting summary judgment is not reversed.
Norwest Financial Alaska v. Brommels [In re Brommels], 10/30/97.
Paul Paslay, Anchorage, for Norwest; Darin Goff (Miles & Goff), Anchorage, for Brommels.
5 ABR 111: Ch. 7, damages, conversion, justifiable reliance (Ross).
Judgment awarded to Plaintiff against Defendant for obtaining money and property under false pretenses and conversion.
Sanjay Talwar and Latha Subramanian had a romantic relationship. Sanjay cajoled Latha into lending him money with the understanding that it would be repaid if they did not marry. He also convinced Latha to buy a 4-plex, with title in their joint names and Sanjay managing it. He later married Molina, telling Latha that the marriage was a family-arranged event and he did not love Molina and was not sleeping with her. Latha later learned that Sanjay was living with his wife and that she was pregnant.
Latha was justified in relying on Sanjay's professions of love in loaning him money, until she learned that he was living with his wife and she was pregnant.Loans given after that time are not justified.
Latha also seeks rental damages, alleging Sanjay mismanaged the 4-plex. The evidence is too sparse to award damages to Latha for mismanagement.
Sanjay converted property (vehicles) which should have been paid over to Latha, and she is entitled to a judgment against Sanjay for the damages.
Latha is not entitled to judgment for infliction of emotional distress as there is insufficient evidence that Sanjay intended to or recklessly caused emotional damage to Latha by willful and malicious behavior.
Subramanian v. Talwar & Compton (Trustee) [In re Talwar], 11/17/97.
Joe Josephson (Josephson & Associates), Anchorage, for Subramanian; Chris Johansen, Anchorage, for Talwar; Rhonda Fehlen, Anchorage, for Compton.
5 ABR 122: Ch. 7, damages (rental, emotional) (Ross).
Plaintiff's motion for amendment of judgment or relief from judgment denied.
Latha Subramanian filed a motion asking the Court to revise its findings regarding failure to grant emotional damages and damages for lost rent.
The Court found that Sanjay Talwars' actions were not malicious, therefore emotional damages are not warranted.
Subramanian is not entitled to rental damages as the Court finds the case for nondischargeability of rental damages is weak, given the lack of testimony about a specific misrepresentation.
Subramanian v. Talwar and Compton (Trustee) [In re Talwar], 12/17/97.
5 ABR 126: Ch 7, preferred creditors, lease (aircraft) (Ross).
MarkAir Inc. filed Ch. 11, at which time it was leasing 3 jets from Defendants. Debtor was in substantial default on the payments at the time of filing but had made some payments within the preceding 90 days. During early bankruptcy proceedings, MarkAir and Defendants entered into stipulations regarding payment. The agreements were not an assumption of the leases or a settlement of §1110 rights. The case was later converted to Ch. 7 and the trustee filed preference actions to recover payments made to Defendants within 90 days of filing the Ch. 11. Defendants moved for summary judgment claiming the Debtor had committed to cure the defaults in the stipulations.
The stipulations did not offer the preference protection Defendants argue for. The stipulations were to govern operations until §1110 agreements could be worked out or until Debtor could impose its right to retain the aircraft pursuant to §1110 in the absence of an agreement.
Barstow (Trustee) v. Marubeni Airleasing (UK) Ltd., Marubeni UK PLC., Inter-Lease (USA) Corp., and Wilmington Trust Co.; Barstow (Trustee) v. Itochu Air Lease (Europe) Ltd., Marubeni Airleasing (UK) Ltd., and Wilmington Trust; Barstow (Trustee) v. Itochu Air Lease (Europe) Ltd., and Wilmington Trust Co.; [In re MarkAir] 11/20/97.
Michael Mills & Andrew Steiner (Bankston & McCollum), Anchorage, for Plaintiff; Ted Wellman (Davis, Wright, Tremaine), Anchorage, for Defendants.
5 ABR 134: Ch. 13, remediation, plan specification (MacDonald).
Confirmation of Debtors' second amended plan denied.
The requirement to clean up contaminated property cannot be discharged when Debtors remain in possession of the property. The plan is not confirmable because it does not make adequate allowance for the cost of remediation and because Debtors have failed to submit adequate proof indicating what the costs of remediation will be.The payment provisions of the plan must be specific.
In re Lewis (ABC Towing, Engine & Core), 8/13/97.
Daniel Weber, Anchorage, for Debtors; Peter Hallgrimson, Anchorage, for Municipality of Anchorage; Stephen Baker, Anchorage, for IRS; John Siemers (Burr, Pease & Kurtz), Anchorage, for creditor Floyd Carley; LeRoy Latta, Anchorage, for Dept. of Environmental Conservation; Hugh Wade (Wade & DeYoung), Anchorage, for creditor Adrian Gray.
5 ABR 137: Ch. 13, eligibility, sanctions (MacDonald).
Motion to dismiss conditionally granted. Motion to avoid lien, allowing secured claims, deferred. Motion for relief from stay denied. Motion for sanctions granted in part.
Knudsen and Richmond contend that Debtor's unsecured claims exceed the limit of §109(e). The Court disagrees with their calculations and finds the Debtor qualifies, prior to any lien invalidation.Accordingly, if Debtor withdraws his motion to avoid lien he will qualify for Ch. 13.
Debtor alleges Richmond and her attorney have refused to turnover Debtor's residence and personal property, which was levied on. Debtor was entitled to possession. There is no provision in the Alaska Statutes or Civil Rules which allows a judgment creditor to assume possession and control of a debtors' homestead simply by posting it. The stay has been willfully violated. Damages will be limited to reasonable attorney fees and costs incurred by Debtor for bringing the current motion for sanctions and the related adversary proceeding.
Gary Sleeper (Jermain, Dunnagan & Owens), Anchorage, for Debtor; Thomas Yerbich, Anchorage, for Susan Richmond and Bonnie Knudsen; Yale Metzger (Metzger & Millen), Anchorage, for Susan Richmond, Bonnie Knudsen & Alaska Diversified Electric.
5 ABR 145: Ch.7, attorney fees (prepetition), security interest (Ross).
Summary judgment denied.
Attorney Kirk Wickersham moved for summary judgment to establish nondischargeability of a debt for legal fees accrued before bankruptcy was filed, alleging Debtor misrepresented to him that certain collateral to secure attorney fees was free of liens when it was not.
There are material questions of fact not established in Wickersham's favor and he has not adequately justified the legal basis of his recovery.
Wickersham v. Smith [In re Smith], 12/29/97.
Walter Featherly & Rebecca Copeland (Koval & Featherly), Anchorage, and Kirk Wickersham (Wickersham & Associates), Anchorage, for Plaintiff; Ben Hancock, Anchorage, for Debtor.
5 ABR 155: Ch. 7, attorney fees (Ross).
Motion for reconsideration of 7th quarterly fee application denied. The Court will afford B&M the right to a hearing and remand the denial if the Court is convinced it was mistaken.
The fees were reduced because the motion to approve certain expenditures as administrative expenses was unnecessary and not beneficial to the estate. Alternatively, the amount sought is excessive.
Bankston & McCollum, Anchorage, for Trustee; John Siemers (Burr, Pease & Kurtz), Anchorage, for Trustee; Spencer Sneed (Bogle & Gates), Anchorage, for GPA; Paul Genender (Strasburger & Price), Dallas, for DFW.
5 ABR 162: Ch. 7, preference, ordinary course of business (Ross).
Motion to dismiss granted in part, denied in part.
Trustee William Barstow sued to recover an $11,037 preference. Enstar Natural Gas moved to dismiss, arguing that payments made by debtor Mark Express within 90 days of the petition date are exempt from avoidance because they were made in the ordinary course of business.
Given the short period of delinquency, the declaration of Enstar's credit manager provides sufficient proof that $1,964 of the claim was paid within the ordinary course of business. However, since the court has no detail on the actual history of the Debtor's prior dealings with Enstar to determine if the payments were in fact within the ordinary course of dealings between the parties with respect to the balance of $9,073, summary judgment is denied as to that amount.
Barstow (Trustee) v. Enstar Natural Gas [In re Mark Express], 2/5/98.
Gregory Oczkus, Anchorage, for Trustee; John Strachan, Anchorage, for Enstar.
5 ABR 167: Ch. 11, profit-sharing agreement, affirmative covenant (Ross).
Memorandum regarding claim of covenant running with land.
Viewpoint Ventures Partnership moved to sell 67 acres to National Bank of Alaska free of encumbrances. Millers, the previous owners, object to the sale on the grounds they retained a 20% profit-sharing interest of the proceeds received from an end-user of the lots developed by VVP. If there is an encumbrance on the land the sale cannot be closed as NBA will not accept title with this cloud.
Whatever the parties intended by the profit-sharing agreement, a statutory warranty deed delivered by Millers to VVP without any restrictions cut off Millers' rights to treat the profit-sharing agreement as running with the land. No covenants are implied. Millers have no right to an affirmative covenant running with the land that would obligate NBA to honor the profit-sharing agreement.
Ronald Goss (Shulkin, Hutton), Seattle, for Debtors; Rebecca Copeland (Koval & Featherly), Anchorage, for Millers; Michelle Boutin (Bundy & Christianson), Anchorage, for NBA; Peter Hallgrimson (Municipality of Anchorage); Bruce Moore (Law Offices of James Gottstein), Anchorage, for Alaska Louisiana Partners; Suzanne Cherot (Birch, Horton, Bittner & Cherot), Anchorage, for Connie Yoshimura.
5 ABR 172: Ch. 11, stay, bond (Ross).
Motion for stay pending appeal denied.
Millers request the Court to enjoin completion of a sale of real property to National Bank of Alaska.
A stay is not a matter of right, but subject to the Bankruptcy Court's discretion.
In this case, the equities strongly favor Debtors, who stand to lose substantial value if the deal is torpedoed.
If the decision to deny a stay pending appeal is overruled and a higher court requests this Court to set a bond amount, that amount is set at $550,000.
Ronald Goss (Shulkin, Hutton), Seattle, for Debtors; Rebecca Copeland (Koval & Featherly), Anchorage, for Millers; Michelle Boutin (Bundy & Christianson), Anchorage, for NBA; Peter Hallgrimson (Municipality of Anchorage); Bruce Moore (Law Offices of James Gottstein), Anchorage, for Alaska Louisiana Partners; Suzanne Cherot (Birch, Horton, Bittner & Cherot), Anchorage, for Connie Yoshimura.
5 ABR 176: Ch. 13, bad-faith filing, sanctions (joint & several), attorney fees (US District Court, Sedwick).
Bankruptcy Court's order imposing sanctions affirmed.
Scott Reisland was severely injured after being electrocuted while cleaning a chimney pipe. He sued Golden Valley Electric Association and Nenana Heating Services. GVEA settled for $1,450,000 which was used to establish a trust, pay attorney fees and purchase an annuity. Reisland proceeded to trial against Nenana. A unanimous verdict was returned in favor of Nenana. The Court entered a judgment of dismissal and awarded Nenana $170,000 attorney fees & costs. Reisland appealed, but did not post a supersedeas bond. When Nenana attempted to collect on the judgment, Reisland filed Ch. 13, which stayed collection. The Bankruptcy Court granted Nenana's motion to dismiss, finding Reisland's petition was filed in bad faith. The Bankruptcy Court imposed sanctions against Reisland and his attorney jointly & severally for the full amount of attorney fees & costs incurred by Nenana due to the filing of the Ch. 13 petition.
The Bankruptcy Court's findings are not erroneous. The judge did not abuse his discretion in determining sanctions of $14,170 in attorney fees and $1691 in costs as these are reasonable. The Bankruptcy Court did not abuse its discretion by imposing sanctions jointly & severally as the filing of the petition was for an improper purpose.
Reisland v. Nenana Heating Services [In re Reisland], 3/31/98.
James Szender, Anchorage, for Reisland; Michelle Boutin, (Bundy & Christianson), Anchorage, for Nenana.
5 ABR 186: Ch. 7, substantive consolidation, Ponzi scheme, alter ego, corporate veil piercing, reverse
piercing (Ross).
Motion to consolidate estate of the debtor with the estates of 2 non-debtors granted.
Raejean Bonham operated a Ponzi scheme through investment contracts issued in the name of World Plus Inc. and Atlantic Pacific Funding Corp., her related corporations. On 12/19/95 an involuntary Ch. 7 petition was filed, which was initially contested, then voluntarily converted to Ch. 11, then converted by the court to Ch. 7. Trustee Larry Compton moved to consolidate the estate of the Debtor with the estates of WPI and APFC, asking the consolidation be effective as of 12/19/95. He seeks that date for avoidance proceedings with respect to any transfers by Bonham, WPI and APFC.
1,111 proofs of claim for over $53 million have been filed. There are virtually no assets, except the potentiality of the Trustee recovering on fraudulent transfer or preference actions. The Trustee commenced 613 adversary proceedings. There has been vigorous opposition to consolidation from the targets of the avoidance actions. They argue the Trustee's presentation of the substantive consolidation motion as a contested matter, instead of by an adversary proceeding or voluntary petitions against WPI and APFC, is procedurally improper. That objection is overruled as the Trustee used the most effective procedure.
The Court has authority to order substantive consolidation of entities in an appropriate case. The reasons for consolidation here are: the financial affairs of Bonham, WPI and APFC are hopelessly entangled; the claimants were enticed into investing in a fraudulent Ponzi scheme, and the funds were used to pay other investors and support Bonham; neither Bonham, WPI, nor APFC has any assets to cover the millions of dollars in claims and Bonham, WPI and APFC should be treated as alter egos to allow recovery. Consolidation is effective as of 12/19/95.
James DeWitt (Guess & Rudd), Fairbanks, for Trustee; Cabot Christianson (Bundy & Christianson), Anchorage, Special Counsel for Trustee; John Burns (Birch, Horton, Bittner & Cherot), Fairbanks, and Rebecca Copeland (Koval & Featherly), Anchorage, for Joint Defense Committee; Brad Ambarian (Lane, Powell, Spears, Lubersky), Anchorage, for various defendants; Grant Courtney (Lane, Powell, Spears, Lubersky), Seattle, for various defendants; Randolph Haines (Lewis & Roca), Phoenix, for various defendants; Ronald Goss (Shulkin, Hutton), Seattle, for various defendants; Mark Davis (Davis & Davis), Anchorage, for various defendants; George Goerig (Goerig & Associates), Anchorage, for various defendants; William Satterberg Jr., Fairbanks, for various defendants; William Artus (Artus & Choquette), Anchorage, for various defendants; Barbara Schuhmann (Cook, Schuhmann & Groseclose), Fairbanks, for various defendants; Christopher Zimmerman (Barrett & Burbank), Fairbanks, for various defendants; Michael MacDonald (Downes, MacDonald & Levengood), Fairbanks, for various defendants; Douglas Blankenship, Fairbanks, for various defendants; Gary Foster, Fairbanks, for various defendants; Ken Wooten, Fairbanks, pro se; John Rosie, Fairbanks, pro se.
5 ABR 277: Ch. 7, passenger facility charges, Public Agencies (Ross).
Motion for summary judgment denied.
MarkAir filed Ch. 11 on 4/14/95 and converted to Ch. 7 on 11/7/95. 5 airport authorities (Public Agencies) moved for summary judgment to establish that they were entitled to funds held by the Trustee because of Passenger Facility Charges collected in trust from enplaning passengers.
The Ch. 7 Trustee does not have the same obligations as the Debtor or DIP to pay the PFCs. The Public Agencies have not established a reasonable nexus between the PFCs and the Ch. 7 estate. The Ch. 7 trustee of a defunct air carrier is not subject to imposition of civil penalties by the DOT. The Public Agencies are not entitled to equitable remedies.
Michael Mills (Bankston & McCollum), Anchorage, and Bret Maidman (Lewis & Roca), Phoenix, for MarkAir; Matthew Roy (Oppenheimer, Wolf & Donnelly), Minneapolis, and Patrick Gilmore (Atkinson, Conway & Gagnon), Anchorage, for Metropolitan; Jeffrey Fine & Paul Genender (Strasburger & Price) Dallas, for Dallas/Ft. Worth; Kathryn Black (Birch, Horton, Bittner & Cherot), Anchorage, and Isabelle Safora, Seattle, for Port of Seattle; Alexis Gabay & Anne Sarkinen (Corporation Counsel), Chicago, for City of Chicago; Frederick Carter (Jessop & Co.), Denver, for City & County of Denver; John Siemers (Burr, Pease & Kurtz), Anchorage, for Trustee; James Dann, Dep. Asst. General Counsel, DC, for DOT.
5 ABR 290: Ch. 7, non-core proceeding, report/recommendation, bad faith, attorney fees (Ross).
Report and recommendation to US District Court.
Quigley was a builder who contracted with Kennedys to build a home. NBA provided a construction loan. The house was 95% complete when Quigley filed Ch. 7 and all work ceased. Kennedys negotiated with the trustee to purchase the home and the Court approved the sale. While efforts to conclude the sale were underway, the Trustee entered into a global settlement of all remaining open issues between NBA and the estate, including Kennedy's house. Meanwhile, Kennedys commenced negotiations with Columbia Investments, which culminated in transfer of their interest in the house to Columbia. Neither the Trustee nor NBA knew of the proposed transfer at the time of the settlement hearing. Columbia then refused to purchase the house under the terms of the agreement that Kennedys had negotiated with the Trustee. This refusal was without substantial justification. NBA wants to get paid or get the property back. Columbia wants to acquire the property for a pittance. Kennedys want to be free of the litigation since they have left the state.
This adversary proceeding is between NBA, Columbia and Kennedys. The bankruptcy estate has an interest in the outcome.
This is a non-core proceeding. The following report & recommendations are submitted to District Court: Terms of the earnest money agreement remain enforceable and the sale should close or the house should be returned; The deed of trust and related documents are still in existence and enforceable. NBA is entitled to foreclose if Kennedys or Columbia do not close within a reasonable time; Bankruptcy Court's order authorizing the trustee to transfer title free & clear of liens to NBA is reaffirmed; Kennedys or Columbia should be required to advise NBA whether or not they will elect to complete purchase of the house. If they elect not to purchase they should not be entitled to any recovery except return of the earnest money and a vendee's lien between $5,645 and $17,000; Kennedys should pay rent of $750 per month; NBA is prevailing party and should be awarded attorney fees of $85,747 as Columbia's actions have been vexatious and in bad faith; except as provided above, all claims by Columbia against NBA should be dismissed with prejudice.
Joseph Moran (Delisio, Moran, Geraghty & Zobel), Anchorage, for NBA; Paul Koval (Koval & Featherly), Anchorage, for Columbia; J.L. McCarrey (McCarrey & McCarrey), Anchorage, for Columbia/Kennedys; Cabot Christianson & Gary Spraker (Bundy & Christianson), Anchorage, for Barstow (Trustee).
5 ABR 346: Ch. 7, quiet title (mining claims), core/non-core proceeding, judicial estoppel (US District Court,
Holland).
Trustee's quiet title action is a core proceeding.
Gold King Mines filed Ch. 11, later converting to Ch. 7. Eric & Paul Wieler formed Gold King and quitclaimed mining claims to the corporation. Subsequently, but before the bankruptcy, they inherited additional interests in the mining claims. The Bankruptcy Judge concluded that Wielers conducted their own affairs and those of Gold King as if the corporation was the sole owner of the claims, and determined that they were judicially estopped from claiming individual interests, and that this was a core proceeding.
The Bankruptcy Court properly concluded that the dispute over ownership of the mining claims was a core proceeding.
Leonard (Trustee), v. Wieler et al [In re Gold King Mines], 4/23/97.
Cabot Christianson (Bundy & Christianson), Anchorage, for Trustee; C.R. Kennelly (Stepovich, Kennelly & Stepovich), Anchorage, for Eric & Paul Wieler; Carl Bauman (Hughes, Thorsness, Powell, Huddleston & Bauman), Anchorage, for Lisa Rogers & Marianne Pilant; Mark Nunn, Anchorage, for Harvey Wieler.
5 ABR 359: Ch. 13, strip-down, attorney fees (9th Circuit) (unpublished).
Judgment affirmed in part, vacated in part.
In 1/90 Donald Dunlap filed Ch. 13. Bankruptcy Court confirmed the reorganization in 7/90. The plan contained a strip-down provision which limited NBA's claim, secured by a mortgage on Dunlap's residence, to the fair market value of the property and made the remaining debt unsecured and hence dischargeable. NBA appealed confirmation but did not seek a stay pending appeal. District Court affirmed Bankruptcy Court's confirmation. Dunlap completed the required payments in 3/93. When Bankruptcy Court proposed to enter a discharge, NBA objected as its appeal from the confirmation remained pending. Dunlap did not move for a discharge. In 6/93 the Supreme Court decided strip-down provisions were invalid. NBA then moved for relief from confirmation based upon the change in law. Bankruptcy Court denied the motion and issued notice of intent to enter discharge. NBA objected and appealed. District Court vacated Bankruptcy Court's order, confirmed the plan by reinstating NBA's secured claim in it's full amount, eliminating the strip-down provision, and awarding NBA attorney fees. Dunlap appeals.
Bankruptcy Court properly deferred discharging NBA's unsecured claim against Dunlap pending appeal. Because the full extent of Dunlap's obligation to make payments under the plan remained undecided, it was not practicable to discharge its claim until the appeal had been decided.
Dunlap contends that because NBA failed to obtain a stay he was entitled to discharge upon completion of the plan and thus NBA's appeal is moot and Bankruptcy Court on remand could not modify terms of the plan. However, an appeal does not become moot notwithstanding the absence of a stay of the bankruptcy court's decision.
Bankruptcy Court erred in awarding attorney fees to NBA. Where the litigated issues involve not basic contract enforcement questions, but issues peculiar to federal bankruptcy law, attorney fees will not be awarded absent bad faith or harassment.
Dunlap v. National Bank of Alaska [In re Dunlap], 12/24/97.
Johnny Gibbons (Dickerson & Gibbons), Anchorage, for Dunlap; Richard Ullstrom (Routh & Crabtree), Anchorage, for NBA.
5 ABR 367: Ch. 7, fraudulent conveyances, frivolous appeal (US District Court, Holland).
Bankruptcy Court's decision denying motions to set aside judgments and reopen adversary proceedings affirmed.
Evalyn Preblich filed Ch. 11, later converting to Ch. 7. The Trustee commenced an adversary proceeding to recover several parcels of real property the Debtor had transferred to her son and husband within 1 year of filing. The Trustee sued Kenneth & Joseph Preblich as transferees of fraudulent conveyances. Bankruptcy Court entered an order authorizing sale of the property. Prebliches filed motions to set aside judgments and reopen adversary proceedings, which were denied.
Prebliches' motions were totally without merit and this appeal is frivolous.
Battley (Trustee) v. Preblich [In re Preblich], 1/14/98.
Michelle Boutin (Bundy & Christianson), Anchorage, for Trustee; Helen Simpson, Anchorage, for Preblich.
5 ABR 376: Ch. 11, oil & gas production payment, security interest, avoidance, assignment, working interest,
interest in land (MacDonald).
TAC's motion for summary judgment denied. SPC's motion for partial summary judgment granted. SPC's motion as to transfer of "additional" collateral granted; transfer avoided.
In 1983 Alaska granted 2 Competitive Oil & Gas Leases to Richard Wagner. In 1989 Stewart Petroleum Co. (SPC) acquired 100% of the working interest & 82.5% of the royalty interest. On 2/25/92 The Aleut Corp. (TAC) paid SPC $1,250,000 and executed an Oil & Gas Production Payment and a Security Agreement. SPC was to pay TAC $1,562,500 from revenues accruing to 1.875% working interest, due by 2/25/96. To secure payment a security interest was given in an undivided 1.875% working interest. On 2/25/92 the parties executed a financing statement that was recorded in the Anchorage Recording District & UCC Central. SPC did not satisfy the obligation and TAC requested the overdue payment immediately & additional security if SPC was unable to make payment. On 5/15/96 SPC executed a note. On 7/17/96 SPC executed a 2nd note. No payments were made. On 8/28/96 SPC executed a 3rd note & a security agreement granting TAC another 1.875% security interest. A financing statement was also executed & recorded with UCC Central. On 9/13/96 an involuntary Ch. 11 was filed against SPC. TAC's claim was treated as a disputed secured claim. TAC received distributions of $377,544. SPC has $828,789 in escrow to cover TAC's claim if it is found to be fully secured.
TAC's interest is not a production payment. SPC's obligation to pay TAC was not contingent on production. The 3 notes executed after the deadline establish installment payment schedules & payment deadlines with no relation to production revenues.
TAC's 1.875% working interest cannot be avoided. The security interest in a working interest in the leases is an interest in land. SPC seeks to avoid, as conveyance of working interest was not acknowledged & conveyance of a real property interest cannot be perfected by recording a financing statement. The financing statement was sufficient to convey as security the working interest, and the financing statement's existence in the land records is sufficient to lead a reasonable person to inquire further regarding TAC's interest.
The 1.875% working interest acquired in 8/96 is avoidable. The transfer was made within 90 days of filing and was on account of an antecedent debt made while the debtor was insolvent.. It was not recorded in the Anchorage Recording District but was filed with UCC Central.
Issues regarding the value of TAC's security interest and whether SPC can avoid a payment made to TAC in 5/96 remain for determination.
The Aleut Corp. v. Stewart Petroleum [In re Stewart Petroleum], 4/20/98.
Erik LeRoy, Anchorage, for SPC; Paul Koval (Koval & Featherly), Anchorage, for TAC.
5 ABR 398: Ch. 7, student loan, state agency, 11th Amendment (US District Court, Singleton).
Appeal dismissed.
Lance & Sheri Nutter borrowed from the Stateto pay their college tuition. Debtors filed bankruptcy to free themselves from the burden of repaying their student loans. Bankruptcy Court concluded it would be an undue hardship to require Debtors to repay all the debt, but they did have earning capacity to repay a significant part. Debtors appealed.
Appeal dismissed for lack of subject matter jurisdiction, because Debtors' adversary action against a state agency is barred by the Eleventh Amendment.
Nutter v. Alaska Commission on PS Education, 5/22/98.
AAG Teresa Williams, Anchorage, for AK; Nutters, N. Pole, pro se.
5 ABR 402: Ch. 7, Ponzi scheme, fraudulent conveyances, corporate veil piercing, alter ego (Ross).
Discharge denied.
RaeJean Bonham operated a Ponzi scheme with creditors filing $40 million in unsecured claims for unrepaid investments. (See 5 ABR 186.)
Payments from a Ponzi scheme within 1 year of the petition date are fraudulent conveyances. Debtor used 2 corporations as her own pocket book, and for an illegal & fraudulent purpose. The corporate veil should be pierced. An individual debtor can be denied a discharge where the transfers were property of her alter ego corporation.
Compton (Trustee) v. Bonham [In re Bonham dba World Plus Inc.], 5/21/98.
James DeWitt (Guess & Rudd), Fairbanks, for Compton; Rebecca Copeland (Koval & Featherly), Anchorage, for Shilanski & Roosa; Fred Odsen (Hughes, Thorsness, Powell), Anchorage, for Rentschler, Yoder & McCormick; Kenneth Ringstad, Fairbanks, for Airport Rentals; John Michaels (Rose, Brouilette & Shapiro), Kansas City, for Jackson; Andrew Cameron, San Francisco, for SEC; Jon Dawson (Davis, Wright, Tremaine), Anchorage, for Delta; RaeJean Bonham, Fairbanks, pro se.
5 ABR 406: Ch. 11, good faith filing, appointment of trustee, plan exclusivity (time) (MacDonald).
Motion for dismissal or appointment of trustee and shortening time for plan exclusivity denied.
Sea Hawk operates a seafood processing plant. Valdez Fisheries Development Association (VFDA) is a non-profit corporation operating a fish hatchery. VFDA has been capitalized with $8 million in loans from Alaska. The State has a perfected security interest. Alyeska Pipeline Service Co. was interested in leasing Sea Hawk's plant and negotiated the possible sale to VFDA with a leaseback to Alyeska. The sale did not close. Sea Hawk sued VFDA for breach of contract, misrepresentation and promissory estoppel. VFDA brought a 3rd-party action against Alyeska. State Superior Court dismissed VFDA's complaint & awarded Alyeska over $53,000 in attorney fees & costs. A jury rendered a verdict against VFDA for Sea Hawk of $1,535,974. VFDA has appealed. VFDA made numerous attempts to avoid execution during the appeal, which were denied.
VFDA received a notice of default from the State and turned over $1.7 million cash and $410,000 in receivables. The State then agreed to a new $1 million operating loan. Sea Hawk filed a fraudulent conveyance action against VFDA and the State. Unable to stay execution, VFDA filed Ch.11. Sea Hawk seeks dismissal of VFDA's petition on the grounds of bad faith, moves for appointment of a trustee, and seeks to shorten the time for plan exclusivity.
VFDA's Ch. 11 is a good faith filing. Debtor's management has not been grossly incompetent or fraudulent and there are no grounds for the appointment of a trustee or shortening the time for plan exclusivity.
In re Valdez Fisheries Development Assoc., 6/8/98.
Paul Koval (Koval & Featherly), Anchorage, for Valdez; Cabot Christianson (Bundy & Christianson), Anchorage, Kevin Sullivan (Sullivan & Thoreson), and John Young (Young, deNormandie & Oscarsson), Seattle, for Sea Hawk; Andrew Behrend (Heller, Ehrman, White & McAuliffe), Anchorage, for Alyeska; Diane Vallentine (Jermain, Dunnagan & Owens), Anchorage, for Alaska.
5 ABR 417: Ch. 7, unconscionability, HEAL obligations, student loan, lifestyle changes (Ross).
Summary judgment denied.
Douglas Lien had prepetition Health Education Assistance Loans. Within a year after his discharge he married his long-time domestic partner, Carla. Shortly thereafter Liens discovered a chronic medical problem of Carla's was more serious than suspected, resulting in substantial post-discharge medical expenses.
Dr. Lien is not barred from getting an "unconscionability" discharge of the HEAL loan, unless the government can establish the marriage was principally to avoid the HEAL obligation.
Lien v. HHS [In re Lien], 7/2/98.
Gregory Oczkus, Anchorage, for Lien; AUSA Elizabeth O'Leary.
5 ABR 423: Ch 7, judicial lien, Permanent Fund Dividend, levied property (ownership), (US District Court,
Holland).
Bankruptcy Court affirmed.
Ketchikan Credit Bureau (KCB) obtained a judgment against John Jousma and had a writ of execution filed against his Permanent Fund Dividend. The Dividend was issued and a portion was garnished. Jousma filed bankruptcy and successfully got the garnished funds released to him. KCB appealed.
Jousma had significant interest in the portion of his PFD which was garnished. The debtor owns the levied property until it is sold by order of the court or until the court directs payment of the debtor's money to a creditor. Within 90 days of filing, Jousma still owned the property and it should have become part of the bankruptcy estate subject to KCB's writ. Mere service of a writ does not divest the debtor of ownership of money.
John Jousma, Anchorage, pro se; R.W. Shaffer, Ketchikan, for KCB.
5 ABR 430: Ch. 13, right of way, best interest of creditors test, willful violation of stay, bad faith filing,
sanctions (MacDonald).
Debtors Craig Puddicombe and John Dunham acquired property on the Knik River in 1983. Conner, Fitzgerald, Kracker & Fidler traversed the Puddicombe & Dunham property for access to their mining claims. Debtors filed suit against the 4 in 1991 to quiet title to the property. Kracker & Fidler settled before trial. Conner & Fitzgerald went to trial and lost. Attorney fees & costs of over $9800 were awarded to Puddi-combe & Dunham. Fitzgerald alone appealed. Puddicombe & Dunham executed against Fitzgerald's property during the appeal. The Alaska Supreme Court reversed the superior court, finding a public right-of-way existed on the property & remanded for determination of the location and extent. The prior attorney fee award was vacated and Superior Court awarded $5923 to Fitzgerald as reimbursement of fees previously collected by Puddicombe & Dunham. Superior court also awarded $21,963 in public interest attorney fees and $1146 in costs. Puddicombe & Dunham appealed the superior court's new judgments, filed for Ch. 13, and moved for relief from the automatic stay to continue their appeal.
Fitzgerald and other parties allege Puddicombe's and Dunham's cases should be dismissed for cause as bad-faith filings. Considering the factors in Estus, the Debtors plans are not confirmable. Motivation and sincerity of the Debtors are very suspect. They are solvent and have large earning capacities. Confirmation denied, petitions will be dismissed.
Conner & Fitzgerald have moved for sanctions, but they must file separate motions.
Conner violated the automatic stay by making post-petition filings with the Alaska Supreme Court. Puddicombe & Dunham are entitled to fees & costs. Any sanctions against Conner will be offset by sanctions awarded to Conner for Debtors' bad-faith filings.
Jeff Carney, Wasilla, for Puddicombe; Erica Kracker, Palmer, for Kracker & Fidler; Michael Conner, Palmer, pro se; JoAnne Fitzgerald, Wasilla, pro se.
5 ABR 443: Ch. 7, consolidation of appeals (District Court, Singleton).
Motion to consolidate appeals granted.
RaeJean Bonham operated a Ponzi scheme through 2 corporations. (See 5 ABR 85, 186, 402.) The Trustee is pursuing a number of the investors, seeking recovery of funds allegedly paid to them. An order was entered by Bankruptcy Court combining assets & liabilities of Bonham and the corporations. A number of appeals have been filed from this order. The Trustee moved to consolidate all appeals from the order of consolidation.
Alford v. Compton (Trustee) [In re Bonham], 7/23/98.
Cabot Christianson (Bundy & Christianson), Anchorage, for Trustee; Mark Davis (Davis & Davis), Anchorage, for DeRamus and Springer.
5 ABR 449: Ch. 7, subject jurisdiction, preference claim, fraudulent conveyances, relation back, actual fraud,
usury (Ross).
Motions to dismiss denied.
RaeJean Bonham operated a Ponzi scheme through 2 corporations. (See 5 ABR 85, 186, 402, 443.) The Trustee seeks to recover funds paid to Todd and Penny Vandenberg of Iowa. Defendants move to dismiss.
Bankruptcy Court clearly has subject jurisdiction as the Trustee's action arises out of a bankruptcy case, District Court has referred bankruptcy matters to Bankruptcy Court, fraudulent transfer and preference actions are core proceedings and they effect the bankruptcy estate directly.
The Trustee can amend after the two-year statute because the claims relate back to the date of the original complaint.
Alaska is the choice of law for the usury claims because there are at least as many Alaskan contacts to
the transactions as Iowan, and the high interest rate offends Alaska law.
In the case of actual fraud by Debtors (versus constructive fraud), the Trustee can recover the payments made, even if the investor did not recover the original investment in full.
Compton (Trustee) v. Vandenberg [In re Bonham], 8/18/98.
Cabot Christianson & Gary Spraker (Bundy & Christianson), Anchorage, for Trustee; Jerrold Wanek (Garten & Wanek), Des Moines, for Vandenbergs.
5 ABR 460: Ch. 7, Federal Debt Collection Procedures Act claims (Ross).
The Trustee seeks to avoid transfers made by Debtors to Defendants by using the Federal Debt Collection Procedures Act. Defendants challenge the Trustee's authority to use the FDCPA.
The SEC obtained a judgment in District Court requiring Debtors to disgorge $2,492,000, to be disbursed in the main bankruptcy case. The SEC has also filed a proof of claim. It has not sought to use FDCPA avoidance powers to obtain judgments or disgorgement from the investors in the Ponzi scheme.
The Trustee has no avoidance powers under FDCPA because recovery stemming from the SEC disgorgement order does not involve a "debt" of the United States.
In re Bonham [Bonham Recovery Actions], 8/28/98.
Cabot Christianson & Gary Spraker (Bundy & Christianson), Anchorage, for Trustee; David Parry (Birch, Horton, Bittner & Cherot), Fairbanks, and Rebecca Copeland (Koval & Featherly), Anchorage, for Joint Defense Committee; Brad Ambarian (Lane, Powell, Spears & Lubersky), Anchorage, Grant Courtney (Lane, Powell, Spears & Lubersky), Seattle, Ronald Goss (Shulkin & Hutton), Seattle, and Gregory Oczkus, Anchorage, for Defendants; RaeJean Bonham, Fairbanks, pro se.
5 ABR 466: Ch. 7, judgment lien, exemption (homestead) (MacDonald).
Motion to avoid lien denied.
Debtor Teresa Povey-Martinez and Mark Henry divorced in 1984. Under the decree she received real property in Oregon that if she were to sell, the proceeds would be pro-rated between Debtor and Henry following receipt of at least $80,000 by Debtor. She remarried and purchased a home in Alaska. Debtor sold the Oregon property and utilized all the proceeds, including some for the Alaska residence. Henry tried to obtain his share of the proceeds, finally obtaining a judgment in Oregon and recording it in Alaska. Debtor filed Ch. 7, claiming a homestead exemption, and filed a motion to avoid Henry's judgment lien against her homestead.
Debtor wrongfully appropriated sales proceeds to her new home. She knew of her obligation to pay a share of the proceeds to Henry, but willfully took his rightful share. There is a substantial connection between the misappropriated proceeds and her equity in the home. Because of that connection the property is not exempt and the motion to avoid lien is denied.
In re Povey-Martinez, 7/28/98.
Daniel Bruce (Baxter, Bruce, Brand & Douglas), Juneau, for Povey-Martinez; Eric Kueffner (Faulkner & Banfield), Juneau, for Henry.
5 ABR 471: Ch. 7, Quota Shares, Individual Fishing Quotas, estate property (IFQ/QS rights), prebankruptcy
potential property, discharge revocation (Ross).
Motion for partial summary judgment to declare IFQ/QSs property of estate granted. Motion that discharge should not be revoked denied.
George Schmitz fished for sablefish 1988-1990, qualifying for IFQ/QSs. He filed Ch. 7 in 4/92, not disclosing potential fishing rights or notifying the Trustee after the fact that he was applying for or had acquired IFQ/QSs, which were awarded in 1996. Schmitz sold some of the rights to a 3rd party for $2205 and the balance of the rights to brother-in-law George Sliney who resold for $44,361. The Trustee seeks a declaration that the IFQ/QS rights were property of the estate and to recover $2205 from Schmitz and $44,361 from Sliney and Schmitz. He also seeks to revoke Schmitz's discharge.
The IFQ/QSs are so rooted in Schmitz's prebankruptcy past that they should be included as property of the estate.
Battley (Trustee) v. Schmitz and Sliney [In re Schmitz], 7/23/98.
William Artus (Artus & Choquette), Anchorage, for Trustee; Cabot Christianson & Gary Spraker (Bundy & Christianson), Anchorage, for Schmitz; Robert Crowther, Anchorage, for Sliney.
5 ABR 487: Ch. 7, quiet title (Ross).
The bankruptcy estate owns lots 1-33, Tract B in Petersburg. Debtors Raymond & Gladys Olsen conveyed the lots to their son John postpetition, but in 1992 title was quieted in the name of the Trustee. Nonetheless John conveyed Lot 1 to Phyllis Hernandez in 1996. Hernandez and Michael Medalen sought a building permit for the lot. John has erected a barrier preventing access to the 33 lots in Tract B, and to Tract A, a contiguous parcel also owned by the Trustee. The Trustee filed motions for summary judgment against John, Hernandez and Medalen. None of the Defendants filed an opposition or attended oral arguments.
It has been established that the lot conveyed to Hernandez was property of the estate. Summary judgment will be granted that title should be quieted against Hernandez and Medalen. The Trustee is entitled to recover possession of the lot.
Summary judgment will be entered against John quieting title to Tract A, and enjoining him from blocking the rights-of-way to Tracts A & B if he does not respond in the time granted by the Court.
Zerbetz (Trustee) v. Hernandez, Medalen & Olsen, 7/28/98.
Bernd Guetschow, Anchorage, for Trustee; Hernandez, Medalen & Olsen, Petersburg, pro se.
5 ABR 493: Ch. 7, assignment of rights, attorney fee judgment lien, fraud, rescission of contract, attorney
fees & costs (MacDonald).
Attorney Warren Kellicut had an attorney fee judgment lien of $66,000 against Eugene Brooks/General Development Inc., who filed Ch. 7. Otto Holta purchased Kellicut's lien through fraudulent and material misrepresentations. Kellicut is entitled to rescission of the contract and attorney fees & costs.
Holta v. Barstow (Trustee) and Kellicut [In re Brooks], 8/10/98.
Gary Sleeper (Jermain, Dunnagan & Owens), Anchorage, for Trustee; Cabot Christianson (Bundy & Christianson), Anchorage, for Kellicut; Otto Holta, pro se.
5 ABR 503: Ch. 13, venue (MacDonald).
Motion to change venue granted.
Susan Richmond has a judgment against Frank Pluid for $50,000 in child support. Bonnie Knudsen has a $220,000 judgment against Pluid for sexual assault. Richmond & Knudsen have sued Pluid and his parents alleging fraudulent transfer of real property in Montana from Pluid to his parents. The parents then transferred the property to Pluid's siblings. Pluid filed Ch. 13 in Alaska. The Trustee substituted as the plaintiff. Because the transfer occurred more than a year before Pluid filed, the Trustee cannot avoid as a fraudulent transfer under bankruptcy, but must instead rely on Montana's fraudulent conveyance statute. Defendants allege improper venue and move to change venue.
This proceeding is not properly venued in this district. This is a local controversy, governed by Montana law and pertaining to Montana real estate. It should be tried in the "home court".
Compton (Trustee) v. Pluid & Jensen [In re Pluid], 9/7/98.
Thomas Yerbich, Anchorage, for Trustee; Pluid & Jensen, pro se.
5 ABR 510: Ch. 7, estate property (insurance policy) (MacDonald).
Trustee's complaint dismissed, motion for preliminary injunction denied.
Martech was a contractor who performed diving & marine services for oil companies, and environmental contracting and government construction projects. Martech had a $5 million officers and directors policy from which several piecemeal settlements have been made. Less than $500,000 of the policy remains. The Trustee and other creditors have sued KPMG Peat Marwick on a variety of grounds and KPMG has filed a third part complaint against some of Martech's officers and directors. The Trustee seeks a declaratory judgment that the policy proceeds are property of the estate and that KPMG's suit against the officers & directors violates the automatic stay. The Trustee seeks injunctive relief against the underwriters and KPMG forbidding "further" violations of the stay, and the Trustee seeks to force some of the law firms representing Martech's former officers and directors to turnover any fees they received from the underwriters. Defendants have submitted motions to dismiss for failure to state a claim.
The proceeds of Martech's officers and directors policy have insufficient potential impact on the Ch. 7 estate to be considered property of the estate. KPMG's suit against Martech's officers and directors does not violate the automatic stay and the Trustee is not entitled to injunctive relief or turnover of fees.
Battley (Trustee) v. Tisdale et. al. [In re Martech], 11/10/98.
Mark Sandberg, Anchorage, for Trustee; Eugene Elsbree, San Francisco, for Lloyds Underwriters, Commercial Union Assurance Co., Aegon Insurance, Zurich Reinsurance, CNA Reinsurance of London, Shere Drake Insurance, Compagnie D'Assurances Maritimes Aeriennes et Terrestres per Camomile Underwriting Agencies and United National Insurance Co.; Brent Cole, Anchorage, for Marston & Cole; Mark Davis, Anchorage, for Davis & Davis; Charles Cole, Fairbanks, for Tisdale & Cole; Robert Owens, Anchorage, for Copeland, Landye, Bennett & Wolf; David Devine, Anchorage, for Groh Eggers; Jared Kopel, Palo Alto, for Wilson, Sonsini, Goodrich & Rosati; Bruce Bookman, Anchorage, for KPMG; Mark Glore, Anchorage, pro se; William Nicholson, Louisiana, pro se.
5 ABR 523: Ch. 7, fraudulent conveyance actions, judgment creditor requirement (Ross).
Defendants' motion for dismissal denied.
The Trustee has filed avoidance actions with counts based on 11 USC §544(b) and either the Alaska Fraudulent Conveyance Act or Alaska common law. Some Defendants argue these counts cannot be maintained unless there was a judgment creditor when the bankruptcy was filed.
The requirement of a judgment creditor as a condition of a fraudulent conveyance action under common law or statute has been abrogated by modernization of the Rules. Alaska case law does not require a prior judgment to bring a fraudulent conveyance action.
In re Bonham Recovery Actions, 11/11/98.
Cabot Christianson (Bundy & Christianson), Anchorage, for Trustee; Brad Ambarian (Lane, Powell, Spears, Lubersky), Anchorage, for moving Defendants; Grant Courtney (Lane, Powell, Spears, Lubersky), Seattle, for moving Defendants; William Satterberg, Fairbanks, for Defendants joining in motion; Michael MacDonald (Downes, MacDonald & Levengood), Fairbanks, for Defendants joining in motion; David Parry (Birch, Horton, Bittner & Cherot), Fairbanks, for Joint Defense Committee; Rebecca Copeland (Koval & Featherly), Anchorage, for Joint Defense Committee; RaeJean Bonham, Fairbanks, pro se.
5 ABR 535: Ch. 7, fraudulent transfer actions (Ross).
Defendants' motion for reconsideration denied.
Various Bonham Recovery Actions (BRA) defendants filed a motion for reconsideration of the Order denying a motion to dismiss the Trustee's counts under §544(b). The Trustee can bring a fraudulent transfer action under §544(b) and Alaska law if there was an unsecured creditor who could have brought one on the petition date. The Trustee can bring a fraudulent transfer action under §544(b) to vindicate the rights of an unsecured creditor.
In re Bonham Recovery Actions [In re Bonham], 11/30/98.
See attorneys in 5 ABR 521