7 ABR 1: Ch. 7, Ponzi scheme, nunc pro tunc substantive consolidation (Ninth Circuit).

Alexander et al v. Compton [In re Bonham], 10/4/00.

Ronald Cross, Seattle, and Gerald Smith, Phoenix, for appellants Richard Alford et al.; Crant Courtney, Seattle, for appellants David Betschart et al.; Rebecca Copelmld (Koval & Feathefty), Anchorage. for appellants Terry Anderson et al.; Cabot Christianson (Bundy & Christianson), Anchorage, for appellee Larry Compton (Trustee).

   7 ABR 37: Ch. 13, sanctions, frivolous filing (District Court, Singleton).

Attorney James Hill appeals an order from Bankruptcy Court sanctioning him for filing a frivolous and improper Ch. 13 petition in violation of Rule 9011. See 6 ABR 316 (00). Bankruptcy Court awarded monetary sanction against Hill of $1,000 to creditors Donald & Parris Reynolds in connection with a Ch. 13 petition Hill filed for the now deceased debtor, Eldridge Sisson, and also imposed a non-monetary sanction prohibiting Hill from any future "bare bones" Ch. 13 filings.

Hill's filing of a Ch. 13 petition when the client's debt clearly exceeded the limit for eligibility warranted sanctions under Rule 9011. A sanction is limited to what is sufficient to deter repetition of such conduct including nonmonetary directives and awards of all or part of attorney fees to the moving party. Bankruptcy Court appropriately considered the amount of time that would have been saved had the moving party simply filed for dismissal on grounds of an ineligible petition rather than pursuing a claim of bad faith.

In re Sisson, 11/2/00.

James Hill, Anchorage, Barton Tiernan, Anchorage, for Reynoldses.

   7 ABR 44: Ch. 7, student loans (MacDonald).

In re Townsend, 12/15/00.

Valerie Therrien, Fairbanks, for Townsend; Diane Vallentine (Jermain, Drunnagan & Owenss), Anchorage, for Educational Credit Management Corp.; Thomas Yerbich, Anchorage, for The Educational Resources Institute; AAG Mary Ellen Beardsley, Anchorage, for Alaska Commission on Post-Secondary Education.

   7 ABR 52: Ch. 1 I, relief from automatic stay, share-holder claims (MacDonald).

In re Kake Tribal Corp., 1/10/01

David Bundy (Bundy & Christianson),Anchorage, for Kake Tribal Corp.; Fred Triem, Petersburg, for Kake shareholders.

   7 ABR 55: Ch. 7, sanctions, bad faith filing, attorney fees & costs (MacDonald).

In re Pathfinders Properties International, 1/2/01.

Reginald Christie (Jim Christie & Associates), Anchorage, for Debtor, Diane Vallentine (Jermain, Dunnagan & Owens), Anchorage, for Point Possession, Inc.

   7 ABR 65: Ch. 7, violation of automatic stay, attorney fees & costs (MacDonald).

In re Good Taste, Inc 1/2/01.

Thomas Yerbich, Anchorage, for Debtor, Williron Brattain, (Baker Brattain), Anchorage, for United Airlines, Inc.

   7 ABR 67: Ch. 7, student loans (partial discharge) (co-signer), Brunner test (undue hardship) (MacDonald).

The Court requests the parties submit an agreed upon order and judgment with an appropriate mechanism for distribution of payments and PFDs. (See 7 ABR 44).

In re Townsend, 12/15/00.

Valerie Therrien, Fairbanks, for Townsend; Diane Vallentine (Jermain, Dunnagan & Owens), Anchorage, for Educational Credit Management Corp.; Thomas Yerbich, Anchorage, for The Educational Resources Institute; AAG Mary Ellen Beardsley, Anchorage, for Alaska Commission on Post-Secondary Education.

   7 ABR 78: Ch. 7, estate assets, UCC, goods for sale or return (MacDonald).

In re Greene, d/b/a Cozy Moose Antiques & Gifts, 3/1/01.

Warren Kellicut, Anchorage, pro se; Ch. 7 Trustee William Barstow, Anchorage; Jane Pettigrew, Anchorage, for Trustee.

   7 ABR 83: Ch. 11, administrative expenses, standard of review, insurance coverage (workers' compensation) (District Court, Singleton).

Kake Tribal Corporation v. Eagle Pacific Insurance Company, 3/28/01.

David Bundy (Bundy & Christianson), Anchorage, for Kake; Mark Figura (Rose & Figura), Anchorage, for Eagle.

   7 ABR 90: Ch. 11, relief from stay (pending state court actions), standing (MacDonald).

In re Kake Tribal Corp., 3/21/01.

David Bundy (Bundy & Christianson), Anchorage, for Debtor; Fred Triem, Petersburg, for class action plaintiffs-creditors.

   7 ABR 95: Ch. 11, confirmation (denied), cramdown (MacDonald).

In re Kake Tribal Corp., 4/26/01.

David Bundy (Bundy & Christianson), Anchorage, for Debtor; Fred Triem, Petersburg, for class action plaintiffs-creditors.

   7 ABR 98: Ch. 7 (no asset), reopen (denied) (MacDonald).

In re Lancaster, 5/2/01.

Valerie Therrien, Fairbanks, for Debtors.

   7 ABR 100: Ch. 7, sale of estate assets (mining patents) (MacDonald).

In re Ashbrook, 5/17/01.

Erik LeRoy, Anchorage, for Trustee Larry Compton; Michael Brain (Royce & Brain), Anchorage, for Desjarlais; Elliott Dennis, Anchorage, for Northwest Exploration

   7 ABR 104: Ch. 7, notice (inquiry), lien (MacDonald).

Compton (Trustee) v. Stelzer [In re Troxell], 6/4/01.

Eugenia Sleeper (Jermain, Dunnagan & Owens), Anchorage, for Trustee; Melvin Stephens, Kodiak, for Stelzer.

   7 ABR 113: Ch. 7, student loans, undue hardship (MacDonald).

Furneri and Salustri v. Graduate Loan Center, The Education Resources Institute, Pennsylvania Higher Education Assistance Agency, Zwicker and Associates and Sallie Mae Servicing Corp. [In re Furneri & Salustri], 6/14/01.>

Furneri & Salustri, Juneau, pro se; Diane Vallentine, Anchorage, for ECMC; Tom Yerbich, Anchorage, for TERI; John Abbott, Anchorage, for PHEAA.

   7 ABR 120: Ch. 7, preferential transfer, constructive trust, ordinary course of business (District Court, Singleton).

America & Pacific Tours, Inc. v. Barstow (Trustee) [In re MarkAir], 6/xx/01.

John Siemers, Anchorage, for Trustee William Barstow; George Lyle, Anchorage, for A&P Tours, Inc.; AUST Barbara Franklin, Anchorage.

   7 ABR 124: Ch. 7, exception to discharge (false pretenses (MacDonald).

Patrick Sickafus, Strausstown, PA, pro se; Michael Heiser, Ketchikan, for Palmers.

   7 ABR 128: Ch. 11-7, preference , new value defense, ordinary course of business, constructive trust (Ross).

Battley (Trustee) v. Brice, Inc. [In re Martech USA Inc.], 7/23/01.

William Artus, Anchorage, for Trustee Kenneth Battley; Herbert Viergutz (Barokas, Martin, Ahlers & Tomlinson), Anchorage, for Brice.

   7 ABR 138: Ch. 7, tax lien subordination (US District Court, Singleton). Bankruptcy Court (Ross) affirmed. §724(b) pertains to statutory tax liens and not to the contractual & judicial lien at issue.

Barstow (Trustee for the Bankruptcy Estate of MarkAir) v. IRS, 8/3/01.

Michael Mills (Bankston, Gronning, et al), Anchorage, for MarkAir; John Siemers (Burr, Pease & Kurtz), Anchorage, for Trustee William Barstow; AUSA Stephen Baker, Anchorage; Ron Goss (Ellis & Goss), Seattle, for Neil Bergt.

   7 ABR 146: Ch. 11/7, recoupment, prejudgment interest, attorney fees (US District Court, Holland).

Barstow (Trustee) v. Caudle & Associates (Chuck E. Cheese) [In re Roasters of Alaska], 8/7/01.

Michelle Boutin (Bundy & Christianson), Anchorage, for Trustee William Barstow; Larry Caudle, Anchorage, for Defendant.

   7 ABR 162 Summary judgment granted for Committee of Fisher Creditors, denied for UCC, packers & processors, and Ch. 11 Trustee.

In re King Fischer Fisheries, 8/28/01.

Spencer Sneed (Dorsey & Whitney), Anchorage, for Committee of Fisher Creditors; Gary Sleeper (Jermain, Dunnagan & Owens), Anchorage, for Trustee Larry Compton; Thomas Yerbich, Anchorage, for UCC; Scott Henrie (Williams, Kastner & Gibbs), Seattle, for packers' lien claimants; Robert McFarlane, Anchorage, for Seattle-Tacoma Box Co.; Karen Bendler (Jamin, Ebell, Schmitt & Mason), Seattle, for Hugh Wisner, Tender Jacquelyn W, James Niemela, T/V American Eagle, and T/V Nor'Quest, and Sorensen's Lighterage.

   7 ABR 168: Ch. 11, fishermen's lien (MacDonald).

In re King Fischer Fisheries, 9/14/01.

See attorneys above.

Sliney v. Battley (Trustee) and Schmitz [In re Schmitz], 10/16/01.

Robert Crowther, Anchorage, for Sliney; William Artus, Anchorage, for Battley and Schmitz.

   7 ABR 178: Ch. 7, pension plan proceeds, IRS levy (US District Court, Holland).

McCubbins v. IRS [In re McCubbins], 8/27/01.

Kevin Blair, Washington DC, for DOJ; Lawrence McCubbins, Homer, pro se.

In re Kloster, 11/19/01.

John Simmons for KPB; Terry Draeger for Debtor.

   7 ABR 189: Ch. 13, discharge (spousal support, property settlement) (MacDonald).

Deborah Russell v. Carl Russell [In re Carl Russell], 12/3/01.

Allan Curlee, Fairbanks, for Carl Russell; Deborah Russell, Fairbanks, pro se.

   7 ABR 198: Ch. 11, confirmation (hearing continued), liquidation analysis, ballot counting, attorney fees, weighted vote, best interest of creditors, cramdown, good/bad faith (MacDonald).

Confirmation was previously denied because a proof of claim had not been filed on behalf of the Hanson impaired class of shareholders and questions of whether the class was being appropriately represented by Trien (7 ABR 95). Debtor then moved to temporarily allow the claim of the Hanson class for voting purposes and the claim allowance was granted prospectively. 90% of the Hanson class voted for confirmation. Because of significant new events, retroactive confirmation was not permitted.

Triem's claim for fees is a debt of the Hanson class, which is to be paid first out of the top third of any recovery by the class. But it is the Hanson class that is the judgment creditor and entity holding a claim against KTC. Triem is not a member of the Hanson class; he is its state-court class-action lawyer. To enforce a portion of his fee award directly against Debtor he would need to apply to the State Court for a Rule 82 fee award to allow partial reimbursement for charges against the common fund. He did not do this before Debtor's petition was filed and the stay now precludes him from doing so.

Triem's argument that he is entitled to vote in proportion to his 1/3 aliquot from the Martin class-action judgment is rejected. He is not a member of the Hanson class and not entitled to vote with that class on confirmation. His appointment as class counsel in the state court class action "is not tantamount to a blanket consent to any litigation the class counsel may wish to pursue." Reid (6th Cir. 1989). His efforts to maximize his fee at the expense of the class he represents is rejected.

Triem contends that upon liquidation the Hanson class judgment would be promptly paid in full, including accrued post-judgment interest at 10.5%, because its judicial lien encumbers the $5 million KTC received from the Land Exchange Fund. Debtor's plan will pay the class only 6.5% interest over an extended period. The liquidation analysis in Debtor's second amended disclosure statement does not resolve this issue and little testimony on the subject was submitted at the hearing. A continued hearing will be conducted solely for the liquidation analysis required by §1129(a)(7)(A)(ii).

Since all classes of claims have accepted the plan, Triem's cramdown arguments are irrelevant.

Triem's bad-faith allegations are without merit. It is not bad faith to provide for full payment of administrative expenses, including professional fees, upon confirmation. He argues that Debtor should pursue corporate claims against its directors and professionals and disallow claims of the Martin shareholders. However, a debtor has a right to propose an end to litigation and a compromise of the claims of shareholder classes.

In re Kake Tribal Corp., 1/11/02.

David Bundy (Bundy & Christianson), Anchorage, for Debtor; Spencer Sneed, Anchorage, for Unsecured Creditors Committee; Fred Odsen, Anchorage, for Fred Triem; Michael Parise, Anchorage, for Key Bank; Kent Sullivan, Juneau, for Situk Adams; Budd Simpson, Juneau, for Martin Class of Shareholders; Sara Trent, Juneau, for State of Alaska, Dept. of Law; Bernd Guetschow, Anchorage, for Hanson Class of Shareholders; Barbara Franklin, Anchorage for UST.

   7 ABR 213: Ch. 11, Ch. 7, sanctions (monetary, disbarment) (US District Court, Singleton).

Christie v. Point Possession, 1/16/02.

Gregory Oczkus, Anchorage, for Christie; D. Vallentine for Point Possession.

   7 ABR 222: Ch. 11, jurisdiction (core proceeding, related proceeding), abstention, settlement agreement (MacDonald).

Scope of settlement agreement a "related proceeding" over which Court has jurisdiction. Mandatory abstention provisions inapplicable. Adversary proceeding required to resolve scope of agreement.

Following the Ch. 11 filing and after prolonged negotiations, Debtor Valdez Fisheries and Sea Hawk entered into a settlement agreement which was approved by this Court. The Ch. 11 proceeding was dismissed without prejudice. Sea Hawk attempted to continue state court litigation with Alaska, which had been stayed during the bankruptcy. The State contends that the settlement agreement encompassed all claims by Sea Hawk against it. State courts found that Bankruptcy Court was the proper forum for resolving any issues regarding scope of Debtor's settlement with Sea Hawk. Sea Hawk moved to reopen the bankruptcy case and determine the scope of the settlement agreement. Sea Hawk moved to dismiss or abstain.

Sea Hawk characterizes its fraudulent conveyance claim against the State as wholly independent of its judgment against Debtor and having no connection to the bankruptcy. However, the settlement clearly released Debtor from all claims which Sea Hawk had asserted or could assert against it in the state court action. Arguably, this proceeding is a matter concerning administration of the former estate and could affect adjustment of Debtor's financial relationship with the State, §157(b)(2)(A) & (O). However, nothing in the pleadings has established that the controversy involves a cause of action created by Title 11, nor is this a proceeding that could only arise in a bankruptcy case. Debtor argues that interpretation of this Court's prior order approving the settlement gives rise to a core proceeding. However, there is nothing to interpret in that order, which merely approves the settlement. Determining the scope of the settlement is not a core bankruptcy function. However, this is a "related proceeding," because the outcome "could conceivably have [an] effect on the estate being administered in bankruptcy." Fietz (9th Cir. 1988).

Retention of jurisdiction is warranted. It would be economical and convenient to resolve the dispute in this Court, and comity would be served because the state courts have refused to decide the issue. Nor are mandatory abstention provisions of 28 USC 1334(c)(2) met.

Because this is a "related proceeding," this Court must submit proposed findings & conclusions to the District Court. The present record is insufficient for this purpose. At its core this is a proceeding to recover money or property or an action to obtain a declaratory judgment. Such proceedings are governed by Rule 7001. Sea Hawk must initiate an adversary proceeding against the State and Debtor.

In re Valdez Fisheries Development Association, 1/31/02.

Rebecca Copeland (Patton Boggs), Anchorage, for Debtor; Kevin Sullivan (Sullivan & Thoreson), Anchorage, for Sea Hawk Seafoods; Asst. AG Mary Ellen Beardsley.

   7 ABR 231: Ch. 7, exemptions (homestead, wildcard, household goods, ex-husband's employment accounts, vehicle) (MacDonald).

Trustee's objections to Debtor's claim of exemptions sustained. Debtor's exemptions of following assets disallowed: excess equity of amount allowable for homestead; excess equity of amount allowable under "wildcard," household goods, pictures, artwork (Debtor may amend to more fully describe these items); interest in former husband's employment accounts awarded in divorce pre-petition and to which Debtor was entitled to immediate distribution and which are not needed for her support and may not be shielded as ERISA plans; Schwab account; excess equity of amount allowable for vehicle exemption.

In re Anagick-Walters, 2/25/02.

Chris Johansen, Anchorage, for Debtor; Gary Spraker, Anchorage, for Trustee Kenneth Battley; Jan Bolvin, Anchorage, for David Walters and the Walters children; Robert Frenz, Anchorage, pro se.

   7 ABR 239: Ch. 7, Ch. 11, administrative priority claim (logging contract), attorney fees (contract, Rule 82(b)(2)) (MacDonald).

Plaintiff Skookum is awarded $11,302 from Debtor BTA with interest. Skookum's lien foreclosure claim against Citifor dismissed with prejudice. Neither BTA nor Skookum will recover attorney fees or costs. Citifor will recover Rule 82(b) attorney fees.

Citifor contracted with BTA to log in Icy Bay. BTA subcontracted with Skookum. BTA paid Skookum $234,124. Skookum alleges that it owes another $254,000 for work performed under the contract.

The felling & bucking services Skookum supplied were beneficial to BTA. Any damages from BTA's breach of the subcontract are entitled to administrative priority under §503(b). Skookum has the burden in establishing its administrative claim for $254,000.

Skookum argues that the contract calls for payment on a gross scale basis. However, "$32.50 per thousand board feet" could easily be interpreted to mean either net or gross. Based on extrinsic evidence I conclude that both BTA and Skookum intended net scale. Skookum is not entitled to any damages for the gross-net differential. BTA thoroughly rebutted Skookum's contentions on claims as to damages for logs used in road construction and for unharvested timber still on the ground.

Skookum has not met its burden on its lien foreclosure claim. Inter alia, it submitted no evidence as to whether the errors in its notice were made in good faith.

Because both Skookum and BTA breached the subcontract, neither is entitled to fees under the contract. However, Citifor is entitled to fees under Rule 82(b)(2) since it is prevailing party and not bound by the contract.

Skookum Timber v. Citifor and Browning Timber of Alaska [In re Browning Timber of Alaska], 3/7/02.

Bernd C. Guetschow, Anchorage, for Skookum Timber; Thomas Yerbich, Anchorage, for Citifor, Inc. and Browning Timber of Alaska.

   7 ABR 251: Ch. 11, liens (fishermen, packers & processors) (US District Court, Sedwick).

Judge MacDonald's ruling that the Committee of Fisher Creditors is entitled to interim distribution affirmed.

Fishers contended that their liens were valid and superior to liens asserted by fish tenders as to proceeds of the sale of fish processed by Debtor. MacDonald determined that the 1949 lien provision pursuant to which Tenders' claim liens and the 1982 provision pursuant to which Fishers claim liens were in conflict and that the conflict must be resolved by recognizing the priority of Fishers' liens.

MacDonald erred in concluding that the lien statutes are in conflict and that fishermen's liens have priority. Packers' liens and fishermen's liens are subject to proration under AS 34.35.360(b).

Fishers are nevertheless entitled to summary judgment on the basis that Tenders did not acquire lien rights under AS 34.35.020 because they were not verified until after the time for recording had passed. Subsequent amendments did not cure that failure.

In re King Fischer Fisheries et al, 4/17/02.

Thomas Yerbich, Anchorage, for Unsecured Creditors Committee; Spencer Sneed, Anchorage, for Committee of Fisher Creditors; Gary Sleeper, Anchorage, for Chapter 11 Trustee Larry Compton; Robert McFarlane, Anchorage, for Seattle-Tacoma Box Company; Karen Bendler, Anchorage, for Hugh Wisner, James Niemela and Sorensens' Lighterage Company, Inc,.

In re King Fisher Fisheries, LLC (on appeal), 4/17/02.

   7 ABR 261: withdrawal of reference (Ross).

The Court recommends that District Court withdrawal its reference of this adversary proceeding pursuant to the mandatory withdrawal provisions of §157(d) because resolution involves consideration of substantial and material issues of both (1) federal nonbankruptcy law involving organizations (ACE, USPS, DOT) and activities (regulation of mail and air carriers) affecting interstate commerce, some of which have not been previously addressed by any court, and (2) bankruptcy issues including violation of the automatic stay, jurisdiction over what would normally be a Tucker Act matter, and whether rights to carry bypass mail are contractual rights protectable as property of the bankruptcy estate. It is not necessary to choose between the competing theories of whether the bankruptcy issues must be substantial, since there are sufficient bankruptcy issues to comply with the more restrictive theory. The facts are substantially uncontested and the issues will probably be resolved by summary judgment; any interim or recommended ruling by this Court would certainly be appealed or contested.

Michael R. Mills, Anchorage, for Debtor/Plaintiff; Robert Silverberg, Washington, DC, co-counsel for Debtor; Retta-Rae Randall, Anchorage, Ass't. U.S. Atty. for Defendant; Frances M. Toole, Washington, DC, Civil Division, for Defendant.

Michael and Tim King's motion for disgorgement by James King granted. Motion to hold James in contempt and compel accounting denied. Request for attorney fees denied without prejudice. Debtor James King Inc.'s motion for approval of final accounting approved with exceptions & conditions.

Bankruptcy was initiated by an involuntary Ch. 7 petition by James King Inc., a sporting goods store. The case was converted to Ch. 11. Following liquidation sale, rather than distributing funds to creditors, James took monthly draws from the liquidation prodeeds and paid his rental costs, prompting his brothers to move for an accounting and distribution.

A Ch. ll plan must disclose identity of any insider to be employed by the reorganized debtor and the nature of any compensation. There was no provision in the liquidating plan or disclosure statement that provided James with prolonged compensation. He must disgorge funds received in violation of the plan and repay them to Debtor. He must also pay Debtor the value of the corporate inventory he misappropriated for his own use. He has demonstrated inability to deal honestly with creditors and the Court. Debtor must transfer all remaining funds to Steven Hartung for distribution.

In re Gary King Inc., 4/25/02.

Cabot ChristiansonAnchorage, for Michael and Tim; John Siemers, Anchorage, for James.

   7 ABR 284: Ch. 13, accounting (statute of limitations), recoupment, attorney fees/costs (MacDonald).

Phylene Gaffney's complaint dismissed with prejudice. Defendant FNB Anchorage's proof of claim allowed in the sum of $201,103 as a secured claim, with accruing interest, attorney fees, and costs. FNBA is also allowed fees in this action pursuant to the trust deed and Ak.R. Civ.P. 82(a).

FNBA filed a proof of claim for $201,103 in Gaffney's Ch. 13 case, secured by the Gaffney Hotel. The hotel was in her name only. She testified that she helped ex-husband Sam Jeffcoat, since deceased, obtain the financing because he did not have a job, and that he was to make all payments. She claims that $103,000 collected by FNBA in 1993 was impermissibly applied against other Jeffcoat obligations and thus the debt of $190,372 in the 1998 loan modification was untrue and should have been reduced to give full credit for all of FNBA's collections from the hotel in 1993. She initially sought and was denied an accounting of how FNBA applied $103,000 in hotel revenues. Her claim in this adversary proceeding for an accounting is barred by the 6-year statute. However, since it arises out of the same act or transaction, her utlization of a recoupment theory circumvents the bank's statute of limitations defense.

Gaffney bases her argument on language in the original trust deed. However, it is inapplicable because FNBA never took possession of the hotel, the funds were not generated by FNBA as a beneficiary in possession, and Gaffney did not own the hotel business in 1993. Funds collected by FNBA in 1993 were proceeds of Jeffcoat's business, which it could apply in accordance with his wishes. Gaffney owed FNBA $190,372 as of 11/98. She is not entitled to a credit against this on the theory of recoupment.

Gaffney v. FNB Anchorage [In re Gaffney], 5/31/02.

John Beard, Anchorage, for FNB; Gregory Oczkus, Anchorage, for Gaffney

   7 ABR 300: Ch. 11, appeal (standing), (US District Court, Sedwick).

ACEs motion to strike NAC's appeal granted.

Although the bankruptcy code does not define who has standing to appeal a bankruptcy court order, the courts are unanimous that standing is determined under a "person aggrieved" standard. Merck (9th Cir. BAP 1999). NAC's reliance on filing of an entry of appearance in the main case and in the hearing on the order now being appealed is insufficient to demonstrate appellate standing.

Northern Air Cargo v. Alaska Central Express, 6/26/02.

David Bundy (Bundy & Christianson), Anchorage, for NAC; Michael Mills (Bankston, Gronning, O'Hara, Sedor, Givens & Heaphy), Anchorage, for ACE; AUSA Retta-Rae Randall, Anchorage.

   7 ABR 304: Ch. 7, abandonment (MacDonald).

Trustee's. motion to revoke technical abandonment denied as moot because condemnation proceeds have not been abandoned.

Although the condemnation roceeds involved real property in which Debtor had an interest, they are a separate asset, distinct from the real property, and were not formally abandoned under §554(a) or (b), which requires notice, a hearing, and a court order. Only assets which have been properly scheduled are abandoned under this subsection at the time the case is closed.

In re Wright, 7/8/02.

Terrence Thorgaard, Fairbanks, for Wright Kenneth Ringstad, Fairbanks, for Trustee Larry Compton

   7 ABR 308: Ch. 11, Interlocutory appeal (US District Court, Singleton).

Sea Hawks motion seeking interlocutory appeal denied.

Judge MacDonald held that there is jurisdiction in Bankruptcy Court to determine scope of a settlement agreement between Sea Hawk and VFDA. The issue there is whether the agreement bars Sea Hawk from bringing fradulent conveyance claims against the State in State Court.

Given that Alaska Superior Court, Alaska Supreme Court, and Bankruptcy Court agree that Bankruptcy Court is the proper court to *interpret the agreement, there may not be a " substantial likelihood" of Sea Hawk prevailing on appeal, and an independent analysis suggests that it is not likely to prevail on appeal.

Bankruptcy Court has jurisdiction because Sea Hawk's fraudulent conveyance claim against the State is a related proceeing to the bankruptcy action and because Bankruptcy Court expressly retained jurisdiction in the settlement agreement to interpret the agreement and by incorporating the agreement in its dismissal order. In any event, immediate interlocutory review would not likely advance ultimate determination of the litigation

Sea Hawk Seafoods v. State of Alaska and Valdez Fisheries Development Association, 8/5/02.

John Young (Young,deNormandie & Oscarsson), Seattle, for Sea Hawk Seafoods,Inc.; Mary Ellen Beardsley, Anchorage for Alaska; Rebecca Copeland (Patron, Boggs), Anchorage; for Valdez Fisheries Development Assoc. Inc.

   7 ABR 314: Ch. 7, lien avoidance, stay violation (MacDonald).

Debtor's motion to avoid judicial lien granted.

Northern Credit Services obtained a state court judgment against Debtor and levied on her PFD in 7/01. Debtor filed a pro se Ch. 7 in 8/01. Following discharge and closure of the case in 1/02 Debtor asked that her PFD be returned to her. She then retained a lawyer who moved to reopen her case.

A lien avoidance action may be brought at any time unless a creditor has been "sufficiently prejudiced so that it would be inequitable to allow avoidance of the lien." Ricks (BAP 9th Cir.1988). NCS says it has been prejudiced because Debtor delayed bringing, the action until it had already disbursed her PFD to its client. However, the act which it claims has caused it prejudice occurred before Debtor's bankruptcy case was closed, while the stay was in effect. NCS seeks to blame Debtor's delay in seeking avoidance. But a sophisticated creditor is required to exercise good faith and reasonable reliance on the debtor's failure to avoid the lien." Ricks. No reasonable reliance exists where a creditor has "jumped the gun" and enforced its lien before the bankruptcy case has closed. Further, Debtor's conduct has in no way prejudiced NCS.

In re Harris, 8/23/02.

Chris Johansen, Anchorage, for Harris; R.W. Shaffer, Ketchikan, For Northern Credit Services.

   7 ABR 319: Ch. 7, appeal procedure (9th Cir. BAP).

Appellee's motion to dismiss denied, remanded for Bankruptcy Court to enter order in compliance with Rule 9021. Judge MacDonald entered an order 7/12/02 denying Trustee's motion to revoke technical abandonment (7 ABR 304) and an order 7/12/02 denying Debtor's motion for reconsideration. Debtor did not file notice of appeal until 25 days after entry of the order denying reconsideration. Also, on 8/6/02 she moved for an extension of time in which to appeal. MacDonald denied the extension motion on the basis that the notice of appeal divested him of jurisdiction. The Trustee moved to dismiss this appeal as untimely. Neither order satisfies the separate document requirement of Rule 58, made applicable to final judgments & orders in adversary proceedings and con tested matters by Rule 9021. Where the separate document requirement has not been satisfied, the appeal time does not run. Thus this appeal is not untimely, and in fact is premature. Once a final order in compliance with Rule 9021 has been entered the appeal will become effective pursuant to Rule 8002(a). It is Appellant's responsibility to ensure that Bankruptcy Court enters an order in compliance with 9021.

Appellant's second extension motion is denied. Authority is given to Bankruptcy Court to grant an extension of time to appeal. Rule 8002(c).

Klein, Perris. Montali concurred & dissented.

Wright v. Compton (Ch. 7 Trustee) [In re Wright], 9/18/02.

Kenneth Ringstad, Fairbanks, for Trustee; Terrence Thorgaard, Fairbanks, for Debtor.

   7 ABR 323: Ch. 7, appeal procedure (stay pending appeal, mootness) (US District Court, Holland).

Trustee's motion to dismiss appeal pursuant to mootness doctrine granted.

Appellant has an unsecured claim against Gold King Mines. On 7/25/02 Bankruptcy Court approved sale of Gold King Claims to the US for $1 million and established its bona fide purchaser status. Appellant moved for stay pending appeal 7/12/02 and 7/31/02. Bankruptcy Court denied the motions for several reasons including failure to file a bond. Appellant renewed his motion for stay with the BAP. The Trustee asked that the appeal be referred to this Court. Appellant re-filed the motion for stay 8/27/02. On 8/26/02 the US deposited a check for $1 million with the Court and the co-owner executed a quitclaim.

Appellant has failed to obtain a stay which is critical to this appeal because a third party has intervened and purchased the property under §363(m), which protects bona fide purchasers. Appellant's argument that the only circumstance in which mootness may be found is where the Debtor could have filed for a stay but did not do so is an overbroad view of Ewell (9th Cir. 1992). While obtaining a stay is dependent on timely filing, it is only one factor in determining mootness. Bankruptcy Court denied Appellant's motion for stay and the property was sold. Thus both the motion for stay pending appeal and the appeal itself are moot.

Oliver v. Barstow (Trustee) [In re Gold King Mines], 9/25/02.

Steven Oliver, Appellant, Davis, CA; Gordon Schadt, Anchorage, for Alice & Howard Baker, Calvin & Connie Strobel, Peggy Burgen, Robert & Nella Mitchell; Dean Dunsmore, Dept. of Justice, Anchorage, for US; Cabot Christianson, Anchorage, for Trustee; Carl Bauman, Anchorage, for Marianne Pilant & Lisa Rogers; John Siemers, Anchorage, for George & James Atkinson, A&G Construction; John Ruebelmann, Anchorage, for UST; William Carroll, Hoquiam, WA, pro se; Eric Wieler and Paul Wieler, Anchorage, pro se.

   7 ABR 327: Ch. 7, tax lien (subordination) (9th Circuit Court).

Trustee William Barstow's request to subordinate Creditors' tax lien claims entirely to the claims of priority unsecured creditors pursuant to §724(b) denied. Ross affirmed, Singleton reversed.

North Slope Borough and the Municipality of Anchorage held tax liens on real property formerly owned by Debtor MarkAir. They seek part of the proceeds from a sale of that property by the estate. Ross, relying on the text of §724(b) and cases and secondary authorities interpreting it, rejected Barstow's construction and awarded Creditors a share of the sale proceeds. Judge Singleton reversed, holding that 724(b) required complete subordination of tax lien claims to priority unsecured claims. Creditors appealed.

We agree with the Creditors: The express text of 724(b) subordinates the interests of tax lienholders to that of priority unsecured creditors, but only up to the total amount of the lien. Any remaining proceeds are to be distributed first to junior lien claimants, next to the tax lienholders, and finally to the debtor's estate. Because the text is clear, we need not explore legislative history. Singleton misapprehended the plain meaning of 724(b), while Ross correctly construed it.

Graber, Fletcher, Alarcon.

North Slope Borough and Municipality of Anchorage v. Barstow (Trustee) [In re MarkAir], 10/21/02.

David Clark (Clark Law Office), Robert Crowther (Crowther Law Office), and Asst. Anchorage Municipal Atty. William Greene for Creditors; John Siemers (Burr, Pease & Kurtz), Anchorage, for Trustee.

   7 ABR 339: Ch. 7, tax lien (subordination) (judicial/statutory) (9th Circuit).

Trustee's request to subordinate proceeds of judicial lien securing taxes owed to IRS denied. Ross, Singleton affirmed.

When MarkAir filed Ch. 11 it owed air transportation excise taxes. However, the IRS had not filed a tax lien and therefore had no statutory tax lien. MarkAir concluded that it had overpaid certain taxes and requested a refund. The IRS asserted a right to off-set the overpayment against outstanding tax liabilities. ARC, a ticket clearinghouse, threatened to stop clearing MarkAir's tickets unless MarkAir posted a $1.8 million letter of credit. To avoid immediate shutdown, the IRS and MarkAir compromised their positions and entered into an agreement with ARC in which the IRS agreed to forego its offset claim and allow part of MarkAir's overpayment to be deposited with Bankruptcy Court as ARC collateral, and MarkAir agreed that the balance would be paid immediately to the IRS. After MarkAir ceased operations the IRS moved for distribution of the collateral. Trustee William Barstow opposed the request and, pursuant to §724(b), sought to subordinate the IRS' lien so that he could pay administrative expenses and claims of other priority creditors. Judge Ross concluded that subordination under §724(b) was intended to apply to "statutory'' tax liens, not the "contractual type of lien involved in this case." Judge Singleton affirmed Ross. The Trustee appealed.

Although the text of 724(b) is ambiguous, its context, structure, history, and purpose convince us that Congress intended "tax lien" to refer to statutory tax liens and not judicial liens securing payment of taxes. We think that Congress intended to encourage the kind of behavior that the IRS exhibited here; it left money in the estate when it was not required to do so, in the hope of assisting MarkAir to survive. That behavior furthers the over-all purpose of the Bankruptcy Code.

Graber, Fletcher, Alarcon.

Barstow (Trustee) v. IRS [In MarkAir], 10/21/02.

John Siemers (Burr, Pease & Kurtz), Anchorage, for Barstow; Theresa Clark (DOJ), DC.

William Barstow v. United States Internal Revenue Service, 10/21/02.

   7 ABR 354: Ch. 11, negligence, wrongful discharge, corporate veil (MacDonald).

Debtor Kake Tribal Corp. liable to employee for $41,666 for loss of tools, $15,000 for wrongful discharge, offset by $3,050 owed to Kake.

Situk was foreman at Kake's shop building which was consumed by fire caused by an oversized burner nozzle on a newly installed waste oil heater while Kake was in Ch. 11. Adams owned Snap-On tools and testing equipment which he kept at the shop. He sued seeking damages for destruction of his tools. Kake removed to this Court. Adams objected to confirmation, wanting Kake to escrow sufficient funds to pay his claim. 7 days after his testimony regarding his contention that Kake's negligence had caused the fire Kake advised him that the shop was being closed and he was discharged a week after that. Adams's limited objection to confirmation was overruled. The shop reopened. Adams did not apply for his former position. He amended to alleged wrongful discharge. Kake counterclaimed for amounts due for purchase of a housing trailer.

Kake contends that Adams was an employee of Kake Tribal Logging & Timber, a wholly owned subsidiary of Kake Tribal Corp., and that any harm suffered by Adams should be borne by the subsidiary which is not a party to this litigation. However, a majority of the Jackson (Alaska 1973) factors weighs in favor of piercing the corporate veil. KTL&T was a mere instrumentality of Kate, and therefore Adams has named the proper party.

Damages from torts committed by the debtor while a Ch. 11 case is in progress are generally administrative expenses which must be paid in full.

Kake breached its duty of reasonable care to Adams by not maintaining insurance on Adams's tools and testing equipment because they were integral to its business regardless of who owned them and because it owned and controlled the shop. Kake was also negligent in allowing the burner to be installed by unqualified personnel. Its negligence caused Adams harm. He seeks $112,909 for replacement costs of his tools and equipment. He is entitled to 70% of the replacement of his tools, full cost of a scope which is no longer produced, and 20% of the cost of other electrical items, for a total of $69,443. However, he is allocated 40% of the total fault due to his negligence in not asking if his tools would be covered by Kake's insurance or in obtaining his own coverage, and in failing to remove his tools even though he believed that the heater installer was unqualified. He is entitled to 60% of the total loss, or $41,666.

Adams's termination was in retaliation for his opposition and testimony in Kake's bankruptcy case, rather than motivated by legitimate business concerns, and breached the covenant of good faith & fair dealing. His damages are 3 months salary in the amount of $15,000.

Kake is entitled to a setoff of $3,050 for the balance Adams owes for the trailer purchase, after setoff of unreimbursed medical expenses.

Adams v. Kake Tribal Corp. [In re Kake Tribal Corp.] , 10/22/02.

Kevin Sullivan, Juneau, for Adams; David Bundy, Anchorage, for Kake Tribal Corp.

   7 ABR 381: Ch. 7, special counsel (MacDonald).

Clapp Peterson & Stowers is appointed special counsel for Trustee subject to conditions.

Debtor has been removed as guardian for incapacitated wards under allegations of, inter alia, misappropriation of funds. A number of wards are seeking recovery from CAPA and officers & employees. Ch. 7 Trustee Larry Compton has discovered an insurance policy which may fund substantial recovery. Also, he and Special Master Dan Winfree want to recover any shortfall in full payment of creditors or wards from personal assets of those they deem responsible for CAPA's downfall, including Cook, Schuhmann & Groseclose. They wish to employ Thomas Van Flein of Clapp to pursue those goals as well as to represent the bankruptcy estate for any injuries suffered directly by it. The contention is that since the facts and sources of recovery for both the wards and the estate may be the same, it did not make economic sense to have the parties fighting between themselves when allocation of any recovery could be determined after liability is established.

In re Community Advocacy Project of Alaska, 12/20/02.

James DeWitt for Ch. 7 Trustee Compton; Barbara Schuhmann and David Bundy for Cook, Schuhmann & Groseclose; Thomas Van Flein (Clapp Peterson & Stowers).

   7 ABR 391: Ch. 7, Bankruptcy Petition Preparer(MacDonald).

WTP USA's motion for summary judgment denied; WTP USA's motion for dismissal of Debtor's motion for damages denied; Debtor's motion for summary judgment denied.

We The People Forms and Service Centers USA, Inc. alleges it is not a bankruptcy petition preparer because it does not receive compensation directly from a debtor It further alleges it did not produce a document for filing by Debtor Cathy Sedenquist, rather it produced a petition, statements and schedules for its franchisee We The People of Alaska, LLC. WTP Alaska prepares no documents. It sends data to WTP USA and WTP USA sends the completed documents back to WTP Alaska for a fee.

The fact that completed bankruptcy documents are first delivered to WTP Alaska before the debtor receives them is meaningless. The documents were prepared, ultimately, for filing by a debtor and are intended to be filed in bankruptcy court. WTP USA's suggested reading of § 110 is at odds with a natural reading of the statute. WTP USA is a bankruptcy petition preparer.

This proceeding involves the application of the whole of § 110 to the actions of WTP Alaska, WTP USA and Jason & Holly Skala. It involves the possible creation of a misleading impression of competence beyond simple document preparation through fraudulent, unfair or deceptive acts. Issues of control and agency must also be resolved and will be addressed at an upcoming hearing prior to certification to district court.

In re Sedenquist, 3/17/03.

Thomas Yerbich, Anchorage, for Debtor; Richard Lubetzy, Los Angeles, CA, for We The People Forms and Service Centers U.S.A., Inc.; William Engish, Anchorage, for We The People Forms and Service Centers U.S.A., Inc. Alaska.

   7 ABR 396: Ch. 11, abstention (MacDonald).

Motion by John Norman and his former law firms of Hartig, Rhodes, Norman, Mahoney & Edwards and Hartig, Rhodes, Hoge & Lekisch to "clarify" an order approving class 7(b) claims (5 ABR 376) is denied without prejudice on grounds of abstention.

Norman seeks a new order stating that Stewart Petroleum shall not use allowance of the 7(b) claim for any purpose in SPC v. Norman (Alaska Superior Court). However, interests of justice and comity with state courts will not be served by this Court's retention of jurisdiction. Application of the Republic Reader's Service (Bankr. SD Tex. 1987) factors supports permissive abstention.

In re Stewart Petroleum, 4/24/03.

Spencer Sneed, Anchorage, for John Norman and Hartig, Rhodes, Norman, Mahoney & Edwards, and Hartig, Rhodes, Hoge & Lekisch; Erick LeRoy, Anchorage, for Debtor.

   7 ABR 399: Ch. 7, dischargeability (federal income taxes) (MacDonald).

Robert Rowen, a physician, established a tiered trust arrangement on advice of Equitrust Consultants and Oregon attorney Richard Stradley. At about the same time he ceased filing Form 1040 tax returns and paying income taxes, and filed a Form 1040NR claiming a sizeable tax refund. He was subsequently indicted for making false claims and corrupt endeavor to impede an IRS investigation. He pled guilty to corrupt endeavor to impede. In 6/01 the IRS filed notice of intent to levy reflecting assessments of $605,438. Rowen filed Ch. 11 the same month, and seeks a determination regarding dischargeability of these taxes.

A tax debt is excepted from discharge if "the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax." §523(a)(1)(C). Rowen has not filed fraudulent returns. However, the totality of his conduct establishes that he attempted to willfully evade or defeat his taxes for 1992-97. Inter alia, although he had earnings from his medical practice he failed to file returns and did everything he could to avoid tax liability. He attempted to thwart a criminal investigation and placed a house in which he lived into the trust's name to protect it from the tax collector. His efforts were not directed at legitimate tax planning, his reliance on Stradley does not justify or excuse his conduct, his arguments regarding legitimacy of the trust are immaterial, and his contention that his ultimate filing of accurate returns has somehow purged his prior behavior also fails.

Rowen v. US [In re Rowen], 5/5/03.

Ronald Offret, Anchorage, for Plaintiff; Keith Blair, for USDOJ.

   7 ABR 417: Ch. 7, relief from stay, deference to divorce court (MacDonald).

Gail Scoggin's motion for relief from stay granted.

Donald Scoggin conveyed substantial sums to Magdalena Ortiz-Aguilo, who purchased a condo in Texas, and bought a BMW for her which she exchanged for a Chevy Tahoe, all without knowledge of his wife Gail. The judge in the Scoggin divorce action granted summary judgment for Gail on her claim of fraudulent conveyance of community property, but no written order was entered. 17 days later Ortiz filed Ch. 7, scheduling the condo and Tahoe as assets. Gail moved for relief from stay so she could continue prosecution of the fraudulent conveyance claim. The Trustee objects.

Under Texas law a constructive or resulting trust may be imposed on community property that has been conveyed to a mistress by one spouse without knowledge of the other. Texas law must be applied to determine who is entitled to these assets, and the Texas divorce court is in the best position to do so.

In re Ortiz-Aguilo, 7/1/03.

Thomas McDermott (Birch, Horton, Bittner & Cherot), Anchorage, for Gail; Erik LeRoy, Anchorage, for Trustee Kenneth Battley.

   7 ABR 421: Ch. 7, res judicata/collateral estoppel (state court summary judgment/default judgment) (MacDonald).

Plaintiff Walter Hickel's motion for summary judgment in which he contends that a pre-petition state court judgment is res judicata denied.

Hickel sued John Curtin in a commercial lease dispute. He moved for summary judgment, which Curtin did not oppose. Summary judgment was granted in 11/00 finding Curtin liable for, inter alia, $107,036 for tortious destruction of property. Curtin filed Ch. 7 in 1/03. Hickel brought this adversary proceeding to except the tortious destruction damages from discharge under §523(a)(6) on the basis of res judicata. Curtin argues that collateral estoppel is the applicable doctrine.

The McElroy (Alaska 2003) distinction between res judicata and collateral estoppel makes clear that collateral estoppel is applicable. The "final judgment on the merits" element is not met. Hickel's summary judgment is essentially a default judgment because Curtin did not answer the complaint or oppose summary judgment. Default judgments are not given issue-preclusive effect in Alaska.

Wall (Alaska 1999).

Hickel v. Curtin [In re Curtin], 8/13/03.

Jon Dawson (Davis Wright Tremaine), Anchorage, for Hickel; Chris Johansen, Anchorage, for Curtin.

   7 ABR 428: Ch. 7, exemptions (residential/income producing homestead, rents, guns, tools) (MacDonald).

Trustee's objection to Debtor's full homestead exemption in 6-plex and to exemption in rents and tools overruled; objection to exemption of 6 guns sustained, Debtor may exempt only 1 gun.

Debtor is a disabled carpenter. His primary income is from a 6-plex. He lives in one unit and collects rents from the others and maintains the premises. He claims a homestead exemption of $64,800 in his 6-plex. The Trustee, citing authorities from other states, contends that he is entitled to exempt just 1/6th of the equity since he uses just 1/6th of the property as his principal residence. However, several bankruptcy courts have concluded that a debtor is entitled to a full homestead exemption in property with dual uses as long as he actually lives on the property, and when a debtor has claimed a homestead exemption under state law his entitlement must be determined by the state law. AS 09.38.010(a) requires that one have an interest in property in Alaska and it must be his principal residence. The Legislature intended to protect property that supplies basic necessities such as shelter and keep indigent debtors off public assistance. This intent would be ill-served by limiting a disabled carpenter's homestead to 1/6th of the equity in his residence, a 6-plex. Legislative history supports the statute's plain meaning.

Debtor's rental income is a liquid asset similar to the note payments found exempt in Melin. It is less than the $1,680/mo allowed under AS 09.38.030(b) and 8 AAC 95.030(d)(2).

Debtor is entitled to exempt only 1 gun as "household goods" under AS 09.38.020(a) in accordance with Fitzgerrell.

Although Debtor no longer works as a carpenter or owner of a handyman business, his active management & maintenance of the 6-plex entitles him to claim exemption in certain hand and power tools as tools of the trade.

In re Shell, 7/1/03.

Marvin Clark, Wasilla, for Debtor; William Artus, Anchorage, for Trustee Kenneth Battley.

   7 ABR 439: Ch. 7, violation of stay (eviction), sanctions (MacDonald).

Debtors are awarded sanctions for Burton & Betty Fields's willful violation of automatic stay for post-petition eviction proceedings: $722 actual damages, $200 punitives.

Fieldses instituted eviction proceedings against tenants Richard & Mary Belew. Belews filed Ch. 7 the day before the eviction hearing. Richard tried to provide the state judge a copy of his bankruptcy petition, but was told that the bankruptcy was irrelevant to the eviction because he did not have an equity interest in the property. Judgment for possession and a writ of assistance were granted and Belews were told to vacate by 6/7/03 at 5 p.m. Fieldses turned the water off at 5:15 while Belews, who thought that they had a little more time because they had filed notice of automatic stay, were still in the unit. After an officer was called Fieldses turned the water back on. Belews were out by 6/10 and stayed in a hotel for 2 weeks.

Fieldses clearly violated the automatic stay. The eviction hearing should not have been held the day after the petition was filed. This judicial proceeding was stayed in accordance with §362(a) once Belews had filed bankruptcy. Fieldses knew of the filing and should have obtained relief from stay in Bankruptcy Court before continuing with the eviction. The judgment for possession and the writ of assistance were also entered in violation of the stay and are void. Fieldses also violated the stay by turning off the water and violated state law by turning it off while Belews were still occupying the property. Finally, Betty Fields did not recall the writ of assistance until after Debtors had moved.

Fieldses' conduct is not excused by the fact that Debtors' rental agreement had been terminated prepetition or that the unit is not property of the bankruptcy estate. The stay stops initiation or continuance of all claims against a debtor. It is up to Bankruptcy Court in the first instance to modify or lift the stay.

Belews are awarded $722 for half the cost of their hotel room (Debtors likely would have incurred alternative lodging for a shorter time had Fieldses followed proper procedures) plus $100 punitives against Betty Fields for turning off the water in violation of the stay and $100 for turning it off in violation of state law.

In re Belew, 9/30/03

Richard & Mary Belew, Anchorage, pro se; Christopher Canterbury, Wasilla, for Fieldses.

   7 ABR 449: Ch. 13, confirmation, impaired claim (MacDonald).

Trustee's objection to confirmation overruled.

Under Plan terms Debtors will pay arrearages on their Wells Fargo mortgage and their Alaska USA FCU car loan from Plan payments made to him. Debtors will maintain regular monthly payments on both obligations. The Trustee objects to Debtors making the monthly payments on the car loan, contending that it is an impaired claim and, where such claims involved secured debts for non-residential property, the trustee must pay both the arrearage and the monthly payments, otherwise it is difficult to monitor a debtor's performance and permits a debtor to avoid the trustee's fee. He cites Fulkrod (9th Cir. 1992). However, the car loan is not an impaired plan. A secured claim is neither modified nor impaired if, under a Ch. 13 plan, the debtor simply cures arrearages and reinstates the debt. Alaska USA does not object to treatment of its claim and Debtors are current on payments. The Plan meets §1325 requirements and will be confirmed.

In re Barocio, 10/8/03
Chris Johansen, Anchorage, for Debtors; Trustee Larry Compton, Anchorage.

   7 ABR 453: Ch. 7, contempt, consent order (e-mail address, trademark, trade name) (Ross).

Ultimate Tours' motion to hold Debtor Lorraine Temple in contempt for violating a consent order regarding sale of her interest in her dog sled tour business denied.

Temple recently started a new business marketing motivational talks to school assemblies based on her experiences in starting Godwin Glacier Dog Sled Tours. Ultimate claims that she is wrongfully using the e-mail address "lthuskys@hotmail.com" which includes the user name "lthuskys." However, the Trustee did not sell Ultimate the use of "lthuskys," but of the e-mail address "lthuskys@ptialaska.net." Use of "lthuskys@hotmail.com" and listing that address on a website regarding motivational speeches to school assemblies is not forbidden by the consent order or remotely infringing on Ultimate's trademark or trade name.

Nor is Temple's use of the name "Godwin Glacier Dog Sled Tours" in her new website an unfair trade practice or infringement on Ultimate's right to exclusive use of that trade name. There is no reasonable possibility of confusion. She is entitled to say that she started and worked for Godwin Glacier Sled Dog Team as long as she does not say that she still does. She is not in competition with Ultimate's business and does not purport to currently use the name or engage in sled dog tours.

In re Temple (fdba Godwin Glacier Sled Dog Tours), 12/30/03
John Siemers (Burr, Pease & Kurtz0, Anchorage, for Ultimate Tours; Jane Pettigrew, Anchorage, for Debtor.

   7 ABR 460: Ch. 7, fraudulent transfers, objection to discharge, attorney fees (MacDonald).

Judgment for Ch. 7 Trustee in the amount of $99,644 plus interest and attorney fees for fraudulent transfers by Debtor.

§544(b)(1) allows the trustee to succeed to the rights of an unsecured creditor who can avoid transfers under state law. 6 transactions from Debtor Katherine Giordano to her husband involving sale of her interest in an espresso franchise were "made with the intent to hinder, delay or defraud creditors." AS 34.40.010. The Trustee failed to prove that Mr. Giordano received additional fraudulent transfers from Debtor's credit card transactions, failing to establish a link between his apparent wealth and cash advances taken from her cards. Further, the Trustee may have no standing to raise this argument, and damages for a fraudulent conveyance scheme can only be raised if voiding the transfer as to a creditor is inadequate.

Debtor's failure to appear constitutes grounds for revocation of her discharge. Because the conduct giving rise to the revocation occurred after filing of this complaint, she is entitled to further notice and hearing.

Since the Court applied Alaska fraudulent conveyance law, Plaintiff is entitled to attorney fees under ARCivP 82. He may not recover fees for pursuing federal claims for objection and revocation of discharge.

Barstow (Trustee) v. Giordano [In re Giordano], 1/7/04.
Jane Pettigrew, Anchorage, for Plaintiff; Robert McFarlane, Anchorage, for Defendants.

   7 ABR 474: Ch. 7, access easement (MacDonald).

Summary judgment for Grande Denali Properties.

Grande Denali acquired an easement for access to Kingfisher Tract A over Tract A-1-A in early 2000 which was visible and in use at the time Debtors filed Ch. 7. The Trustee's application to sell property clear of liens did not extinguish the easement. All prospective bidders at the auction of A-1-A were on notice that they should investigate condition of and title to the property. FNBA failed to do so. It has purchased A-1-A subject to the easement.

Grande Denali Properties v. FNB Alaska [In re Corry (Denali Smoke Shack)], 1/20/04.
G. Speaker for Grande Denali Properties, LLC; J. Beard for First National Bank Alaska ; J. DeWitt for Compton (Trustee); P. Giannini for Stephen E. Jones .

   7 ABR 486: Ch. 11, subject jurisdiction, settlement agreement, core proceedings (US District Judge Beistline).

Judge MacDonald affirmed; Bankruptcy Court had continued subject jurisdiction over interpretation of settlement agreement notwithstanding dismissal of underlying bankruptcy case.

Sea Hawk Seafoods obtained a $2 million judgment against Valdez Fisheries Development Association. Alaska Div. of Investments called a loan and VFDA turned over its liquid assets to the State. Sea Hawk petitioned to avoid the transfers. VFDA filed Ch. 11. During pendency of bankruptcy proceedings VFDA and Sea Hawk reached a settlement agreement which provided that jurisdiction to interpret & enforce the agreement was reserved to Bankruptcy Court. Judge MacDonald approved the settlement and the bankruptcy case was dismissed. Sea Hawk then returned to State Court to pursue its action against the State. The State asserted that the settlement agreement extinguished Sea Hawk's claims against it. Alaska Superior Court deferred to Bankruptcy Court on interpretation of the settlement agreement. MacDonald held that Bankruptcy Court did have subject jurisdiction (7 ABR 222). A stipulated order provided that if the matter were to be tried in Bankruptcy Court, that Court would find that the settlement agreement completely released the State from all further liability. It reserved to Sea Hawk its objection to Bankruptcy Court jurisdiction.

Bankruptcy Court had subject jurisdiction over the issues resolved by the settlement agreement, resolution of which were core proceedings. Unlike Kokkonen (US 1994), not only did the order refer to the settlement agreement, the Court clearly committed its authority to the process. Entry of the order was not based on the settlement agreement but upon exercise of the Court's authority to approve the agreement. If the order approving the settlement does not by necessary implication incorporate terms of the agreement it references, including specific retention of jurisdiction over its interpretation, it is impossible to divine the purpose of the order or its effect. Kokkonen and post-Kokkonen decisions of the 9th Circuit are reeds too thin to support a decision by a district court that holdings of Taylor (9th Cir. 1989) and Franklin (9th Cir. 1986) do not apply to and govern outcome of this case.

Valdez Fisheries Development Association v. Sea Haw Seafoods v. Alaska, 3/15/04.
Kevin Sullivan (Sullivan & Sorenson), Seattle, Michael Schein (Reed, Longyear, Mainati & Ahrens), Seattle, Laurel Peterson, Anchorage, and Michael Moberly (Moberly Law Offices), Anchorage, for Sea Hawk; Asst. AG Mary Ellen Beardsley.

   7 ABR 500: Ch. 13, relief from stay, foreclosure sale, property of estate, eviction (Ross).

Edwin Osowski is entitled to relief from stay to bring state court action to evict Debtor.

Osowski bid in real property owned by Debtor at a nonjudicial foreclosure sale. The trust deed trustee prepared a deed transferring the property to Osowski the same day. The next day Debtor filed Ch. 13. Nonetheless, the trustee recorded the deed. Osowski moved for relief from stay to allow him to seek removal of Debtor.

The sale was completed by execution & delivery of the deed the day before Debtor filed Ch. 13. The real estate was not property of the estate at the time of the filing. Debtor had bare possession with no right to remain. The postpetition recording of the deed did not violate §362(a) since it did not continue foreclosure or assert a lien against property of the estate, but merely allowed Osowski to give notice to third parties of his ownership.

In re Macavilca, 4/7/04.
Chris Johansen, Anchorage, for Debtor; Shane Osowski for Edwin Osowski.

   7 ABR 514: Ch. 11, lease, security agreement (Ross).

Motion for adequate protection in the form of requiring lease payment from 5/03 granted. ABCO is entitled to inspect the goods and Debtor shall provide proof of insurance.

Debtor leases exercise equipment and is behind on prepetition & postpetition payments. The lessor moved for adequate protection or relief from stay (commencing lease payments, proof of insurance, etc.). Debtor argues that the leases should be treated as security agreements under 1-201(37) because there is a nominal purchase option at the end of the terms.

Debtor has not established that the leases should per se be treated as security interests because Debtor has not shown that the option price is nominal. Nor has a security agreement been established under the reversionary test.

In re Sankey, 6/2/03, motion for reconsideration denied 6/13/03.
Deborah Crabbe, Seattle, for ABCO Leasing; Robert Crowther (Crowther Law Office), Anchorage, for Debtor.

   7 ABR 527: Ch. 7, Ch. 13-7 conversion, security interest (mechanic's toolbox), attorney mistake, relief from stay, relief from judgment (MacDonald).

Debtor's Rule 60(b) motion for relief denied. Creditor's motion for relief from stay to foreclose granted.

Ray Wales, a mechanic, bought a Macsimizer 18 drawer toolbox from Michael Brown (Mac Tools) for $4,500 on credit. Wales granted a security interest in the toolbox but no financing statement was signed. He filed Ch. 13, represented by Chris Johansen. Brown moved for relief from stay. The parties stipulated to payment of Brown's claim in full and the Ch. 13 Trustee paid Brown $2,200. Johansen converted the case to Ch. 7, but Brown never received the balance of his claim. Wales substituted Eric LeRoy as counsel and filed a 60(b) motion alleging that Johansen and the Court applied the wrong law when determining adequate protection and setting conditions for relief from stay. While Brown had a purchase money security interest in the toolbox under Alaska law, his security interest was not perfected. The toolbox was purchased for business or commercial use and was not a consumer good exempted from the financing statement requirement. Johansen did not raise the lack of perfection as a defense. Wales is bound by Johansen's mistakes or omissions and cannot obtain relief under 60(b)(1). Nor can Wales correct legal errors made beyond the time for appeal. Nor is he entitled to relief under 60(b)(3). Brown's statement in his motion for relief from stay that “creditor is holder of a secured or statutorily secured claim against the debtor” was not a misrepresentation. Wales was a secured party at state law by virtue of the security interest granted in the sales documents. The security for the claim had value within the meaning of §506(b). Nor was there gross negligence by Johansen that would warrant relief under 60(b)(6). Johansen filed a timely objection to Brown's motion for relief from stay and participated in several hearings. No default judgment was entered against his client. It appears that he simply assumed that the toolbox was a consumer good perfected without a UCC-1 filing. He was mistaken but his conduct is not gross negligence.

Brown is entitled to relief from stay. Wales defaulted on the plan payments after receiving notice of default, and has failed to cure the default. Brown's request for attorney fees is denied as there is no legal basis for this request.

In re Wales, 7/7/04.
Erik LeRoy, Anchorage, for Debtor; P. Paslay, Anchorage, for Brown; William Barstow, Trustee.

   7 ABR 533: Ch. 7, discharge (debt) (MacDonald).

Sunland's claim against Harold Cook sustained, debt excepted from discharge. Sunland's claim as to Mrs. Cook dismissed with prejudice.

Cook sought to develop a time-share resort in Homer. He needed $60,000 to close on the land. Based on a financial statement provided by Cooks, Sunland owner Phil Slabaugh loaned Cook the money and it was promptly repaid. Sunland worked on the project but none of its monthly pay requests, totaling $1.2 million, was paid. Sunland stopped work and sued Cook and others in state court. Cook then filed Ch. 7.

Cook made materially false statements in his financial statement, representing that he owned Oregon property worth $1.5 million, which was actually owned by his mother. The statement was issued to deceive & induce Sunland and Slabaugh to loan him $60,000 and enter into a construction contract. Although Slabaugh primarily relied on James Spizzirri, who had agreed to finance the project, Cook's financial statement was also a substantial factor in inducing Slabaugh to enter into the contract. Although Slabaugh was negligent in not obtaining a title report on Cook's property and in believing his fabrication, Cook had performed his promise to repay the $60,000 and Slabaugh was familiar with the area around the Oregon property and knew it to be a highly desirable area. His reliance was reasonable.

Linda Cook was not a business partner in the project and there is no evidence that she knew the statement was false or that she signed it with the intention of deceiving Slabaugh.

Sunland Development v. Cook (C&S Resort Development) [In re Cook], 7/12/04.
Robert Dickson (Atkinson, Conway & Gagnon), Anchorage, for Sunland; Harold & Linda Cook, pro se.

   7 ABR 539; 543 (supplemental): Ch. 13, tax claims, proof of claim amendment (MacDonald).

IRS may amend original proof of claim to include penalty for unpaid withholding taxes imposed against a corporate officer.

Debtors object to 3 IRS claims. The third claim was filed after the bar date for government claims. Debtors contend that the penalty asserted in the late claim is unenforceable.

A creditor can file a claim after the bar date when the proof of claim is an amendment to a timely filed claim but not a separate & distinct claim. Menick (9th Cir. 1953). Osborne (Bankr. CD Ca. 1993) followed a 2-step analysis in determining whether an amendment to a timely claim was valid: whether the new claim bears a reasonable relationship to the original filing, and whether balancing of equities supports allowance of the new claim.

Debtors agree that the taxes asserted as a civil penalty in the late claim were of the same general type of withholding taxes asserted in the timely claim, but argue that allowance of a late-filed penalty for corporate withholding would be inequitable in this case. They claim reliance on the early claim because they chose not to proceed to confirmation immediately after the claims bar date. However, they were not diligent in prosecution of their Plan in which they acknowledged the penalty claim as an undisputed personal liability. Their tactics enabled the IRS to file another claim. I do not find reasonable reliance on the first claim. Their strongest equitable argument is that elements of a penalty claim for corporate withholding against a corporate officer are different from a withholding tax liability assessed against a sole proprietorship. Sims (Bankr. ND Ga. 1984) found that a late-filed penalty claim for withholding was not a timely amendment of a claim for individual income taxes. However, the initial claim here included a claim for withholding taxes.

In re Heitstuman, 6/5/03,  In re Heitstuman,6/13/03.
Robert Crowther (Crowther Law Office), Anchorage, for Debtors; Stephen Baker, Anchorage (IRS).