Edward Nazar v. Robert McComb (In re Goldstein); Case No. 03-15701-7; Adv. No. 04-05052 (K. Pickens, F. Ojile) (Nugent) (April 18, 2005)
MEMORANDUM OPINION
· 11 U.S.C. 547(b): Preference
Facts:
In December 2002, the debtor Peggy Goldstein (“debtor”) received $10,000.00 from her father, Robert McComb (“Father”) as “seed money” to encourage her to get started in real estate investing. The debtor and her Father testified that the money was not the debtor’s unless it was used to purchase real estate. In January 2003, the debtor deposited the money in a bank account and held it in the segregated account until February 2003 when she returned the funds to her Father. In October 2003, the debtor filed a Chapter 7 bankruptcy petition, and the Trustee filed an adversary complaint under §547(b) to recover the funds as a preferential transfer. The Court held the transfer was a conditional gift, and there was no creditor/debtor relationship between the father and the debtor.
Holding:
The transfer was not made “for or on account of an antecedent debt.” The Father intended to make a gift. The debtor accepted the gift, and the gift was conditional upon the performance of some act. The Father made no effort to ensure that the money would be repaid, and therefore the debtor had no legal obligation to repay the money.
Warren Power & Machinery, Inc. v. Bemis Construction, Inc., and Mid-Continent Casualty Company (In re Bemis Construction, Inc.); Case No. 02-14893-11; Adv. No. 03-5132 (R. Ogden, S. Saidian, L. Lerner) (Nugent) (May 13, 2005)
MEMORANDUM OPINION
● FRCP Rule 68: Offer of Judgment
● D. Kan. Rule 54.2: Award of Statutory Attorney’s Fees
● Reasonable Attorney Fees and Costs
Facts
The debtor Bemis Construction, Inc. (“debtor”) was a road construction and grading contractor that worked extensively on public works projects in the State of Oklahoma. Mid-Continent Casualty Company (“Surety”) issued the performance and payment bonds for the debtor’s road projects. Warren Power & Machinery, Inc. (“Supplier”) provided parts, tools, and serviced the equipment used by the debtor.
On September 27, 2002, the debtor filed a Chapter 11 bankruptcy petition. The Supplier was owed approximately $124,000.00. On December 13, 2004, the Surety filed a Notice of Offer of Judgment to the Supplier, in the amount of $40,000.00; and on December 15, 2004, the debtor filed its own Notice of Offer of Judgment to the Supplier, to allow its entire claim to be unsecured and share in any distributions; to resolve the respective disputes pursuant to FRCP Rule 68. The Supplier contends it conditioned its acceptance on the payment of its statutorily allowed attorneys’ fees and costs.
The first issue is whether the Supplier accepted the offers of the debtor and the Surety, and whether it is entitled to its attorneys’ fees and costs. [See Holding #1.] The subsequent issue is whether the attorneys’ fees and expenses of the Supplier are reasonable. [See Holding #2.]
Holdings:
1. The debtor made no offer for fees, and the Supplier is not over-secured, so there is no legal basis to award any post-petition attorneys’ fees and costs. As to the Surety, the ambiguity in the terms does not void any agreement, and after live testimony, the Supplier intended to accept the $40,000.00 offer without its fees and expenses. The actions by the Supplier suggest that it later intended to carve out its fees and expenses.
2, The issue is moot. However, to the extent the agreements allowed for the statutorily allowed attorneys’ fees and costs, the Supplier failed to comply with D. Kan. Rule 54.2 and advise the Court, in writing, of the fee dispute. Furthermore, the Supplier provided poor documentation and duplicate billings that suggest unnecessary time and expense.
In re Jerry and Terry Cruz; Case No. 04-43119-13 (B. Bell, E. Pugh, R. Olsen) (Karlin) (May 12, 2005)
MEMORANDUM ORDER AND OPINION GRANTING DEBTORS’ OBJECTION TO CLAIM OF FARMERS STATE BANK AND OVERRULING DEBTORS’ OBJECTION TO CLAIM OF KAW VALLEY STATE BANK
· After-Acquired Property Clause
Facts:
In June 2002, the debtors Jerry and Terry Cruz (“debtors”) entered into a loan agreement with Kaw Valley State Bank (“First Bank”). The security agreement gave the First Bank a blank security interest and contained an after-acquired property clause. A financing statement was properly filed.
In September 2004, the debtors received a 1968 John Deere tractor as a gift. The debtors gave Farmers State Bank (“Second Bank”) a security interest in the tractor as collateral for a new loan. The debtors did not believe the tractor was encumbered when they entered into the new loan. The debtors operated a furniture business which was later abandoned and later used the tractor in a new milling operation. The debtors filed a Chapter 13 bankruptcy petition in November 2004, and both banks filed proofs of claim claiming an interest in the tractor. The Court held in favor of the First Bank.
Holding:
The security agreement of the First Bank contained a valid after-acquired property clause, and therefore, served as collateral for the First Bank and not the Second Bank.
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