In re Raejean S. Bonham dba World Plus
Bankruptcy No. F95-00897
Unofficial Web Site
HERBERT A. ROSS
U.S. Bankruptcy Judge
605 West 4th Avenue, Room 138, Anchorage, AK 99501-2296 (Phone 907/271-2655)
In re RAEJEAN BONHAM, aka Jean Bonham, aka Jeannie Bonham, dba World Plus; WORLD PLUS, INC., an Alaska corporation; and ATLANTIC PACIFIC FUNDING CORP., a Nevada corporation,
Case No. F95-00897-HAR
In Chapter 7
In re BONHAM RECOVERY ACTIONS, a proceeding to jointly administer certain pre-trial issues in numerous related adversary proceedings.
ADV PROC NO F95-00897-168-HAR
(BANCAP No. 96-4281)
MEMORANDUM DECISION DENYING DEFENDANTS' MOTION FOR RECONSIDERATION OF THE BANKRUPTCY COURT'S NOVEMBER 13, 1998 ORDER DENYING MOTION TO DISMISS
1. INTRODUCTION- Various Bonham Recovery Actions (BRA) defendants filed a motion for reconsideration1 of the court's order denying a motion to dismiss the trustee's counts under 11 USC Section 544(b). 2 The motion for reconsideration will be denied by a separate order.
2. THE TRUSTEE CAN BRING A FRAUDULENT TRANSFER ACTION UNDER 11 USC Section 544(b) AND ALASKA LAW IF THERE WAS AN UNSECURED CREDITOR WHO COULD HAVE BROUGHT ONE ON THE PETITION DATE- In the motion to reconsider, the defendants restate the issues that they believe the court should be deciding as:
. . .the proper issue is whether or not a trustee, endowed solely with, and limited to, the rights of a general unsecured creditor pursuant to 11 U.S.C. Section 544(b), can avoid a transfer under the fraudulent conveyance laws of the State of Alaska and under the common law when a general unsecured creditor has no rights under those laws, i.e. may a bankruptcy trustee assert a right not conferred upon him by federal nor state law. 3
An unsecured creditor can bring a fraudulent transfer action under Alaska law without being either a prior lien holder or judgment creditor. There is currently no requirement in Alaska law, under a common law or AS 34.40 theory, that a plaintiff has to be a consensual or a judgment lien creditor as a condition precedent to bringing a fraudulent transfer action.
There is no substantive rule of law requiring a prior judgment lien creditor which overrides the clear statements to the contrary in both FRCP 18(b) or ARCP 18(b). The state and federal rules both allow an unsecured creditor to bring a fraudulent transfer action. To hold otherwise would require the court to both overlook the case authorities contrary to defendants' position cited by the court in its Memorandum Decision supporting the order denying dismissal, 4 and the Advisory Committee's Notes for the federal rule, a rule adopted verbatim by Alaska.
Consequently, a trustee can bring a Section 544(b) action premised on Alaska law provided there is an unsecured creditor who could have brought one when the case was filed. There appear to be plenty of those in the Bonham case.
3. A TRUSTEE CAN BRING A FRAUDULENT TRANSFER ACTION UNDER 11 USC Section 544(b), BASED ON ALASKA LAW, TO VINDICATE THE RIGHTS OF AN UNSECURED CREDITOR- I also disagree with the defendants' second point, that footnote 6 in Summers v Hagen, 5 is a:
clearly articulated pronouncement applicable to situations such as those found in this case. The language of that footnote, particularly the recognition by the Alaska Supreme Court that prior to judgment a general creditor has no legal right to the property fraudulently conveyed and therefore must first reduce their claim to a judgment before asserting a cause of action, is not only clear in of itself, but is consistent with the long established legal precedent in Alaska. The defendants argue that the bankruptcy court is bound by the "considered dicta" of the Alaska Supreme Court. 6
In support of this statement, defendants cite several cases. 7 Other cases from the 9th Circuit make it clear that the requirement in diversity cases that a federal court must follow "considered dicta" does not mean it must follow "any dicta." In order to be binding, the dicta relied upon requires at least some reasonable discussion of the issue in order to be treated as "considered dicta." 8 These cases make it clear that if the dicta is not explained or discussed, or is, in effect, like the offhand remark in footnote 6 in Summers v Hagen, a federal court need not adhere to it.
The last sentence in footnote 6 in Summers v Hagen upon which defendants rely is not "considered dicta." It is a throwaway statement, buried in a footnote, without citation of supporting authority, unnecessary in light of the facts of the case, and unnecessary to the decision. I believe the Supreme Court of Alaska would not adhere to the statement in footnote 6 if directly presented with the question.
Dated: November 30, 1998
HERBERT A. ROSS
U.S. Bankruptcy Judge
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RaeJean Bonham, Debtor
Cabot Christianson, Esq., for Trustee
Larry D. Compton, Trustee
Brad E. Ambarian, Esq., for Various s
Grant E. Courtney, Esq., for Various s
Michael MacDonald, Esq., for s joining in the motion
William Satterberg, Esq., for s joining in the motion
John Burns/David G. Parry, Esqs., for Joint Defense Committee
Rebecca Copeland, Esq., for Joint Defense Committee
Janet Stafford, Adversary Proceeding Manager
Maia Weber, Deputy Clerk, Fairbanks D3615
1. Defendants' Motion for Reconsideration of the Bankruptcy Court's November 13, 1998 Order Denying motion to Dismiss, Docket Entry 711, filed November 25, 1998.
2. Order Denying Motion to Dismiss Counts under 11 USC Section 544(b) and FDCPA [Lane Powell Motion to Dismiss, Docket Entry 591], Docket Entry 706, filed November 23, 1998.
3. Id at Pages 2-3.
4. See, Memorandum Decision Denying Motion to Dismiss Counts under 11 USC Section 544(b), Docket Entry 705, filed November 13, 1998.
5. 852 P2d 1165 (Alaska 1993).
6. See footnote 1, Defendants' Motion for Reconsideration, at page 8.
7. Rocky Mountain Fire & Casualty Company v Dairyland Insurance Company, 452 F2d 603 (9th Cir 1972); United States Fidelity & Guaranty Company v Anderson Construction Company, 260 F2d 172, 177 n 17 (9th Cir 1958).
8. United States v Ramos, 39 F3d 219, 221 (9th Cir 1994); Manalis Finance Co. v United States, 611 F2d 1270, 1272 (9th Cir 1980).