In re Raejean S. Bonham dba World Plus
Bankruptcy No. F95-00897
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LARRY D. COMPTON,	)
Plaintiff,	)
	)
v.	) Adv Proc No. 95-00897-185-HAR
	) Bancap No. 96-4298
RAEJEAN S. BONHAM, STEVE A.	)
BONHAM, ALLEN DALE CARTWRIGHT,	)
MARIA CARTWRIGHT aka MARIA	)
CAPORICCI, and JAMES T. DECKER, SR.	)
Defendants.	)

The court, in its Order Deferring Ruling on Partial Summary Judgment Pending the Trustee Finding a Potential Buyer filed May 7, 1997, Docket No. 76, deferred ruling on the plaintiff trustee's motion for partial summary judgment under 11 U.S.C. §363, ordered the trustee to attempt to market the property at a price of $175,000 and, in that order and in subsequent orders, directed the defendants to cooperate in the marketing of that property.

At a subsequent hearing, the court orally stated it would entertain a report on the status of efforts to market the property. This is that report.

The trustee and his real estate agent, Gerrie Duffy, or Coldwell Banker Greatland Realty, have struggled almost weekly with efforts to frustrate and discourage the effective marketing of the real property. Since the court's last order directing the cooperation of the debtor in the main case filed September 15, 1997, Docket No. 1387, that interference has continued. Specific instances include:

(a) The debtor, permitted by the Order of September 15, 1997 to have an independent observer on the premises, has apparently instructed those observers, typically but not always Yvette Curtis, to follow the real estate agents around, writing down notes as to everything said. This has operated to intimidate and frighten persons viewing the property. See Affidavit of Gerrie Duffy dated December 3, 1997.

(b) The debtor has manufactured excuses and alleged problems with the property; most recently, the debtor told Gerrie Duffy that yet another alleged electrical problem in the kitchen required that the lights be kept turned off for the kitchen area while the house was being shown. See Affidavit of Gerrie Duffy dated December 3, 1997. There seems to always be something suddenly wrong with the property when it is scheduled to be shown.

(c) The debtor's pattern of conduct, detailed in the three previous Motions for Order to Show Cause and this Report, and ongoing conduct, have discouraged other real estate agents from showing the property to interested purchasers. See Affidavit of Gerrie Duffy dated December 3, 1997.

The practical effect of the debtor's actions and conduct since May 7, 1997, Steve Bonham's claim of lien and deferred maintenance on the property raise questions about the trustee's ability to achieve anything like $175,000 for the property. The trustee has received only one offer. That single offer was for $130,000, with all required repairs effected at the trustee's expense. The trustee rejected the offer and made a counteroffer for $155,000, with a commitment to perform some of the repairs at the trustee's expense. The counteroffer was rejected.

There is remaining interest in the property. It was shown as recently as Saturday, November 20, 1997.

The following table, described in more detail below, shows the present values and costs associated with the property.

In preparing this table, the trustee has reduced the gross sales price to reflect the impact that the debtor's obstructive efforts have had on the marketability of the property. In particular, her tactics have dissuaded real estate agents from showing the property to potential purchasers.

The repair costs shown range from about $10,000 to about $15,000, based upon estimates prepared by the trustee's experts. Attorneys' fee incurred in this matter are now approximately $16,000.

The repair costs are the debtor's and Steve Bonham's obligations under the Lease with Alan Dale Cartwright. The Lease provides, at Paragraph 8, that it is the obligation of the debtor and Steve Bonham, as Lessee, to promptly perform, at their expense, all necessary repairs to the property. If the court enforces the Lease and imposes the obligation for repairs on the Bonhams, then there is equity in the property.

Similarly, the attorneys' fees incurred in this matter are almost exclusively the result of the debtor's and Steve Bonham's obstructionist tactics. The court, after the matter of Steve Bonham's "Claim of Lien," can no longer regard Steve Bonham as anything like an innocent victim in this matter. The trustee believes the court, consistent with earlier orders to the Bonhams, should shift the majority of those attorneys' fees to the Bonhams. The trustee estimates that in a case where the property owners complied with the law and cooperated with the trustee when ordered to do so, the reasonable fees would have been in the range of $3,000. The trustee requests that the court shift $13,000 of the fees to the Bonhams.

With those adjustments, the equity in the property for the bankruptcy estate would look like this:

While, in the best case, those adjustments would net the estate $27,000, in the worst case they would net the estate $9,000. While the trustee strongly believes that the sale of any asset reasonably calculated to net monies to the estate is justified, particularly in this case, the court has opined previously that it was concerned that requiring Steve Bonham to relocate for a moderate net recovery to the estate might be unreasonable. If, despite Steve Bonham's subsequent conduct and the trustee's evidence that Steve Bonham did not personally make the downpayment, the court is still of that view, then the court must rule on one of the issues not yet fully briefed to it: do the debtor and Steve Bonham have a homestead exemption in this property?

The court may recall that in the briefing for summary judgment, the trustee proposed to defer the issue of the exemption until there was a sale generating money. If the court's position is unchanged, then that issue cannot be deferred and must be addressed now to determine if there is a point to proceeding with a sale. If the court found that there was no homestead exemption in leasehold property, then the net equity to the estate would look something like this:

It seems clear to the trustee that if there was no homestead exemption to the debtor or Steve Bonham, there is ample reason to cause the sale of the property.

Therefore, the trustee intends to move for a determination from the court that there is no homestead exemption available to either the debtor or Steve Bonham in the property.

A further issue for the court is the Bonhams' default in the performance of the Lease. The reports referred to above, as well as the Bonhams' own engineer's report and the Bonhams' latest claim regarding electrical circuits in the kitchen area all point to ongoing, continuous, material defaults by the Bonhams. The trustee may be successor-in-interest to the debtor and her obligations under the Lease, but Steve Bonham remains a lessee as well.

The trustee recommends to the court that:

1. The trustee be authorized to renew the listing of the property with Coldwell Banker Greatland Realty at a price of $155,000 for a period of six months. The property should continue to be marketed through those six months.

2. Subject to Steve Bonham's sleep schedule, the debtor and Steve Bonham be required to vacate the premises on one hour's telephonic notice that the property is to be shown.

3. The Bonhams not be entitled to have any person present on the property on their behalf when the property is shown. The trustee notes to the court that real estate agents prefer to have no one present, and that the policy is the custom in the trade. See Affidavit of Gerrie Duffy dated December 3, 1997. The alternative is to require the Bonhams to vacate the property.

4. The trustee, by December 15, 1997, file a motion to partial summary judgment to determine whether or not the debtor and Steve Bonham have a homestead exemption in the property.

It is plain to the trustee that the debtor, and very likely Steve Bonham, have embarked on a conscious, deliberate plan to do everything possible, without regard to court orders and the law, to impair the marketing of the property. If the court declines to permit the trustee to sell the property on terms that reflect the economic effect of their conduct, the court will be rewarding intentional violations of the law and egregious interference in the administration of the case.

DATED at Fairbanks, Alaska this 3rd day of December, 1997.

GUESS & RUDD P.C.
Attorneys for the Trustee

 

James D. DeWitt
ABA No. 760523

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