Decisions of 2005

Able-First Security v. Able - Exemption to Discharge - 523(a)(2)(A) and 523(a)(2)(B) - June 5, 2005

Case No. 04-62970

In this Adversary Proceeding, after due notice, trial was held in this matter in Butte on May 10, 2005. The Plaintiff, First Security Bank (“FSB”), was represented at the trial by attorney Calvin L. Braaksma and the Defendant, Kyle Kennelly Able (“Debtor”), was represented at the trial by attorney James J. Screnar. Maggie S. Anderson, a senior vice president for FSB, and Debtor testified. Exhibits 1 through 12 and 14 were admitted into evidence without objection. Exhibit 13 was admitted into evidence after Debtor’s objection to the admission of Exhibit 13 was sustained in part and overruled in part. At the conclusion of the trial, the Court granted Debtor 15 days to file a post-trial brief. Debtor’s brief was filed on May 24, 2005. The matter is thus ready for decision.

FSB commenced this Adversary Proceeding on December 20, 2004, seeking to except from discharge the debt owed by Debtor to FSB under 11 U.S.C. §§ 523(a)(2)(A) and (a)(2)(B).� Debtor answered FSB’s Complaint on February 11, 2005, denying several of the allegations set forth in FSB’s Complaint, requesting that the Complaint be dismissed and requesting that the Court find that the obligation owing by Debtor to FSB is a dischargeable obligation.

This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334 and 157. This is a core proceeding to determine the dischargeability of a particular debt under 28 U.S.C. § 157(b)(2)(I). This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law pursuant to F.R.B.P. 7052.

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Agnew - Chapter 7 - Attorneys Fees - Benefit to Estate - April 14, 2005

Case No. 04-62073-7

In this Chapter 7 bankruptcy, which was converted from Chapter 13 upon Debtor’s motion by Order entered January 5, 2005, Debtor’s former1 attorney James H. Cossitt (“Cossitt”) filed his Second Application for Professional Fees and Costs on February 14, 2005, (“Second Application”) requesting an additional award of attorney’s and paralegal fees in the amount of $17,994.00 and costs of $305.14 as an administrative expense of the estate. Objections were filed by creditor Susan Smith (“Smith”), who is Debtor’s former common law spouse, and by the Chapter 7 panel Trustee Don W. Torgenrud (“Torgenrud”) on February 24, 2005, on the grounds Cossitt’s services were not necessary or beneficial to the estate and reorganization was never a viable possibility, citing this Court’s decisions in In re Berg, 268 B.R. 250, 260, 19 Mont. B.R. 232, 245-46 (Bankr. D. Mont. 2001) and In re Crown Oil, 257 B.R. 531, 539, 18 Mont. B.R. 505, Cossitt filed a motion to withdraw as Debtor’s attorney on January 19, 2005, pursuant to Mont. LBR 2090-5, citing Mont. Rules of Professional Conduct 1.16 and the Debtor’s failure to cooperate in amending his Schedules and Statement of Financial Affairs to include undisclosed assets and gifts. No objection was filed, and Cossitt was authorized to withdraw as Debtor’s attorney by Order entered February 2, 2005.� 513-14 (Bankr. D. Mont. 2000) (amended 18 Mont. B.R. 525 (Bankr. D. Mont. 2000)), aff’d., (9th Cir. BAP September 28, 2001) (unpublished decision).

After due notice, a hearing on Cossitt’s Second Application was held at Missoula on March 10, 2005. Cossitt appeared and testified in support of his Second Application. No exhibits were admitted. Smith was represented by attorney Andrew Pierce (“Pierce”), and Torgenrud appeared in opposition. Cossitt requested a directed verdict on the paralegal billing rate of $70 included in both his Applications based upon this Court’s Memorandum of Decision and Order entered January 31, 20052. At the close of the hearing the Court took Cossitt’s Second Application under advisement. After review of the record, this matter is ready for decision.

This Court has jurisdiction over this Chapter 7 bankruptcy under 28 U.S.C. § 1334(a).� Cossitt’s Second Application for professional fees and costs is a core proceeding concerning administration of the estate under 28 U.S.C. §§ 157(b)(2)(A) and (B). For the reasons set forth below Cossitt’s Second Application is denied in its entirety as Cossitt failed his burden to show his services were necessary and beneficial to the estate, and Cossitt’s allowed professional fees and costs in this case are limited to the $4,677 and $362.12 awarded by Order entered by the Court on January 31, 2005, as a second-tier administrative expense

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Agnew - Chapter 7 - Paralegal Fees in Converted Case - January 31, 2005

Case No. 04-62073-7

Still pending in this Chapter 7 case, which was converted from Chapter 13 upon Debtor’s motion by Order entered January 5, 2005, is the “First Application for Professional Fees & Costs” (hereinafter “Application”) filed on September 29, 2004, by Debtor’s attorney James H. Cossitt (“Cossitt”), if Kalispell, Montana, requesting professional fees for Cossitt and his paralegals, including Donald R. Franchi (“Franchi”), in the total amount of $8,677.00 and costs of $362.12, and objections thereto filed by creditor Susan L. Smith (“Smith”)1, through her attorney, Quentin M. Rhoades (“Rhoades”), of Missoula, Montana. Hearing on Cossitt’s Application was held after due notice at Missoula on December 9, 2004, after which the Court closed the record and granted the parties time to file briefs, after which the matter would be taken under advisement. Subsequently, the case was converted upon Debtor’s motion to a case under Chapter 7. In addition, Cossitt has filed a motion to withdraw as Debtor’s counsel, for which the notice period has not yet run. After review of the record, the parties’ briefs, and applicable law, Smith filed Proof of Claim No. 5 on October 22, 2004, asserting a claim in the amount of $466,911.24 secured by a judgment entered against the Debtor Robert Agnew in Cause No. DV-02-14 in Montana Twentieth Judicial District Court, on April 8, 2004. The pending Application is ready for decision. For the reasons set forth below, Smith’s objections are overruled and Cossitt’s Application is approved, but only as a second-tier administrative expense. See In re Bean, 15 Mont. B.R. 397, 398 (Bankr. D. Mont. 1996).�

At the hearing Cossitt appeared and testified, as did Franchi. Exhibits (“Ex.”) 1 and 2 were admitted. Ex. 2 shows that Cossitt’s employment by the trustee, in a separate and unrelated case, was approved in Case No. 03-61901-7 at the hourly rate for Cossitt of $180, and the hourly rate for Franchi of $120. Smith was represented by attorney Rhoades, but called no witnesses and offered no exhibits in Smith’s case-in-chief. At the conclusion of the hearing the Court closed the record, granted Smith and the Debtor time to file post-hearing briefs which have been filed and reviewed by the Court. This matter is ready for decision.

This Court has exclusive jurisdiction over this case under 28 U.S.C. § 1334(a). Cossitt’s Application is a core proceeding under 28 U.S.C. § 157(b)(2). This Memorandum of Decision includes the Court’s findings of fact and conclusions of law.

Some of Smith’s objections to Cossitt’s Application, including lumping and prepetition services, were resolved or decided at trial2. The issues still to be decided are: (1) whether Franchi’s $120 per hour billing rate as a paralegal is reasonable based on the practice in the Smith objected to Cossitt’s Application for lumping and for including prepetition services. Cossitt supplemented his Application with additional detail on December 6, 2004, attaching thereto a billing statement which provided additional detail. Rhoades objected to the supplement at the hearing on the grounds it was not contemporaneous as required by Mont LBR 2016-1. The Court denied Smith’s objection at the hearing, noting the Court’s long-time practice of allowing applicants to provide additional detail to cure lumping. In addition, Smith’s objection to Cossitt’s prepetition services was shown to be moot by Cossitt’s testimony that the prepetition services were paid prior to the commencement of the case, and Cossitt included such services in the Application in the interests of disclosure. The billing records filed December 6, 2004, corroborate Cossitt’s testimony by showing payments on June 3, 2004, and July 2, 2004, and Smith offered no evidence to the contrary. relevant market and whether he is engaged in the unauthorized practice of law; (2) whether Cossitt’s hourly rate of $180.00 is reasonable based on the practice in the relevant market; and (3) whether professional time for filing pleadings utilizing this Court’s “Case Management / Electronic Case Filing” system (“CM/ECF”) should be treated as overhead and not compensated.

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Agnew-Torgenrud v. Smith-State Court Judgment - Constructive Trust - Property of Estate - November 15, 2005

Case No. 04-62073-7

In the above-captioned adversary proceeding and Chapter 7 bankruptcy case the following matters were consolidated for trial in this adversary proceeding1: (1) The Trustee/Plaintiff’s preference action against the Defendant Susan L. Smith (“Smith”) based upon 11 U.S.C. §§ 547(b) and 550 to avoid Smith’s judicial lien against certain real property listed in the Debtor’s Schedule A; (2) Smith’s counterclaim asserting the imposition of a constructive trust against the real property; (3) Smith’s motion to modify stay filed in the main bankruptcy case on July 23, 2004 (Docket No. 7); (4) Smith’s objection, filed July 23, 2004, to Debtor’s claims of exemptions (Docket No. 8); (4) the Trustee’s objections to Debtor’s claim of exemptions2. After due notice trial of these consolidated matters was held at Missoula on September 9, 2005. The Trustee/Plaintiff Donald W. Torgenrud, Jr. (“Trustee”) was represented by attorney Thomas W. Trigg (“Trigg”). Smith was represented by attorney Andrew Pierce (“Pierce”). Debtor Robert Eugene Agnew (“Agnew” or “Debtor”) appeared in propria persona and testified. Appraiser Richard D. Johns (“Johns”) testified as to the market value of real property which is the subject of this proceeding. Plaintiff’s Exhibits (“Ex.”) 1, 2, 3, 4, 5, 6, and 7, and Smith’s Ex. A, B, C3, D, F, G, and H were admitted. At the conclusion of the parties’ cases-in-chief the Court closed the record and granted the parties time to file briefs, which have been filed and reviewed by the parties filed a Stipulation to Consolidate the matters on September 29, 2004, which was approved by Order entered September 30, 2004 (Docket No. 58 in Case No. 04-62073-7).

The Trustee’s objection was filed by the Chapter 13 Trustee on August 30, 2004 (Docket No. 37) in the main case before the case was converted to Chapter 7, and pursued by Torgenrud who later filed Docket No. 64 in this adversary proceeding objecting to the homestead exemption.

Ex. 4 and C are the same state court findings of fact, conclusions of law and judgment entered on April 8, 2004, in the Montana Twentieth Judicial District Court, Lake County, Cause No. DV-02-14, Susan L. Smith v. Robert Agnew.

Court, together with the record and applicable law. These matters are ready for decision.

This Court has jurisdiction of this case under 28 U.S.C. § 1334(b). The pending matters are core proceedings under 28 U.S.C. § 157(b)(2). At issue is: (1) whether Smith is barred by the doctrine of merger and res judicata from asserting her counterclaim for constructive trust when the state court judgment entered was silent on her constructive trust claim, even though that judgment is on appeal; (2) if Smith’s constructive trust claim is not barred, whether a constructive trust should be imposed on the subject property under Mont. Code Ann. § 72-33-219. For the reasons set forth below, a separate Judgment and Order shall be entered in Smith’s favor dismissing the Plaintiff’s preference action, denying his motion to avoid Smith’s judicial lien, and sustaining the objections to Debtor’s homestead exemption. This Memorandum of Decision includes the Court’s findings of fact and conclusions of law pursuant to F.R.B.P. 7052 (applying Fed. R. Civ. P. 52 in adversary proceedings).

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Agri-Systems - Chapter 11 - Administrative Expense - December 14, 2005

Case No. 04-60069-11

In this Chapter 11 bankruptcy, after due notice, a hearing was held December 13, 2005, in Billings on the Motion for Approval of Request for Payment of Administrative Claim filed by Greg Braun, Plan Agent for Coast Grain (“Coast Grain”) on October 25, 2005, wherein Coast Grain seeks payment for a discovery sanction of $18,063.50 against Debtor as set forth in an order entered by the United States District Court, Eastern District of California, Fresno Division. Debtor was represented at the hearing by attorneys Jon Doak and Mark D. Parker. Coast Grain was represented by attorneys Justin Harris and Steven McGee. Neither Debtor nor Coast Grain called a witness at the hearing and no exhibits were offered into evidence.

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Agri-Systems - Chapter 11 - Chapter 11 Confirmation - August 26, 2005

Case No. 04-60069-11

In this Chapter 11 bankruptcy, after due notice, a hearing on confirmation of Debtor’s Chapter 11 Plan of Reorganization and Partial Liquidation was held in Butte on June 7, 2005.� Debtor was represented at the hearing by its counsel of record, Jon E. Doak; and Matthew Hamlin, an 8% shareholder of Debtor and Vice President of Sales for Debtor, testified in support of confirmation. Debtor’s Exhibits A, B and C were admitted into evidence without objection.� The sole objection to confirmation of Debtor’s Chapter 11 Plan was filed by Greg Braun, Plan Agent for Coast Grain Company (“Coast Grain”). Coast Grain was represented at the hearing by its attorneys, Riley C. Walter and Alan C. Bryan. Greg Braun testified in opposition to approval of Debtor’s Chapter 11 Plan and Coast Grain’s Exhibits 1 and 2 were admitted into evidence without objection. At the conclusion of the hearing, the Court granted Debtor and Coast Grain until July 1, 2005, to file simultaneous briefs. Both Debtor and Coast Grain filed post-hearing briefs on July 1, 2005. This matter is thus ready for decision. This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

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Alwerdt - Chapter 7 -Fees Denied - Failure to Seek Employment Prior to Settlement - July 6, 2005

Case No. 03-62701-7

In this Chapter 7 bankruptcy, after due notice hearing was held at Great Falls on June 30, 2005, on the Trustee’s Application for Payment of Attorney Fees and Costs for John E. Seidlitz, Jr. (“Seidlitz”), filed June 3, 2005. No objection was filed, and no appearance was made at the hearing in opposition to the Trustee’s Application, which seeks an award of attorney’s fees for Seidlitz in the amount of $4,787.60 and costs in the amount of $1,124.14 for Seidlitz’s legal services for the Debtors in a personal injury action, which the Application states was settled on July 8, 2004, for the amount of $16,000. The Court set the Application for hearing because Seidlitz was not employed by the estate until the Trustee filed an employment application on April 6, 2005, to employ Seidlitz, which the Court granted by Order entered April 7, 2005.�

Seidlitz appeared at the hearing in support of his Application, as did the Trustee Gary S. Deschenes, and both addressed the Court. The Debtor Debra Kay Alwerdt (“Debra”) appeared and testified. At the conclusion of the hearing the Court took the Application matter under advisement, after voicing the Court’s concern about the parties’ failure to request or obtain court approval for Seidlitz’s employment for more than a year and a half after the petition date. After review of the record and applicable law, this matter is ready for decision.�

This Court has jurisdiction of this Chapter 13 case under 28 U.S.C. § 1334(a). The Trustee’s Application for Payment of Attorney Fees and Costs for Seidlitz is a core proceeding under 28 U.S.C. § 157(b)(2). At issue is whether the Trustee’s Application for retroactive approval of Seidlitz’s fees and costs satisfies the requirements for nunc pro tunc approval of fees.� For the reasons set forth below, the Court finds that the Trustee’s Application fails to show a satisfactory explanation for the failure to receive prior judicial approval of Seidlitz’s employment. Therefore, under controlling authority the Trustee’s Application for compensation of Seidlitz must be denied.

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Archer Certification to Montana Supreme Court - May 12, 2005

Case No. 04-63593-7

The above-captioned Chapter 7 bankruptcy case involves a question of law arising through the interpretation of Montana exemption law under MONT. CODE ANN. (“MCA”) § 25-13-608(1)(f)1, as applied in bankruptcy through the opt-out statute of MCA § 31-2-106, and the Debtors’ right to claim an exemption under 11 U.S.C. § 522(b)(2)(A) applying State law, Mont. Local Bankruptcy Rule (LBR) 4003-1 and F.R.B.P. 4003(a), and the Trustee’s objection to Debtors’ claim of exemption pursuant to F.R.B.P. 4003(b) and Mont. LBR 4003-3. Pursuant to Section 25-13-608(1)(f) provides that a judgment debtor is entitled to exemption from execution of “benefits paid or payable for medical, surgical, or hospital care to the extent they are used or will be used to pay for the care” M.R.APP.R. 44(c), the United States Bankruptcy Court for the District of Montana has determined that the answer to the question may be determinative of an issue in pending litigation of the certifying court and there is no controlling appellate decision, constitutional provision, or statute of this State. Accordingly, the undersigned certifies pursuant to M.R.APP.R. 44 the following question of law to the Montana Supreme Court.

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Banna-Banna v. IRS - Discretionary Abstention - February 14, 2005

Case No. 02-60880-7

In this adversary proceeding to determine tax liability for trust fund taxes under 11 U.S.C. § 505, defendant Internal Revenue Service (“IRS”) filed a motion to abstain on December 21, 2004, with supporting memorandum requesting discretionary abstention under 28 U.S.C. § 1334(c)(1). The plaintiff/Debtor filed a response in opposition setting the matter for hearing, which was held after notice at Missoula on February 10, 2005. The IRS was represented at the hearing by attorney Philip E. Blondin (“Blondin”) of the Tax Division of the U.S. Department of Justice. The plaintiff/Debtor Jamison R. Banna (“Jamison”) appeared and testified, represented by attorney Daniel S. Morgan (“Morgan”). Plaintiff’s Exhibits (“Ex.”) 1 and 2 were admitted into evidence as answers of codefendants Donald Dilworth (“Dilworth”) and Kelly Robbennolt (“Robbennolt”), but not for the truth of the matters stated therein. At the conclusion of the parties’ cases-in-chief the Court heard argument of counsel, then took the matter under advisement. After review of the record and applicable law, under binding Ninth Circuit authority set forth in Security Farms v. International Brotherhood of Teamsters (“Security Farms”), 124 F.3d 999, 1009-1010 (9th Cir. 1997), and In re Lazar (“Lazar”), 237 F.3d 967, 981-82 (9th Cir. 2001), cert. denied 534 U.S. 992, 122 S.Ct. 458, 151 L.Ed.2d 377 (2001), the IRS’s motion to abstain is denied because there is no parallel proceeding in state court. This memorandum contains this Court’s findings of fact and conclusions of law.

The parties’ pleadings agree that this Court has jurisdiction pursuant to § 505, but the IRS denies that this is a core proceeding. Jamison commenced this adversary proceeding on March 18, 2003, seeking to determine his liability for trust fund taxes owed by Elocal Network, Inc. (“Elocal”), and ExploreTV.Com, Inc. (“ExploreTV”). Jamison testified that he agreed to go through the IRS’s administrative appeal process, thinking that it would speed resolution, but that a 15 month delay ensued despite the IRS’s representation it would be over in 6 months. Trial of this adversary proceeding is set for March 10, 2005, and Jamison seeks to proceed with that trial to reach finality and realize the benefits of his fresh start.

The IRS moves to abstain on the grounds it has initiated an action in the United States District Court for the District of Montana, Cause No. CV-04-243-M-LBE against Dilworth and Robbennolt, in which it proposes to file an amended complaint to add Jamison and try the matter in federal court, a process which Jamison testified could take another 9 months. Jamison testified that he is ready for trial next month, and the delay is harming his fresh start and ability to provide for his spouse and children.

The IRS contends that Jamison is enjoying the benefit of a fresh start, but that does not include a choice of forum. The IRS cites authority from other circuits that abstention is appropriate in no-asset cases, and that abstention would promote judicial economy and permit the issues to be litigated in one forum in district court. At hearing Morgan requested the Court consider factors listed in decisions from outside this circuit to determine whether discretionary abstention is appropriate.

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Bodreau - Violation of Stay - No Sanctions - July 29, 2005

Case No. 04-62410-13

In this Chapter 13 case, a hearing was held at Missoula after due notice on May 5, 2005, on Debtor’s motion, filed March 16, 2005, requesting sanctions against Riverside County, California, Department of Child Support Services (“Riverside DCSS”) for civil contempt and willful violation of the automatic stay under 11 U.S.C. § 362(h). The Debtor Joane Lisa Boudreau (“Lisa” or “Debtor”) appeared and testified at the hearing, represented by attorney Nikolaos G. Geranios (“Geranios”). Riverside DCSS failed to appear at the hearing as ordered by this Court in its Order entered March 30, 2005. Debtor’s Exhibits (“Ex.”) 1, 2, 3, 4, 5, 6, 7, 8, and 9 were admitted into evidence, and at Debtor’s request the Court took judicial notice of her Schedules. At the conclusion of the Debtor’s case-in-chief the Court granted Debtor’s counsel Geranios ten (10) days in which to file an affidavit of attorney’s fees and costs incurred by the Debtor in relation to her motion for sanctions, after which the matter would be taken under advisement. Geranios’ affidavit of fees and costs has been filed and reviewed by the Court, together with the record and applicable law. This matter is ready for decision. For the reasons set forth below a separate Judgment will be entered imposing sanctions against Riverside DCSS for willful violations of the stay by postpetition garnishment, and in addition a separate Order shall be entered imposing sanctions against Riverside DCSS for civil contempt of this Court’s Orders.�

This Court has jurisdiction over this Chapter 13 case under 28 U.S.C. § 1334(a). Debtor’s motion for sanctions is a core proceeding under 28 U.S.C. § 157(b)(2). This Memorandum of Decision includes the Court’s findings of fact and conclusions of law. These contempt proceedings are governed by F.R.B.P. 9020 and 9014.

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Bruce - Chapter 13 - Sanctions - Emotional Distress - May 11, 2005

Case No. 04-63383-13

In this Chapter 13 case a hearing was held after due notice at Great Falls on January 27-28, 2005, on the Debtors’ motion for sanctions against American General Finance, Inc. (hereinafter “American General”) for willful violation of the automatic stay under 11 U.S.C. § 362(h), filed November 30, 2004, and American General’s objection thereto filed December 9, 2004. The Debtors and American General each were represented at the hearing by counsel – Randy L. Tarum (“Tarum”) for the Debtor and Greg A. Luinstra (“Luinstra”) for American General. Both Debtors Steven Clark Bruce (“Steven”) and Diane Marie Bruce (“Diane”) (together “Bruces” or “Debtors’) testified, as did American General’s branch manager Lorrie Sharp (“Sharp”). American General’s Exhibits (“Ex.”) A and B1 were admitted into evidence without objection. At the conclusion of the parties’ cases-in-chief the Court closed the record2 and granted the parties time to file simultaneous briefs, after which Debtors’ motion would be
ex. A and B are identical to Debtors’ Ex. 1 and 2, respectively.

American General’s post-hearing motion to reopen the record to offer portions of its policies and procedures manual was denied by Order entered March 24, 2005. Taken under advisement. The parties’ briefs have been filed and reviewed by the Court, together with the record and applicable law. This matter is ready for decision. This Court has jurisdiction over this Chapter 13 case under 28 U.S.C. § 1334(a). Debtors’ motion for sanctions for willful violations of the stay is a core proceeding under 28 U.S.C. § 157(b)(2). �

At issue is whether American General’s stay violations, Sharp’s post-petition phone calls to Debtors, were willful and whether the record supports an award of sanctions against American General under § 362(h), including emotional distress damages and punitive damages. For the reasons set forth below, Debtors’ motion for sanctions against American General will be granted and sanctions will be imposed against American General under § 362(h) by separate Order and Judgment, for its willful violations of the stay. This Memorandum of Decision includes the Court’s findings of fact and conclusions of law as provided in F.R.B.P. 7052.

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Danaher-Samson v. Danaher - Motion to Dismiss - March 21, 2005

Case No. 03-60037-7

In this adversary proceeding the Defendant Susan M. Danaher filed a motion to dismiss on February 7, 2005, on the grounds Plaintiff failed to plead fraud with particularity as required under F.R.B.P. 7009 (applying Fed. R. Civ. P. 9(b) in adversary proceedings). Plaintiff filed an objection on February 16, 2005, arguing that the Amended Complaint alleges fraudulent conveyance and badges of fraud with sufficient particularity. After due notice, a hearing on Defendant’s motion was held at Missoula on March 10, 2005. Attorney Edward P. Nolde, of Bigfork, Montana, represented Plaintiff. James H. Cossitt1, of Kalispell, Montana, represented Defendant. No testimony or exhibits were admitted, and at the conclusion of the hearing the Court took the Defendant’s motion under advisement. After review of the pleadings and applicable law, for the reasons set forth below Defendant’s motion to dismiss is denied. �

Plaintiff filed a complaint on January 4, 2005, and filed an Amended Complaint on January 28, 2005, asserting jurisdiction of this Court and core proceedings to recover an alleged� fraudulent transfer from transfer from Debtor to his spouse, the Defendant, of real property described as Lot 16 of Crestview Terrace, Phase 1, according to the map or plat thereof on file in the office if the Clerk and Recorder of Flathead County, Montana (hereinafter the “real property”). Amended Complaint, ¶ 10. The Amended Complaint avers that Defendant subsequently sold the real property and deposited the proceeds into a bank account in her name and used much of the net proceeds to pay her own credit card debt. ¶ 13. �

Plaintiff contends in Count One: “The Debtor transferred the real estate to Defendant with the actual intent to hinder, delay or defraud Debtor’s creditors and/or the Debtor received less than a reasonably equivalent value in exchange for such transfer and was insolvent on the date that such transfers were made or became insolvent as a result of such transfer.” Amended Complaint, ¶ 14. Plaintiff seeks to void the transfer under 11 U.S.C. § 548 and recover the value of the transferred property, $27,996, from the Defendant under 11 U.S.C. § 550.

In Count Two the Plaintiff repeats the factual allegations of Count One, and adds a state law claim based upon Mont. Code Ann. § 31-2-333. Paragraph 17 of the Amended Complaint Cossitt has since been replaced as Defendant’s attorney by Harold V. Dye, of Missoula, Montana, by Notice of Substitution filed March 16, 2005. states: “The Debtor transferred the real estate to Defendant with actual intent to hinder, delay, or defraud one or more of his creditors, and/or without receiving a reasonably equivalent value and reasonably should have believed that he would incur debts beyond his ability to pay as they became due.”�

Defendant admits that Plaintiff’s complaint mirrors the statutory language, but moves to dismiss on the grounds the complaint does not contain any specific facts or circumstances constituting fraud with the particularity required by Rule 7009(b). Plaintiff argues that the complaint has sufficiently pled fraudulent transfer and intent, and that Debtor’s Schedules provided the source of many of the facts averred in the Amended Complaint, which must be taken as true in deciding a motion to dismiss.

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Deines - Chapter 13 - Deines v. IRS - Jury Trial - March 2, 2005

Case No. 04-62682-13

In the Adversary Proceeding, Plaintiffs/Debtors’ Request for Jury Trial, docket #4, filed December 29, 2004, and Plaintiffs/Debtors’ Notice of Conflict of Interest and Demand for 7th Amendment Common Law Jury Trial, docket # 12, filed January 21, 2005, are presently pending before this Court and are ready for decision. After Plaintiffs/Debtors’ filed the initial request for jury trial, the Court issued an Order directing the Internal Revenue Service (“Defendant IRS”) to file a response to Plaintiffs/Debtors’ request for jury trial. The Defendant IRS filed its response on January 5, 2005, wherein it declined to consent to a jury trial. For purposes of rendering a decision on these matters, the Court will issue two decisions. One decision will involve the Plaintiffs/Debtors’ Notice of Conflict of Interest that the Court will deem a motion for disqualification. The other decision will involve the Plaintiffs/Debtors’ Request and Demand for Jury Trial. This decision involves Plaintiffs/Debtors’ Request and Demand for Jury Trial.

Plaintiffs/Debtors filed their chapter 13 bankruptcy case on August 30, 2004. On October 4, Defendant IRS filed proof of claim no. 3, alleging secured, unsecured and priority unsecured claims. On October 28, 2004, Plaintiffs/Debtors filed an objection to this claim, which was denied for its nonconformity to this Court’s local rules. Plaintiffs/Debtors filed a second objection to Defendant IRS’s proof of claim no. 3, on November 5, 2004. Defendant IRS file a response and request for hearing to the objection and set the contested matter for hearing on January 25, 2005. On November 15, 2004, this Court issued an Order directing the Plaintiffs/Debtors to file an adversary proceeding to consider all issues raised by their objection and holding and consolidating the objection to claim with the adversary proceeding. On February 11, 2005, Defendant IRS filed an amended proof of claim no. 8 alleging secured, unsecured and priority unsecured claims, which is contested by this adversary proceeding and the objection to claim filed by Plaintiffs/Debtors.

This adversary proceeding constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B), and (O) dealing with matters concerning the administration of the estate, allowance or disallowance of claims against the estate, and other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor relationship and this Court has jurisdiction under 28 U.S.C. § 1334.

The Defendant IRS, through its amended proof of claim no. 8 filed on February 11, 2005, claims a secured claim for penalties and interest associated with income tax arising for calendar tax year 1998 in the amount of $2,781.85, claims an unsecured priority claim for assessed tax and interest associated with income tax arising for calendar tax years 2001 through 2003 in the amount of $54,159.31, and claims an unsecured claim for assessed tax and interest associated with income tax arising for calendar tax years 1998 through 2000 in the amount of $35,317.80.

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Dienes - Chapter 13 - Disqualification - March 2, 2005

Case No. 04-62682-13

In the Adversary Proceeding, Plaintiffs/Debtors’ Request for Jury Trial, docket #4, filed December 29, 2004, and Plaintiffs/Debtors’ Notice of Conflict of Interest and Demand for 7th Amendment Common Law Jury Trial, docket # 12, filed January 21, 2005, are presently pending before this Court and are ready for decision. For purposes of rendering a decision on these matters, the Court will issue two decisions. One decision will involve the Plaintiffs/Debtors’ Notice of Conflict of Interest that the Court will deem a motion for disqualification. The other decision will involve the Plaintiffs/Debtors’ Request and Demand for Jury Trial.

Plaintiffs filed their chapter 13 bankruptcy case on August 30, 2004. On January 21, 2005, Plaintiffs/Debtors filed a Notice of Conflict of Interest that the Court deems a motion for disqualification. This adversary proceeding constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B), and (O) dealing with matters concerning the administration of the estate, allowance or disallowance of claims against the estate, and other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor relationship and this Court has jurisdiction under 28 U.S.C. § 1334. 

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Dennis-Dennis v. Cates and Buckley - Remand to State Court - June 16, 2005

Case No. 04-63822-13

In this adversary proceeding, which was removed from the Montana Fourth Judicial District Court, Missoula County, Case No. DV-01-405 (hereinafter the “state court action”) by the Plaintiffs/Debtors Jolynn Dennis and David Dennis by Notice of Removal filed on March 29, 2005, after due notice hearing was held at Missoula on June 2, 2005, on the “Motion for Abstention from Removal or Remand” filed by Defendant Tex Cates (“Cates”), and Plaintiffs’ objection thereto. Cates was represented at the hearing by attorney Quentin H. Rhoades (“Rhoades”). Plaintiffs were represented by attorney Harold V. Dye (“Dye”), and Plaintiffs’ attorney David McLean (“McLean”) of Browning, Kaleczyc, Berry & Hoven, P.C. (the “Browning firm”), which was employed as special counsel by the Debtors to pursue their action against Cates in the state court action, testified. Also appearing were attorneys Geoffrey Angel (“Angel”) for Third-Party Defendant Alan F. Blakely (“Blakely”), and Kevin Twidwell for Defendants Patty Stevens and Lambros Realty (“Lambros”). No exhibits were admitted. At the conclusion of the parties’ cases-in-chief the Court took the matter under advisement. After review of the record and applicable law, for the reasons set forth below the Court will grant Cates’ Motion to Remand by separate Order, and remands this adversary proceeding to the Montana Fourth Judicial District Court, Missoula County, Case No. DV-01-405.

This Court has jurisdiction of this adversary proceeding under 28 U.S.C. § 1334(b), but � Debtors admit that the Court’s jurisdiction is “related to” their Chapter 13 case. Plaintiffs’ claims for relief asserted against Cates in this adversary proceeding are non-core proceedings under 28 U.S.C. § 157 (c)(1).

Cates’ motion seeks abstention from removal, or in the alternative requests that this Court remand this adversary proceeding back to state court on grounds of comity with the state court and because the state court is better able to determine state law issues. On procedural grounds

Cates argues that the Notice of Removal was defective because it was not accompanied by the pleadings1, and that the other defendants Linda Brown and David Brown have not been properly served with the second amended complaint.

Plaintiffs respond that the other defendants have been defaulted or disappeared. Plaintiffs agree their claims for relief are non-core matters involving state law claims, but argue that this Court is competent to decide the state law issues without offending comity. Debtors argue that Cates is responsible for the delay in trying their claims in state court

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Deteinne - Chapter 11 - Confirmation - Dismissal - July 29, 2005

Case No. 04-63115-11

This Chapter 11 bankruptcy case, after due notice, a hearing on confirmation of Debtor’s Chapter 11 plan was held in Butte on June 7, 2005. Debtor was represented at the hearing by its counsel of record, James A. Patten; and Kevin DeTienne, the general partner of Debtor and the principle officer of Park Plaza Hotel, Inc., testified in support of confirmation.� Debtor’s Exhibits A-1 through A-9, B, C, D, E-1, E-2 and F were admitted into evidence without objection. Secured creditor Mountain West Bank was represented at the hearing by attorney Amy Randall. Objecting creditor Fremont Investment and Loan (“Fremont”) was represented at the hearing by attorney Ross Richardson; and Pat Burt, a certified public accountant, testified on behalf of Fremont and in opposition to approval of Debtor’s Chapter 11 plan. Fremont’s Exhibit 1 was admitted into evidence without objection. At the conclusion of the hearing, the Court granted Debtor and Fremont until June 21, 2005, to file simultaneous briefs. Upon request of the parties, the briefing deadline was extended from June 21, 2005, to June 24, 2005. Both Debtor and Fremont filed post-hearing briefs on June 24, 2005. The matter is thus ready for decision.

This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

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Dumontier (Subsequent District Court Appeal) - Disposable Income - Lien on Tribal Land - September 20, 2005

Case No. 05-60598-13

Pending in this Chapter 13 case are: (1) Debtor’s objection to her former spouse Mike McVicker’s (“McVicker”) Proof of Claim No. 11 and (2) Debtor’s motion for valuation of McVicker’s security at $0.00, both filed May 26, 2005; (3) McVicker’s motion to dismiss this case with prejudice for bad faith, filed April 20, 2005; and (4) confirmation of Debtor’s amended Chapter 13 Plan and objections thereto filed by McVicker and the Chapter 13 Trustee. Hearing on these matters was held after due notice at Missoula on July 7, 2005. The Debtor Lisa Ann Dumontier (hereinafter “Lisa” or “Debtor”) appeared and testified, represented by attorney Daniel S. Morgan (“Morgan”). McVicker appeared and testified, represented by attorney Harold V. Dye (“Dye”). Debtor’s father Leroy Dumontier (“Leroy”) testified. By stipulation of counsel exhibits (“Ex.”) A, B1, 1, 2, 3, 4, 5, 6, 7, 8, and 9 were admitted into evidence without objection.� The Court took judicial notice of Debtor’s amended schedules.�

Ex. B is McVicker’s deposition dated June 21, 2005, and Ex. B includes five (5) numbered deposition exhibits, including Debtor’s amended Schedules and other exhibits.

After the conclusion of the parties’ cases-in-chief the Court closed the record2 and granted the parties time to file simultaneous briefs, which have been submitted and reviewed by the Court, together with the record and applicable law. These matters are ready for decision3. This Court has jurisdiction of this case under 28 U.S.C. § 1334(a). The pending matters are core proceedings under 28 U.S.C. § 157(b)(2). This Memorandum of Decision includes the Court’s findings of fact and conclusions of law.

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Emerson - Chapter 13 - Trust Indenture - Property of Estate - December 29, 2005

Case No. 05-62495-1

On July 29, 2005, Debtor filed this chapter 13 case. On August 3, 2005, Mountain West Bank (“MWB”) filed proof of claim no. 1, claiming a secured claim in the amount of $64,292.34.� On September 21, 2005, Debtor filed an objection to Mountain West Bank’s proof of claim, based on the following grounds:

1. [MWB] has filed a secured Proof of Claim in the amount of $64,292.34. The security for the claim is real estate.

2. The Debtor does not own any real estate. The Debtor has co-signed a mortgage loan with his wife who is the titled owner of the real estate. The Debtor is liable and obligated for the debt but because the Debtor does not own the collateral for the loan the claim is unsecured as to him.

Debtor requests that MWB’s claim be disallowed as a secured claim pursuant to 11 U.S.C. §§ 506(a)(1) and 502(b)(1) and be allowed as an unsecured nonpriority claim.

James A. Patten, of Billings, Montana, represents the Debtor. Amy Randall, of Helena, Montana, represents Mountain West Bank. Pursuant to the stipulation of the parties, all briefing has been filed and this contested matter is ripe for a decision. This memorandum contains the Court’s findings of fact and conclusions of law.

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Frantum - Chapter 13 - Disposable Income - August 30, 2005

Case No. 05-60547-13

In this Chapter 13 bankruptcy, after due notice, a hearing was held August 16, 2005, in Butte on confirmation of Debtor’s Second Amended Chapter 13 Plan filed July 12, 2005, together with the objections thereto filed by Holly Smith and the Chapter 13 Trustee. The Chapter 13 Trustee, Robert G. Drummond, was present at the hearing as was Debtor’s counsel of record, Richard A. Ramler. In addition, Holly Smith was represented at the hearing by her counsel, Harold V. Dye. No exhibits were offered into evidence, but Debtor Joel Frantum testified.

Debtor filed a First Amended Chapter 13 Plan on June 22, 2005, and after due notice, a hearing on confirmation of said Plan was held July 6, 2005. On June 28, 2005, prior to the confirmation hearing, the Trustee filed a written objection to confirmation of Debtor’s Frst Amended Chapter 13 Plan complaining that Debtor was failing to commit 100% of his disposable income to fund the Plan as required by 11 U.S.C. § 1325(b)(1)(B) because Debtor failed to provide for increased plan payments after sale of a pull trailer. As set forth in an Order entered by the Court on July 6, 2005, Debtor conceded the Trustee’s disposable income objection and requested 10 days to file a second amended Chapter 13 plan. Debtor’s First Amended Chapter 13 Plan called for plan payments of $600.00 per month for a period of 3 months and then provided for payments of $125.00 per month for a period of 33 months. In accordance with the Court’s Order of July 6, 2005, Debtor filed a Second Amended Chapter 13 Plan on July 12, 2005.� Debtor’s Second Amended Chapter 13 Plan proposes payments of $600.00 per month for the first 3 months of the plan and then proposes payments of $325.00 per month for a period of 33 months. In essence, it appears that Debtor has increased the funding of this Chapter 13 plan by the amount of the tool trailer payment

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Franz - Chapter 13_In rem Relief v. Relief From Stay - June 10, 2005

Case No. 05-60889-13

In this Chapter 13 bankruptcy, after due notice, a hearing was held June 10, 2005, in Butte on the Motion for In Rem Relief filed by Mortgage Electronic Registration Systems, Inc. (“MERS”) on April 25, 2005.1 Attorney Michael A. Horton appeared at the hearing on behalf of Debtors and in opposition to MERS’s Motion. Attorney Matthew Kolling appeared at the hearing on behalf of MERS and in support of the Motion for In Rem Relief. No exhibits were offered into evidence but both debtor Dennis Franz and debtor Mary Franz testified. This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

According to its Motion, MERS requests that the Court enter an order: (1) prohibiting Debtors from transferring certain property held by Debtors for a period of 180 days; (2) directing that any bankruptcy filing, voluntary or involuntary, which would impose an automatic stay against the property, be prohibited for at least 180 days; and (3) that Debtors be prohibited from otherwise interfering with MERS’s right to foreclose on the property at issue. In support of its Motion, MERS offered the following factual background, which facts have not been contested by in reviewing MERS’s Motion, it appears that MERS is only seeking in rem relief at this time and is not seeking relief from the automatic stay

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Fulbright-Fulbright v. USA Department of Education - Student Loan Discharge - January 7, 2005

Case No. 03-62471-7

Plaintiff/Debtor William E. Fulbright (“Fulbright”) commenced this adversary proceeding on February 20, 2004, seeking a determination that excepting student loan debt owing to the Defendant United States Department of Education (“DOE”) from his discharge will impose an undue hardship on the Debtor and his dependents under 11 U.S.C. § 523(a)(8). DOE filed an answer admitting the Debtor is indebted to DOE for $88,651.94 in student loans, but denying that Fulbright’s student loan debts are dischargeable on grounds of undue hardship, and denying that Fulbright has met the “good faith” test because he failed to utilize various income-sensitive repayment options available based on Debtor’s ability to repay. After due notice, trial of this cause was held at Missoula on November 4, 2004. Fulbright, who is an attorney admitted to practice in the State of Montana, appeared in propria persona and testified. DOE was represented by assistant United States Attorney George F. Darragh, Jr. (“Darragh”). Plaintiff’s Exhibits (“Ex.”) 1, 2, 3, 4, and 5, and DOE’s Ex. A, B, and C, all were admitted into evidence. In addition, by Stipulation of the parties a “Declaration of Lynda D. Faatalale” (“Faatalale’s Decl.”), who is a loan analyst for the DOE, was admitted into evidence. At the conclusion of the parties’ cases-in-chief the Court closed the record and granted the parties ten (10) days to file simultaneous briefs, after which this matter would be taken under advisement. The parties’ briefs have been filed and reviewed by the Court, together with the record and applicable law governing undue hardship under § 523(a)(8). This matter is ready for decision.

This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334 and 157. This is a core proceeding to determine to determine dischargeability of particular debts under 28 U.S.C. § 157(b)(2)(I). This Order contains the Court’s findings of fact and conclusions of law pursuant to F.R.B.P. 7052. At issue is whether excepting Fulbright’s student loan debt from his discharge will impose an undue hardship on the Debtor or his dependents under § 523(a)(8), when Debtors tithe $430 per month from their income in charitable contributions to their church, which contributions are encouraged but voluntary, and not a requirement for membership in the church. For the reasons set forth below, Judgment will be entered for DOE dismissing Fulbright’s complaint.

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Grinsteiner-Parker v. Grinsteiner - Standing 523 (a)(15) - Alimony - September 28, 2005

Case No. 05-60252-7

The Plaintiff, Vera Parker, as personal representative of the Estate of James Norman Batman (“Parker”), filed a Complaint on May 3, 2005, objecting to the discharge of a debt owed by the Defendant, Velma Grinsteiner (“Debtor”), to James Norman Batman (“Batman”)� pursuant to 11 U.S.C. §§ 523(a)(5) and (a)(15) . Debtor filed an Answer to Parker’s Complaint on June 3, 2005, and following a pretrial scheduling conference held July 13, 2005, and after due notice, s trial in this matter was held in Billings on August 23, 2005. Attorney Scott Green appeared at the trial on behalf of Parker and attorney Dane Schofield appeared on behalf of Debtor. Both Parker and Debtor testified and Exhibits 1, 2, 3 and D were admitted into evidence without objection. At the conclusion of the trial, the Court granted the parties ten days to file simultaneous post-trial briefs. Debtor tardily filed a post-trial brief on September 7, 2005, and Parker tardily filed a post-trial brief on September 13, 2005. This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

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Harlinda - Chapter 11 - Confirmation - April 11, 2005

Case No. 04-61738-11

In these jointly administered Chapter 11 cases, a hearing was held at Missoula after due notice on March 10, 2005, on confirmation of the Debtors-in-Possession’s (“DIP”) Amended Chapter 11 Plan, filed January 26, 2005. Secured creditor Amresco Commercial Finance (“Amresco”) filed an objection to confirmation on March 8, 2005, and was represented at the hearing by attorney Jon R. Binney (“Binney”). The DIP were represented by attorney Harold V. Dye (“Dye”), and Debtor Harold Richard Dennison (“Harold”) testified. Also testifying were the estate’s real estate broker Ed Coffman (“Coffman”) of Lambros Real Estate (“Lambros”), and Amresco’s senior asset manager Jim Balis (“Balis”). Amresco’s Exhibits (“Ex.”) A through X, and DIP’s Ex. 1 consisting of Coffman’s recast financial statements of the DIP’s principal asset, the Missoula Athletic Club (“MAC”), all were admitted into evidence by stipulation. At the conclusion of the parties’ cases-in-chief the Court closed the record and took the matter of confirmation under advisement.

This Court has jurisdiction over these jointly administered Chapter 11 cases under 11 U.S.C. § 1334(a). Confirmation of DIP’s Chapter 11 Plan is a core proceeding under 28 U.S.C. § 157(b)(2)(L). At issue is whether the DIP have satisfied the requirements for confirmation of their Amended Plan under 11 U.S.C. § 1129.

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Hull - Chapter 13 - Best Interest of Creditors Test - December 27, 2005

Case No. 05-64124-13

In this Chapter 13 case hearing was held at Missoula after due notice on December 8, 2005, on confirmation of the Debtors’ Chapter 13 Plan and objection thereto filed by the Chapter 13 Trustee. Debtors James A. Hull (“James”) and Teresa G. Hull (“Teresa”) filed an amended Chapter 13 Plan on December 7, 2005, and both appeared and testified at the hearing represented by attorney Gregory E. Paskell (“Paskell”). The Chapter 13 Trustee Robert G. Drummond appeared in opposition to confirmation. No exhibits were admitted. The Trustee stated that his sole remaining objection to confirmation is based on 11 U.S.C. § 1325(a)(4), the “best interests of creditors”, since the Debtors’ Amended Plan fails to pay the amount of the Debtors’ nonexempt equity in their residence to creditors based on the value Debtors listed in their Schedule A. At the conclusion of the parties’ cases-in-chief the Court took the matter under advisement. After review of the record and applicable law, the Trustee’s objection to confirmation based on the “best interest of creditors” test will be sustained by separate Order, and Debtors will be given one final opportunity to propose a confirmable Plan.

This Court has exclusive jurisdiction of this Chapter 13 bankruptcy case under 28 U.S.C.� 1334(a). Confirmation of a Chapter 13 plan is a core proceeding under 28 U.S.C.§ 157(b)(2)(L).� This Memorandum includes the Court’s findings of fact and conclusions of law. At issue is whether the Debtors satisfied the “best interest of creditors” test of § 1325(a)(4) when they attempted to satisfy the Trustee’s objection by changing the valuation of their residence at the hearing. This Court concludes that the Debtors failed to cure the Trustee’s objection by changing the valuation of their residence at the hearing to eliminate their equity.

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Klink - Chapter 7 - Objection to Claim - Documentation - July 29, 2005

Case No. 03-61719-7

In this Chapter 7 bankruptcy, the Trustee filed an Objection to Proof of Claim No. 4 filed by CBB Collections, Inc. The Trustee asserts in his Objection that “Claim number 4 filed by CBB Collections, Inc. appears to be founded on an agreement in writing i.e., a credit application.� No such agreement is attached to the proof of claim”. The Court disagrees that CBB Collections, Inc.’s claim is premised on a credit application. The claim stems from collection efforts undertaken by CBB Collections, Inc. to collect on services rendered by Billings Anesthesiology, PC and Deaconess Behavioral Health.

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LaCounte - December 8, 2005

Case No. 05-61209-13

In this Chapter 13 bankruptcy, after due notice, a hearing was held September 20, 2005, in Billings on confirmation of Debtors’ Chapter 13 Plan filed June 22, 2005, and on the Trustee’s Objection to the homestead exemption claimed by Debtors. The Chapter 13 Trustee, Robert G. Drummond, appeared at the hearing in support of his Objection. Debtors were represented at the hearing by their counsel of record, Terrance Toavs. Both Earl Leonard Lacounte (“Lenny”) and Janice Corrine Lacounte (“Janice”) testified and Exhibits 1 through 5 and 7 were admitted into evidence without objection. At the conclusion of the hearing, the Court granted the Trustee through October 7, 2005, to file a brief and also granted Debtors the same amount of time to simultaneously supplement the brief previously filed by Debtors on July 29, 2005, and took the matter under advisement. The Trustee timely filed his brief on October 7, 2005. Debtors’ supplemental brief was tardily filed on October 11, 2005. The matter is ready for decision

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Miller-Smith - Chapter 13 - Relief from Automatic Stay - August 12, 2005

Case No. 04-61991-13

Pending in this Chapter 13 bankruptcy case is the motion to modify stay filed June 15, 2005, by secured creditor the United States, Rural Housing Service (hereinafter referred to as the “Rural Housing Service”), and Debtor’s objection thereto. The Chapter 13 Trustee filed a consent to the Rural Housing Service’s motion on June 20, 2005. After due notice, hearing on the Rural Housing Service’s motion was held at Missoula on July 7, 2005. The Debtor Michelle Miller-Smith (“Michelle”) appeared and testified, represented by attorney Harold V. Dye (“Dye”). The Rural Housing Service was represented by assistant U.S. Attorney George F. Darragh Jr. (“Darragh”), and called to testify Christine L. VanRonk (“VanRonk”), Area Director for the USDA Rural Development. Exhibits (“Ex.”) 501, 502, 503, and 504, and Debtor’s Ex. 1, all were admitted into evidence without objection. At the conclusion of the parties’ cases-in-chief the Court took the matter under advisement. After review of the record and applicable law, this matter is ready for decision. This memorandum contains this Court’s findings of fact and conclusions of law.

This Court has exclusive jurisdiction in this Chapter 13 case under 28 U.S.C. § 1334(a). The Rural Housing Service’s motion to modify stay is a core proceeding under 28 U.S.C. § 157(b)(2). For the reasons set forth below, Debtor’s objection will be overruled and the Rural Housing Service’s motion to modify stay will be granted by separate Order, but the Debtor will be allowed thirty (30) days to complete her application for a reduction in payments and file a written stipulation with the Rural Housing Service to cure her post-petition default.

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Mock - Chapter 11 - Motion to Modify Stay - In rem Relief - September 26, 2005

Case No. 05-61157-11

Pending in this Chapter 11 bankruptcy case are: (a) the motion to modify stay and for in rem relief filed on May 16, 2005, by First State Bank of Thompson Falls (“First State Bank”), and Debtors’ objection thereto; and (2) Debtors’ Application to approve employment of TLC Engineering, PE, LLC (“TLC”) as civil engineer and planner for the Debtors, filed May 26, 2005, and objection thereto filed by First State Bank. Hearing on these two matters was held after due notice at Missoula on July 7, 2005. Debtors were represented at the hearing by attorney Gregory E. Paskell (“Paskell”), and Debtor Stan W. Mock (“Stan”) testified. First State Bank was represented by attorney David B. Cotner (“Cotner”). Other witnesses testifying included timber appraiser Ken Stephens (“Stephens”), real estate appraiser Mark Manley (“Manley”), Mike Duffield (“Duffield”), Robert Fletcher (“Fletcher”), and TLC licensed professional engineer Scott Curry (“Curry”). First State Bank’s Exhibits (“Ex.”) 1, 2, 3, 4, 5, 6, 6A, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 23, 24, and 25 and Debtors’ Ex. A, all were admitted into evidence. Ex. 22 was admitted subject to qualification that Debtors dispute the amounts of the claims stated thereon. At the conclusion of the parties’ cases-in-chief the Court closed the record and granted the parties time to file briefs, after which First State Bank’s motion and Debtors’ Application to employ TLC would be taken under advisement. The parties’ briefs have been filed and reviewed by the Court, together with the record and applicable law. These matters are ready for decision.

This Court has exclusive jurisdiction in this Chapter 11 case under 28 U.S.C. § 1334(a). � First State Bank’s motion to modify stay and for in rem relief and Debtors’ Application to employ TLC are core proceedings under 28 U.S.C. § 157(b)(2). For the reasons set forth below, First State Bank’s motion to modify stay will be granted but its request for in rem relief will be denied, and Debtors’ Application to employ TLC will be granted, by separate Order, provided that no compensation will be paid to TLC without the filing of an application for compensation, including contemporaneous and detailed billing records by TLC, in compliance with Mont. LBR 2016-1 and Montana Local Bankruptcy Form (“LBF”) 17.

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Northern Routes Transportation Inc. - Chapter 11- Payment of Vendors - April 5, 2005

Case No. 05-60368-11

In this Chapter 11 bankruptcy, the Debtor filed a “Motion . . . to Pay Its Prepetition Wages, Employee Benefit[s], Payroll Taxes and Contract Drivers” and a “Motion . . . to Pay Its Prepetition Fuel Contract[s] and Cell Telephone Service Contracts” on February 22, 2005; the same date that Debtor filed its voluntary Chapter 11 bankruptcy petition. Debtor asserts that the services of its drivers, employees and 7 identified vendors is critical and is necessary for the day to day operations of Debtor and that it is essential that Debtor maintain its business operations pending the formulation and submission of a Chapter 11 Plan.

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O'Dowd - Chapter 7 - Bad Faith - June 11, 2005

Case No. 04-62325-7

In this Chapter 7 bankruptcy, after due notice, a hearing was held March 8, 2005, at Butte on Debtor’s Motion to Amend Schedules filed February 6, 2005. Also pending in this case and set for hearing on April 5, 2005, is the Motion to Strike Amended Schedule B filed by Stanley Steemer International, Inc. (“Stanley”) on February 16, 2005. Debtor was represented at the hearing by her counsel of record, James J. Screnar, of Bozeman, Montana, while Stanley was represented by attorney Joel E. Guthals, of Billings, Montana. The Chapter 7 Trustee, William M Kebe, Jr., of Butte, Montana, was also present at the hearing and testified. Debtor was listed as a witness by both Debtor’s counsel and Stanley. However, Debtor failed to appear at the hearing. Stanley’s Exhibits A through H were admitted into evidence without objection. At the conclusion of the hearing, the Court denied Debtor’s Motion to Amend Schedules for bad faith. For the reasons discussed herein, the Court also finds it appropriate to grant Stanley’s Motion to Strike Amended Schedule B and vacate the hearing scheduled for April 5, 2005. This memorandum contains the Court’s findings of fact and conclusions of law.

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O'Dowd - Chapter 7 Motion to Modilfy Security Agreement - UCC - February 2, 2005

Case No. 04-62325-7

In this Chapter 7 bankruptcy, after due notice, a hearing was held December 7, 2004, at Butte, on the Motion to Modify Stay filed by Gallatin Valley Furniture Co. (“GVF”) on October 29, 2004. Attorney W. Lee Stokes, of Bozeman, Montana, appeared at the hearing on behalf of GVF and in support of the Motion to Modify Stay. Attorney James J. Screnar, of Bozeman, Montana, appeared at the hearing on behalf of Debtors and in opposition to GVF’s Motion to Modify Stay. The Chapter 7 Trustee filed a consent to GVF’s Motion on November 1, 2004, and thus did not participate in the hearing. Jim Decosse (“Jim”) of GVF testified, as did Debtor, and GVF’s Exhibit 1 and Debtor’s Exhibit A were admitted into evidence without objection. This memorandum contains the Court’s findings of fact and conclusions of law.

In June of 2003, Debtor began purchasing furniture, draperies and other such items from GVF. Debtor’s purchases totaled approximately $52,000.00. GVF delivered approximately $38,000.00 worth of the items to Debtor’s home and the balance of the items remain in GVF’s possession. Jim testified that $13,000.00 worth of the items delivered to Debtor’s home are custom items that no longer have a value to GVF. �

GVF asserts in its Motion that the balance owing on Debtor’s account is $31,428.19 while Debtor maintains that she has paid GVF roughly $21,758.77 toward her purchases of $52,000.00. GVF applied the payments made by Debtor first to the custom items and then to the remainder of the items purchased. Jim testified that GVF could in theory realize about $22,000.00 from the sale of the items in Debtor’s possession and the items still in GVF’s possession.1

Debtor does not oppose GVF’s motion as it relates to the items still in GVF’s possession and further agrees that GVF has a valid security interest in the items of furniture still in GVF’s possession. Given Debtor’s position on the valid security interest in the items still in GVF’s possession and pursuant to Montana statutory law, the Court concurs with Debtor’s position. See MONT. CODE ANN. (“MCA”) §§ 30-9A-110 and 30-9A-313(1). Debtor, however, opposes GVF’s motion as it relates to the items in Debtor’s possession. Debtor’s opposition is premised on the fact that the items in Debtor’s possession were delivered either in December of 2003, or prior to that date. However, it was not until March 8, 2004, that GVF had Debtor sign a promissory note for the items purchased. GVF proceeded to file a UCC-1 statement with the Gallatin County Clerk and Recorder, on March 9, 2004.

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Parrotte - Chapter 13 - Duplicative Fees - February 4, 2005

Case No. 03-60043-13

In this Chapter 13 bankruptcy case, R. Clifton Caughron (“Applicant”), on behalf of his law firm and as Debtor’s attorney, filed on January 20, 2005, Debtor’s Application for Professional Fees and Costs (“Application”) and filed a Notice to all appropriate persons requesting an award of attorney’s fees in the amount of $1,278.12 and costs in the amount of $21.61 for a total of $1,299.93. Applicant previously received $1,050 ($750 for fees and $300 for court fees and costs) from a retainer and $1,000 from the Chapter 13 trustee through the confirmed plan. In actuality, Applicant has billed $3,028.12 for fees and $321.61 for court fees and costs, from December 4, 2002, through April 26, 2004. The Court notes that nearly nine months have passed from his last date of service until he submitted the Application. The Court does note that Applicant did not charge for preparing the Application. No objections have been filed to the Application. Based upon the Court’s independent review of the file, the detail provided, the nature and extent of the services rendered, and even with the lack of any objections, the Court finds, after completing its independent review, that some of the services rendered andcosts incurred by R. Clifton Caughron and his firm are not reasonable and necessary.

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Rankin-UST v. Costello - Chapter 7 - Bankruptcy Petition Preparer - January 14, 2005

Case No. 04-61399-7

In this adversary proceeding initiated by the Office of U.S. Trustee seeking fines, injunctive relief, disallowance and turnover of fees paid by the Debtor to the Defendant Susan Lamoyne Costello (“Costello”) for numerous violations of 11 U.S.C. § 110 governing bankruptcy petition preparers (“BPP”), and unauthorized practice of law, the U.S. Trustee filed a motion for summary judgment on October 17, 2004, together with a Statement of Uncontroverted Facts, supporting Memorandum of Law, and attachments including a Declaration of Assistant U.S. Trustee Neal G. Jensen (“Jensen”), and three (3) exhibits consisting of transcripts of meetings of creditors conducted pursuant to 11 U.S.C. § 341(a) in the above captioned Chapter 7

case and in two (2) other Chapter 7 cases, In re Walter Allen Metcalf (“Metcalf”), Case No. 04-61042-7 and In re Debra Jo Lemond (“Lemond”) Case No. 04-60656-7. Costello, in propria persona, filed a response in opposition to summary judgment and request for hearing, stating that she is a BPP but contending (1) that requiring her to disclose her social security number on the bankruptcy petition unjustly discriminates against her and denies her equal protection; (2) that she is entitled to reasonable compensation for secretarial-type services; and (3) that she did not give the Debtor legal advice or engage in fraudulent, unfair and deceptive acts. Costello failed to file a separate “Statement of Genuine Issues” as required by Mont. LBR 7056-1(a)(2), setting forth specific facts which she asserts establish genuine issues of material fact and preclude summary judgment.

Trial of this cause was set for November 18, 2004, along with a hearing on the U.S. Trustee’s motion for summary judgment. Trial was continued by Order entered November 8, 2004, but the hearing on the U.S. Trustee’s motion went forward and was held after notice on November 18, 2004. No appearance was made by the parties, and the Court took the matter under advisement. �

This Court has jurisdiction via 28 U.S.C. § 1334 and § 157(b)(1). The U.S. Trustee’s action against Costello is a core proceeding under § 157(b)(2)(A). See Frankfort Digital Services, Ltd., et al. v. Neary (In re Reynoso), 315 B.R. 544, 549 (9th Cir. BAP 2004); see also Ostrovsky v. Monroe (In re Ellingson), 230 B.R. 426, 428, 17 Mont. B.R. 361, 362 (Bankr. D. Mont. 1999). At issue is whether Costello violated § 110 by failing to include her address and complete social security number on Rankin’s and Metcalf’s bankruptcy petitions, failing to file disclosures of fees, and by collecting and paying Lemond’s filing fee, and whether Costello engaged in the unauthorized practice of law subject to fines, injunction and other sanctions under § 110 when she prepared the petitions, schedules and statements in the 3 cases. After review of the record, the U.S. Trustee’s motion, Statement of Uncontroverted Facts, Jensen’s Declaration and attached § 341(a) meeting transcripts, for the reasons set forth below the U.S. Trustee’s motion for summary judgment will be granted. This Memorandum includes the Court’s findings of fact and conclusions of law pursuant to F.R.B.P. 7052.

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Reeser - Chapter 7 - Willful Violation of Automatic Stay - September 26, 2005

Case No. 05-61614-7

On July 12, 2005, Debtors filed a motion for sanctions for violating the automatic stay against Clark Fork Valley Hospital and Collection Professionals, Inc. On July 25, 2005, Collection Professionals, Inc., filed a response and requested a hearing for September 8, 2005.� The Court conducted a hearing in Missoula on September 8, 2005. Harold V. Dye (“Dye”) appeared on behalf of the Debtors, who were not present. Bruce Gobeo (“Gobeo”) appeared on behalf of Collection Professionals, Inc. (“CPI”). Exhibits 1 through 6 were admitted without objection. No witnesses testified. Dye and Gobeo presented legal argument. After review of the motion for sanctions, the exhibits, the objection, the record and applicable law, this matter is ready for decision. For the reasons set forth below Debtors’ motion for sanctions is granted.

This Court has jurisdiction of this Chapter 7 case under 28 U.S.C. § 1334(a). Debtors motion for sanctions is a core proceeding under 28 U.S.C. § 157(b)(2) and 11 U.S.C. § 362(h).� This memorandum of decision includes the Court’s findings of fact and conclusions of law.� These contempt proceedings are governed by F.R.B.P. 9020 and 9014.

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Retz-Abbey v. Retz - Judgment on Pleadings - June 17. 2005

Case No. 04-60272-7

In this adversary proceeding the Defendant/Debtor Ryan James Retz filed a motion on April 11, 2005, for judgment on the pleadings pursuant to F.R.B.P. 7012(b) (applying Fed. R. Civ. P. 12(c) in adversary proceeding) seeking judgment against Plaintiff Timberland Construction, L.L.C. (“TCLLC”) dismissing Count I of the amended complaint due to the expiration of the bar date under F.R.B.P. 4007(c) for filing a complaint to determine dischargeability of a debt, before TCLLC filed its complaint. Plaintiffs filed an objection, and the matter was heard at Missoula on June 2, 2005. Attorneys Harold V. Dye appeared for the Defendant, and Edward A. Murphy appeared for the Plaintiffs Donald G. Abbey (“Abbey”) and

TCLLC. No testimony or exhibits were admitted, and the Court took the matter under advisement at the conclusion of the hearing. After review of the record and applicable law, for the reasons set forth below Defendant’s motion will be granted and a separate Judgment shall be entered dismissing TCLLC’s Count I as barred by Rule 4007(c). �

This Court has jurisdiction of this adversary proceeding under 28 U.S.C. § 1334(b).� Plaintiffs’ claims seeking denial of Debtor’s discharge and exception from discharge are core proceedings under 28 U.S.C. § 157(b)(2)(I) and (J).

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Retz-Abbey v. Retz - Motion to Dismiss - Mootness - June 21 ,2005

Case No. 04-60302-7

On March 8, 2005, Plaintiff initiated this adversary proceeding against Defendant. On April 8, 2005, Defendant moved to dismiss counts two, five, six, seven and eight of the complaint, but used the incorrect docket code for the motion. On April 11, 2005, Defendant refiled the same motion to dismiss counts two, five, six, seven and eight pursuant to F.R.B.P.

7012(b), which incorporates Fed. R. Civ. P. 12(b)(6), and used the correct docket code for such motion. On April 21, 2005, Plaintiff filed a response and requested a hearing on Defendant’s motion. The hearing was scheduled for June 2, 2005, in Missoula. On May 26, 2005, Defendant filed a brief in support of his motion to dismiss. On June 1, 2005, Plaintiff filed an amended complaint, in an effort to address the issues raised in Defendant’s motion to dismiss, and filed a supplemental response to Defendant’s motion to dismiss. The Court held a hearing on June 2, 2005, concerning the Defendant’s motion to dismiss, and Plaintiff’s response thereto. At the hearing, Attorneys Harold V. Dye, of Missoula, Montana, appeared for the Defendant, and Edward A. Murphy and Michael G. Black, of Missoula, Montana appeared for the Plaintiff Donald G. Abbey. No testimony or exhibits were admitted, and the Court took the matter under advisement at the conclusion of the hearing, subject to Defendant submitting a report to the Court as to whether the amended complaint filed on June 1, 2005, cured the relief requested by Defendant’s motion, and thereby rendered Defendant’s motion moot. Defendant has not filed an answer to the original complaint or to the amended complaint. �

After reviewing the record and applicable law, and for the reasons set forth below Defendant’s motion to dismiss counts two, five, six, seven and eight of the original complaint under F.R.B.P. 7012(b), which incorporates Fed. R. Civ. P. 12(b)(6), will be denied as the motion has been rendered moot by the amended complaint filed by Plaintiff.

This Court has jurisdiction of this adversary proceeding under 28 U.S.C. § 1334(b).� Plaintiffs’ claims seeking denial of Debtor’s discharge and exception from discharge are core proceedings under 28 U.S.C. § 157(b)(2)(I) and (J).

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Retz - Chapter 7 - Sale of Stock by Trustee - Good Faith - June 14 ,2005

Case No. 04-60302-7

After expedited notice, hearing was held at Missoula on June 8, 2005, on the Trustee’s Notice (Docket # 140) of Proposed Sale of 24,000 shares of Debtor’s stock in Timberland Construction, Inc. (“TCI”), and objection1 thereto filed by the Debtor on May 16, 2005 (Docket # 152). The Trustee Richard J. Samson (“Samson”) appeared and testified in support of the proposed sale. The Debtor Brendon Keith Retz (“Retz”) appeared and testified in opposition, represented by attorney Harold V. Dye (“Dye”). Proposed purchasers of the TCI stock Donald G. Abbey (“Abbey”) and LDP Holdings, LLC (“LDP Holdings”) were represented by attorney Edward A. Murphy (“Murphy”). Exhibit (“Ex.”) 11, the proposed Agreement for sale of the TCI

An objection to the proposed sale was filed by former Custodian/Receiver, James H. Cossitt on May 17, 2005 (Docket # 156), but that objection was withdrawn on June 6, 2005 (Docket # 169). Stock, was admitted into evidence, as were Ex. 4, 5, and 62. Also testifying were Abbey’s attorney Michael G. Black (“Black”), who negotiated Ex. 11 with Samson’s attorney, David Chisholm, certified public accountant (“CPA”) William Matteson (“Matteson”) who is employed as a consultant for Abbey, and Retz’s attorney Thomas T. Tornow (“Tornow”) . At counsel’s request the Court took judicial notice of the complaint filed in Adversary Proceeding No. 04/00049, and also the final report filed in Adv. No. 04/49 by former Custodian/Receiver James H. Cossitt (“Cossitt”) on October 1, 20043. At the close of the testimony at hearing Dye requested the Court leave the record open and permit Retz to obtain deposition testimony of Glacier Bank executives, Dennis Beams and Nick Brodnick, neither of which were identified on Retz’s witness list (Docket #167). Samson objected, and the Court denied Retz’s request to leave the record open, but allowed Dye to make an offer of proof on the record4. Thereafter, the Court closed the record and Court took the Trustee’s Notice of Proposed Sale of TCI stock, Docket #140, under advisement. After review of the record and applicable law, this matter is ready for decision. For the reasons set forth below, Retz’s objection will be overruled and the latter 3 exhibits relate to Trustee’s motion to approve compromise settlement, (Docket #136), and Retz’s objection thereto (Docket # 150), which shall be the subject of a separate Memorandum.

The First Amended & Substituted Final Report was filed with a motion for approval and discharge of Cossitt as receiver, Docket #84, with supporting exhibits, Docket #85, filed on October 8, 2004. The final report and discharge have not yet been finally decided and are the subject of a pending confidential settlement between the parties.

Retz’s offer of proof is that the bankers would testify that Retz told them at a meeting at which Abbey was present, that Retz said he had an agreement with Retz for land on Shelter Island rather than the customary 10% profit charged for construction, and that Retz thought Abbey would help him learn how to be successful in business, and that Abbey did not dispute Retz’s statement. Trustee will be authorized by separate Order to sell the TCI stock pursuant to Ex. 11.

This Court has jurisdiction of this Chapter 7 bankruptcy under 28 U.S.C.§ 1334(a). The Trustee’s proposed sale of 24,000 shares of Debtor’s TCI stock is a core proceeding under 28 U.S.C. § 157(b)(2)(N). This Memorandum includes the Court’s findings of fact and conclusions of law.

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Retz - Chapter 7 - Settlement - June 20, 2005

Case No. 04-60302-7

After expedited notice, hearing was held at Missoula on June 8, 2005, on the Trustee’s Motion to Approve Proposed Settlement (Docket # 136) between Timberland Construction, Inc. (“TCI”), Timberland Construction, LLC (“TCLLC”), Leesa Valentino (“Valentino”), and Lawrence Kirkemo and Kirkemo & Company (together “Kirkemo”). The Debtor filed an objection on May 16, 2005, (Docket # 150) on the grounds that the settlement results in no payment to the estate, that the settlement was negotiated by counsel for creditor Donald G. Abbey (“Abbey”) who has a documented vendetta against the Debtor, and the proposed settlement is tainted by a significant and undisclosed conflict of interest. The Trustee Richard J. Samson (“Samson”), of Missoula, Montana, appeared and testified in support of the proposed settlement. The Debtor Brendon Keith Retz (“Retz”) appeared and testified in opposition, and was represented by attorney Harold V. Dye (“Dye”), of Missoula, Montana. Abbey was represented by attorney Edward A. Murphy (“Murphy”), of Missoula, Montana. Exhibits (“Ex.”) 4, 5 and 6 were admitted into evidence. Also testifying were Abbey’s and TCLLC’s attorney

Michael G. Black (“Black”), of Missoula, Montana, certified public accountant (“CPA”) William Matteson (“Matteson”) who is employed as a consultant for Abbey, and Retz’s attorney Thomas T. Tornow (“Tornow”), of Whitefish, Montana, who represented Retz and TCI in their claim against Valentino in state court. At counsel’s request the Court took judicial notice of the final report filed in Adv. No. 04/49 by former Custodian/Receiver James H. Cossitt (“Cossitt”) on October 1, 20041. At the conclusion of the parties’ cases-in-chief the Court closed the record and Court took the Trustee’s Motion under advisement. After review of the record and applicable law, this matter is ready for decision. For the reasons set forth below, Retz’s objection will be overruled and the Trustee’s Motion to Approve Proposed Settlement will be granted and the Trustee will be authorized by separate Order to enter into the “Comprehensive, Final, Irrevocable and Mutual Release of All Claims and Rights” (hereinafter the “Settlement Agreement”) which is attached to the Trustee’s Motion (Docket # 136) with TCI, TCLLC, Valentino and Kirkemo.

This Court has jurisdiction of this Chapter 7 bankruptcy under 28 U.S.C.§ 1334(a). The Trustee’s Motion to Approve Proposed Settlement is a core proceeding under 28 U.S.C. § 157(b)(2). This Memorandum includes the Court’s findings of fact and conclusions of law.

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Retz-Retz v. Abbey - Attorney Fee Claim - Motion to Dismiss - March 22, 2005

Case No. 04-60302-7

Pending in this adversary proceeding, which was removed from state court on April 22, 2004, by the Chapter 7 Trustee of the above-captioned case Richard J. Samson, is the Motion to Dismiss Claim for Attorneys’ Fees for Failure to State a Claim Upon Which Relief Can Be Granted, filed on January 25, 2005, by Third-Party Defendant James H. Cossitt (“Cossitt”) (“Cossitt’s Motion”), and objections thereto filed by Third-Party Plaintiffs Donald G. Abbey, Timberland Construction, L.L.C., Timberland Properties, L.L.C., Copperwood Properties, L.L.C., Creekwood Lots, L.L.C., Edgewood Properties, L.L.C., Riverside Properties, L.L.C., Abbey-Land, L.L.C., and Lakeshore Drive Properties , L.L.C. (collectively referred to hereinafter as “Third-Party Plaintiffs”), and by Cross-Defendant Whitefish Credit Union. Hearing on Cossitt’s Motion was held after notice at Missoula on March 14, 2005. Cossitt was represented at the hearing by attorney Keith Strong (“Strong”). The Third-Party Plaintiffs were represented by attorneys Michael G. Black (“Black”) and Edward A. Murphy (“Murphy”). Whitefish Credit Union, which joined and adopted the Third-Party Plaintiffs’ objection, was represented by attorney Ronald A. Bender (“Bender”). No testimony or exhibits were admitted. The Court heard statements from the parties’ counsel, after which it took the matter under advisement.

The instant proceedings are related to the above-captioned Chapter 7 bankruptcy case under 28 U.S.C. § 1334(b), and involves a multitude of claims, some of which are core and others non-core.

Cossitt’s reply filed February 18, 2005, admitted that his Motion to Dismiss does not reach the Third-Party Plaintiffs’ claims for disgorgement of the fees which Cossitt has already collected or for disallowance of Cossitt’s pending fee requests, but instead seeks dismissal only of the Third-Parties’ claims for attorneys’ fees incurred in prosecution of their legal malpractice action against Cossitt. That claim is set forth in the Third-Party Plaintiffs’ Third Amended answer, affirmative defenses, counterclaim and Third-Party Complaint filed December 1, 2004, (Docket No. 1471), beginning at Part IV on page 19, incorporating preceding factual allegations and adding allegations that Cossitt breached his fiduciary responsibilities as receiver/custodian of certain of the Third-Party Plaintiffs under Montana law. Paragraph 9 on page 21 of Docket No. 147 alleges Cossitt failed to exercise due and reasonable care required of attorney for certain of the Third-Party entities and seeks treble damages under Mont. Code Ann. § 37-61-407. The prayer for relief, Part V, of Docket No. 147 prays for, inter alia, for “an award of interest, actual costs, actual expenses and actual attorneys’ fees as allowed by law or the parties’ contracts” at paragraph 16, page 28.

Cossitt filed an answer on December 20, 2004 (Docket No. 162), admitting and denying the material allegations of the Third-Parties’ claims against him and asking that the Third-Party Complaint be dismissed. In paragraph (b) of his prayer for relief, Cossitt prays that he be awarded his reasonable attorneys’ fees and costs2.

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Sauter - Collection Bureau v. Sauter - Judgment - Fraud Direct Evidence - May 2, 2005

Case No. 04-63077-7

On April 15, 2005, Plaintiff filed a motion for summary judgment, including therein an abbreviated statement of uncontroverted facts. The statement of uncontroverted facts is not entirely in compliance with Mont. LBR 7056-1, as the statement does not “specify the specific portion of the record where [each] fact can be found.” See statement numbers 5, 7 and 8.

On April 25, 2005, Defendants filed a response in opposition to summary judgment and requested a hearing for May 5, 2005, at 1:30 p.m., in Missoula, Montana. Given an error in the docket text, Defendants were instructed to resubmit the filing to correct the hearing information.

On April 26, 2005, Defendants refiled their response in opposition to summary judgment, together with an affidavit by Julia Sauter, and requested a hearing for May 5, 2005, at 1:30 p.m., in Missoula, Montana. Defendants’ response and statement of genuine issues admit the facts contained in statement numbers 1, 2, 6, 7, 8, 9. Defendants dispute they provided Ms. Kelly with a certificate of liability insurance and contend that an insurance company representative provided Ms. Kelly with a certificate of liability insurance. Statement no. 3. Defendants dispute that Ms. Kelly relied on the representation that a certificate of liability insurance existed. Statement no. 4. Defendants deny the “workmanship was very poor.” Statement no. 5. Defendants admit that a default judgment was entered that conforms to the statement contained in Plaintiff’s statement number 8.

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Schmeresy-Samson v. Schmeresy - Hearsay - March 21 ,2005

Case No. 02-51838-7

Pending in this adversary proceeding to recover property are: (1) the Defendant Dorothy M. Schmersey Trust’s (hereinafter referred to as the “Trust” or “Dorothy’s Trust”) motion for summary judgment, filed January 27, 2005, seeking dismissal of the Plaintiff/Trustee’s complaint on the grounds Plaintiff’s only evidence of a “transfer” to Dorothy M. Schmersey (“Dorothy”) from her son the Debtor Paul R. Schmersey (“Paul”), is inadmissible hearsay from a judgment debtor examination (“JDE”) of Paul taken in a state court proceeding of which Dorothy and her Trust had no notice or knowledge; and (2) the Plaintiff’s motion1 for a preliminary ruling on admissibility of Paul’s JDE former testimony since he is unavailable to testify under FED. R. EVID. 804(b)(1), and under the catchall residual exception of FED. R. EVID. 807. A hearing on both matters was held at Missoula after due notice on March 10, 2005. Dorothy’s Trust was represented by attorney Harold V. Dye (“Dye”), and the Plaintiff was represented by attorney James H. Cossitt (“Cossitt”). No testimony or exhibits were admitted into evidence. The Court heard argument from counsel, after which the Court took both matters under advisement. �

The parties admit that this Court has jurisdiction in this adversary proceeding under 28 U.S.C. § 1334 and that it is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (F), (H) and (O).� At issue is (1) whether Paul’s former testimony is not excluded by the hearsay rule under Rule 804(b)(1) when the Defendant did not have notice of or knowledge of Paul’s JDE or an opportunity to develop Paul’s testimony by direct, cross or re-direct examination; (2) whether Paul’s former testimony is not excluded by the hearsay rule under the residual exception, Rule 807; and (3) whether Defendant has satisfied the burden for summary judgment under Rule 56(c), FED. R. CIV. P. (applicable in adversary proceedings under F.R.B.P. 7056) of showing that there is no genuine issue as to any material fact and that Defendant is entitled to summary judgment as a matter of law. For the reasons set forth below, the Court will enter a separate Order denying Plaintiff’s motion to admit Paul’s JDE testimony as hearsay under Rule 802, since the Defendant did not have an opportunity and similar motive to develop Paul’s testimony by direct, cross or re-direct examination as required in order to not exclude as hearsay former Plaintiff’s motion was filed twice, on January 28, 2005, and January 30, 2005 (Docket Nos. 27 and 28. Testimony under Rule 804(b)(1), and the Court deems application of the residual exception of Rule 807 inappropriate. Notwithstanding that decision, Defendant’s motion for summary judgment also will be denied for failure to satisfy the burden of showing that there is no genuine issue as to any material fact.

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Schmeresy-Samson v. Schmeresy - Transfer - Transferee - June 24 ,2005

Case No. 02-51838-7

In this adversary proceeding the Plaintiff/Chapter 7 Trustee Richard J. Samson (“Samson”) filed a complaint seeking to recover from the Defendant Dorothy Schmersey Trust1 (hereinafter the “Trust”) the sum of $266,650.33 in proceeds from the sale of real property the Trust was substituted for Dorothy M. Schmersey, who is deceased, by Stipulation between the plaintiff and the Trust filed October 14, 2004, and approved the same date.

Asserting claims for relief under theories of actual and constructive fraud under state and federal law, and as an insider preference under 11 U.S.C. § 547(b). The Trust filed an answer denying that any transfers of proceeds was made by the Debtor Paul R. Schmersey (“Paul” or “Debtor”) to the Trust or to Dorothy M. Schmersey (“Dorothy”). Trial of this cause was set for April 7, 2005, at Missoula by Scheduling Order entered January 13, 2005. The parties filed a Proposed Pretrial Order on March 30, 2005, setting forth agreed facts and elements of their claims and defenses, which the Court approved the following day by Order entered March 31, 2005.

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Schmeresy-Samson v. Schmeresy - Service - Local and Forgien Address -

August 15, 2005

Case No. 02-51838-7

In this adversary proceeding filed by the Plaintiff/Chapter 7 Trustee Richard J. Samson for turnover and determination of estate’s interest in property, after due notice, a hearing was held at Missoula on July 7, 2005, on the Motion, filed April 15, 2005, by Defendants Arthur G. Schmersey Revocable Trust (hereinafter the “Trust”), Leslie R. Monroe, and John S. Schmersey to compel proper service by the Trustee/Plaintiff Richard J. Samson (“Samson”) on the Defendant/Debtor Paul R. Schmersey, and to stay these proceedings until service is effected. The Plaintiff Samson filed an objection on the grounds that service was made upon the Debtor at the address shown on Debtor’s petition and statement of affairs, and that the Debtor has not filed a statement of change of his address as required by F.R.B.P. Rule 4002(5). Attorney Harold V. Dye (“Dye”) appeared at the hearing in support of Defendants’ Motion. The Plaintiff’s attorney James H. Cossitt appeared. The Defendant/Debtor Paul R. Schmersey did not appear. No testimony or exhibits were admitted. The Court heard argument from counsel, after which the Court took the Defendants’ Motion to compel service and stay proceeding under advisement.� After review of the record and applicable law, Defendants’ Motion will be denied.

This Court has jurisdiction of this adversary proceeding under 28 U.S.C. § 1334(b). This adversary proceeding to determine the estate’s interest in and for turnover of nonexempt property is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (E).

Defendants move to stay this adversary proceeding and compel the Plaintiff to serve the Debtor with the summons and complaint in accordance with Fed. R. Civ. P. 4(f) (applicable in adversary proceedings under F.R.B.P. 7004(a)) because the Debtor resides in a foreign country, i.e., New Zealand, and Plaintiff’s service on the Debtor by first class mail pursuant to F.R.B.P. 7004(b)(9) is not appropriate for an individual in a foreign country. Defendants argue that the first clause of Rule 7004(b) limits service by first class mail to within the United States.� Movants seek to compel service on the Debtor pursuant to Rule 4(f) because they may be subject to conflicting claims by the Debtor in the future if he is not properly served and thereby bound by any judgment issued herein.

The Plaintiff objects to Defendants’ Motion on the grounds that the Debtor was served with the summons and complaint pursuant to Rule 7004(b)(9) at the Debtor’s address shown on his bankruptcy petition, and Debtor has not filed a statement of change of address as required by F.R.B.P. 4002(5). Plaintiff’s objection is well taken.

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Sharp - Chapter 13 - Disgorgement of Fee - Lack of Client Consultation -

September 7, 2005

Case No. 05-60796-13

In this Chapter 13 bankruptcy, after due notice, a hearing was held August 16, 2005, in Butte on the Chapter 13 Trustee’s Amended Motion for Order Compelling Turnover Disgorgement of Attorney’s Fees filed July 13, 2005, together with the objection thereto filed by attorney Charles A. Smith. The Chapter 13 Trustee, Robert G. Drummond, appeared at the hearing in support of the Amended Motion for Order Compelling Turnover Disgorgement of Attorney’s Fees. Objecting attorney Charles A. Smith appeared at the hearing with attorney Robert Cummings. Debtor, Charles A. Smith and Chantelle R. McDuffie testified and Exhibits A, B, D and E were admitted into evidence without objection. At the conclusion of the hearing, the Court took the matter under advisement. This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

Debtor testified that when his bills began mounting, Debtor used his credit cards to cover his day-to-day living costs. However, when Debtor’s wages were no longer sufficient to cover the minimum payments due on Debtor’s credit card bills, Debtor turned to the yellow pages in search of help from an attorney. Debtor found the name of Charles A. Smith and proceeded to have his wife Carmen contact Mr. Smith regarding the possibility of filing bankruptcy.

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Smith - Chapter 13 - Student Loans - Luxury Items - January 7, 2005

Case No. 04-62741-13

In this Chapter 13 bankruptcy, after due notice, a hearing was held December 7, 2004, at Butte on confirmation of Debtors’ Amended Chapter 13 Plan filed December 4, 2004, together with the Trustee’s objection thereto. The Debtors Robert Smith (“Robert”) and Carol Smith (“Carol”) appeared at the hearing and testified, and were represented by attorney R. Clifton Caughron. The Chapter 13 Trustee, Robert G. Drummond, appeared at the hearing in opposition to confirmation of Debtors’ Amended Chapter 13 Plan. In particular, the Trustee argues that Debtors are failing to commit all their disposable income to their plan as required by 11 U.S.C. § 1325(b)(1) and that Debtors are unreasonably discriminating among creditors as prohibited by U.S.C. § 1322(b)(1). Exhibits A, B and C were admitted into evidence without objection. At the conclusion of the hearing, the Court took confirmation of Debtors’ Amended Chapter 13 Plan under advisement. The Court has reviewed the record and applicable law and this matter is ready for decision. For the reasons discussed herein, the Trustee’s objections are sustained and confirmation of Debtors’ Amended Chapter 13 Plan is denied.

Debtors’ Amended Chapter 13 Plan provides for payments of $150.00 per month for 19 months and $291.00 per month for 17 months, for total plan payments of $7,797.00 over the life of Debtors’ 36 month plan. The Trustee filed an objection to confirmation of Debtors’ Amended Chapter 13 Plan on October 12, 2004, arguing that Debtors’ Amended Plan is not entitled to confirmation because: (1) Debtors propose to pay a student loan creditor outside the Plan separately from the class of unsecured creditors, which the Trustee contends unfairly discriminates among creditors in a class in violation of 11 U.S.C. § 1322(b)(1); (2) that payments of $141.00 per month for a period of 19 months on a horse trailer used in Debtors’ horse training and roping business, which operates at a loss, is not reasonably necessary for the maintenance of Debtors’ household and must thus be included in Debtors’ disposable income calculation pursuant to 11 U.S.C. § 3125(b)(1)(B); and (3) that Debtors should have to include the other business expenses set forth on Schedule J, which the Trustee contends are understated, in the disposable income calculation because, as asserted earlier, Debtors operate their horse training and roping business at a loss.�

This is a core proceeding under 28 U.S.C. § 157(b)(2)(L) involving confirmation of a plan. At issue is: (1) whether Debtors’ Amended Chapter 13 Plan discriminates unfairly against the class of unsecured claims in violation of § 1322(b)(1), when it provides for the continuation of regular payments on Carol’s student loan debts directly to those creditors while paying other unsecured nonpriority claims pro rata; and (2) whether Debtors are failing to commit 100% of their disposable income to their Amended Chapter 13 plan when Debtors Schedule J includes payment on a horse trailer of $141.00 per month, payment of $60.00 per month for the lease of roping steers, and payment for other business expenses of $290.00 per month. This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

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St. Marie Development Corporation of Montana Inc. Involuntary Chapter 7 -

December 5, 2005

Case No. 05-62166-7

Petitioners seeking to place the alleged Debtor St. Marie Development Corporation of Montana, Inc. (“SMDC”) in a Chapter 7 bankruptcy, through counsel Ronald R. Arneson, have filed on November 10, 2005, a “Motion for Reconsideration” of the Court’s Memorandum of Decision filed October 17, 2005 (DK No. 51) and Final Judgment thereon with award of attorney’s fees and costs to SMDC filed November 9, 2005 (DK No. 57). Contrary to Montana Local Bankruptcy Rule (“Mont. LBR”) 9013-1(b) and (d)1, the motion does not specify or cite any Bankruptcy Rule of Procedure or Federal Rule of Civil Procedure under which the petitioners seek relief. These failures alone are grounds to deny the motion. An amended motion was filed on November 23, 205, evidently to cure notice requirements, but it too is deficient.

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St. Marie Development Corporation of Montana Inc. Involuntary Chapter 7 - Denial of Reconsideration - October 17 ,2005

Case No. 05-62166-7

After due notice, a hearing was held on September 13, 2005, on the Involuntary Chapter 7 Petition to adjudicate St. Marie Development Corporation (“SMDC”) a Chapter 7 debtor pursuant to 11 U.S.C. § 303(b). The petition was filed by R.W. Dunseth (“Dunseth”), Glacier Trail Management Service (“GTMS”) by Marv W. Bethea, President, and Patrick Suminski (“Suminski”), and alleges (1) petitioners are eligible creditors of SMDC, (2) which is a person against whom an order for relief may be entered under Title 11 of the United States Bankruptcy Code, and (3) that the alleged Debtor, SMDC, is generally not paying such alleged debtor’s debts as they become due and such debts are not subject to bonafide dispute. The petition recites Dunseth is owed $55,196.06, GTMS is owed $137,750.00, and Suminski is owed $7,500.00.� Attached to the petition is a list of alleged creditors totaling $388,707.00. SMDC filed an answer and counterclaim to the petition stating Dunseth and GTMS debts are contingent as to liability and subject to bonafide dispute. Further, the answer alleged that Suminski failed to comply with F.R.B.P. 2003(a) regarding transfer of claims. This matter was subsequently cured by an amended petition. SMDC admits sections 1 and 2 of the petition but denies section 3. The counterclaim alleges the petition was filed in bad faith and seeks an award of attorney’s fees and costs

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Steffens - Chapter 7 - Objection to Proof of Claim - Documentation - August 26, 2005

Case No. 04-62147-7

In this Chapter 7 case, after due notice, a hearing was held in this case and other cases at Great Falls on August 25, 2005, on the Trustee’s objections, filed July 8, 2005, to Proofs of Claim Nos. 4 filed on February 23, 2005, by World Financial Network National Bank (“World Financial”) c/o Weinstein & Riley, P.S. (“Weinstein & Riley”) for Chadwicks, and Proof of Claim No. 11 filed on March 16, 2005, by Chase Manhattan Bank U.S.A., NA (“Chase Manhattan Bank”) as successor to Bank One Delaware, NA, also c/o Weinstein & Riley, respectively, on the grounds said claims have no attachments verifying that debts are owed.� World Financial and Chase Manhattan Bank filed responses and set the matters for hearing, and included case law to support their contention that their Proofs of Claim are sufficient to establish prima facie validity under F.R.B.P. 3001(f), or at least evidence of their claims, and that Debtor’s Schedules admit the debts.

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Sula Store - Chapter 11 - Dismissal - July 28, 2005

Case No. 04-61901-11

In this Chapter 11 bankruptcy case, confirmation of the Debtor-in-Possession’s (“DIP”) Chapter 11 Plan of Reorganization, filed December 6, 2004 (the “Plan”), and the DIP’s motion, filed January 18, 2005, for valuation of security of Atlantic National Trust, LLC (“Atlantic”), and Atlantic’s objections thereto are pending. The Court held a hearing on these matters on May 5, 2005, and continued such hearing over to June 2, 2005. The DIP was represented at the hearing by attorney Harold V. Dye (“Dye”). Atlantic was represented by attorney Edward A. Murphy (“Murphy”). Licensed appraiser Tyler M. Jourdonnais (“Jourdonnais”) testified at the May 5, 2005, hearing, and the appraisal which he prepared for Atlantic, Exhibit (“Ex.”) A, was admitted into evidence over Atlantic’s objection. At the hearing on June 2, 2005, the DIP’s managing member John Kingsbury (“Kingsbury”) testified, as did licensed appraiser Thomas G. Stevens (“Stevens”), and rebuttal witness – realtor Jim Risher (“Risher”). Stevens’ Appraisal, Ex. C, was admitted. At the conclusion of the parties’ cases-in-chief the Court closed the record and granted the parties 10 days to file simultaneous briefs, which have since been filed and reviewed by the Court, together with the record and applicable law. The pending matters are ready for decision.� For the reasons set forth below, a separate Order will be entered denying confirmation of DIP’s Plan for failure to satisfy the “fair and equitable” requirement of 11 U.S.C. § 1129(b)(2)(A)(i)(II), and dismissing this case.�

This Court has jurisdiction of this Chapter 11 bankruptcy under 28 U.S.C. § 1334(a).� Confirmation of the DIP’s Plan and DIP’s motion for valuation of Atlantic’s security are core proceedings under 28 U.S.C. § 157(b)(2)(B), (L) and (O). This memorandum includes the Court’s findings of fact and conclusions of law. At issue is the valuation of Atlantic’s security, and whether DIP’s Plan satisfies the requirements of § 1129(b)(2)(A)(i)(II) with respect to the value of Atlantic’s interest in the estate’s interest in Atlantic’s security.

The ballot report shows and the Court finds that the only ballots submitted, by Farmers State Bank (Class 3.4) and Kurt and Deborah Thomas (Class 3.6), accepted DIP’s Plan. No ballots were submitted rejecting DIP’s Plan, although Atlantic objected to confirmation and is deemed to have rejected the Plan for its Class 3.5. By virtue of the ballots for Classes 3.4 and 3.6, the Court concludes that at least one class of impaired claims, has accepted the plan in satisfaction of 11 U.S.C. § 1129(a)(10).

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Sullens-Martinson v. Sullens - Objection to Discharge - June 14, 2005

Case No. 04-62115-7

The Plaintiff, Craig D. Martinson, of Billings, Montana, who is the Chapter 7 Trustee in Debtor’s main bankruptcy case, filed a Complaint on December 15, 2004, objecting to Debtor’s discharge under 11 U.S.C. §§ 727(a)(2), (a)(3), (a)(4), (a)(5) and (a)(6). The Trustee is requesting: “[J]udgment against the Debtor, turnover of all antiques, collectibles, and sports memorabilia that [the] Trustee will identify as having been owned by the Debtor prior to the filing of this bankruptcy. In addition, the trustee is asking that the Discharge of the Debtor be denied for the filing of false schedules, the failure to properly account to the Trustee for property he once owned, and the failure of the Debtor to provide the trustee with adequate information and documents to show his actual financial transactions prior to the filing of this bankruptcy.”� In their Final Pre-Trial Order filed May 12, 2005, the parties set forth the following disputed factual issues:

1. Whether the Defendant has accounted for all items of personal property that he owned when he filed this bankruptcy.

2. Whether the Defendant owned property described as antiques, collectibles and sports memorabilia that were not listed on his schedules.

3. Whether the property referred to in paragraph 2 are assets of this bankruptcy estate and need to be accounted for

4. Whether, if the Defendant did liquidate items of property prior to the commencement of his bankruptcy case, he has provided the trustee with a complete accounting of these sales transactions.

5. Whether the Defendant has provided the trustee with sufficient records and documents to explain any loss of assets or deficiency of assets. 6. Whether the Defendant has attempted to conceal property of the estate. 7. Whether the Defendant has purposefully concealed, destroyed, mutilated, falsified orfailed to preserve any recorded information from which the pre-bankruptcy sales transactions might be ascertained. After due notice, trial in this matter was held in Billings on May 17, 2005. The Debtor/Defendant, Jack William Sullens (“Debtor”) testified and was represented at the trial by The assets were identified more particularly at the trial in Exhibits 1 through 63 and 71 through 79. is counsel of record, James A. Patten, of Billings, Montana. Attorney Craig D. Martinson, of Billings, Montana, the Chapter 7 Trustee (“Trustee”), was also present at the trial in his capacity as counsel for the Chapter 7 Trustee. In addition to the Debtor, the Trustee called Linda Clausing, Tracy Hoen and Carly Clausing as witnesses. The Trustee’s Exhibits 1 through 82 and the Debtor’s Exhibits A through Q were admitted into evidence without objection.

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Sykes-Sykes v. Ocwen - Civil Contempt - Inherent Sanction Authority - June 17, 2005

Case No. 02-30076-13

On May 31, 2005, Defendants, through their counsel, Charles J. Peterson and Matthew R. Kolling of the Mackoff, Kellogg Law Firm of Dickinson, North Dakota, filed a motion for summary judgment, together a statement of uncontroverted facts and brief. On June 13, 2005, Plaintiffs, through their counsel, Harold V. Dye, of Dye & Moe, P.L.L.P., of Missoula, Montana, filed their opposition to the motion for summary judgment together with a statement of disputed facts filed on June 14, 2005 and requested a hearing on July 7, 2005, the same day that this adversary proceeding is scheduled for trial. On June 15, 2005, Defendants filed a reply to the

opposition filed by the Plaintiffs. Although the motion for summary judgment and the opposition thereto is scheduled for hearing on July 7, 2005, the Court concludes that the matter is ripe for decision so the trial may proceed on July 7, 2005. The Court notes that Defendants’ filed on July 17, 2005, a motion to continue trial, given the pending motion for summary judgment.� Defendants’ motion to continue, doc. # 15, is denied herein. As set forth herein, Defendants’ motion for summary judgment is denied and the hearing on the motion for summary judgment is vacated; this adversary proceeding shall proceed to trial on July 7, 2005, at 9:00 a.m. in Missoula as scheduled by prior Order.

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Verschoot - Chapter 7- Taxes -16th Ammendment - Summary Judgment - April 4, 2005

Case No. 04-61722-7

Debtors commenced the above-referenced Chapter 7 case on June 2, 2004. Subsequently, Debtors filed a document entitled “11 USC 9014 motion to contest creditors Mary Koritnik and Larry Colliers claims as falsely stated”. The above pleading was filed on August 30, 2004, and was treated by the Court as an objection by Debtors to Proof of Claim No. 2 filed by the Internal Revenue Service (“IRS”) on August 9, 2004.1 Debtors’ objection is premised on Debtors’ assertion that the United States lacks authority under the Sixteenth Amendment of the United States Constitution to tax income, the belief that income taxes are excise taxes and on allegations that the actions taken by various agents or officers of the IRS were in violation of 26 U.S.C. §

The IRS filed a claim asserting a combined debt against both Debtors in the total sum of $33,669.11, of which $1,684.97 is listed as unsecured, $27,520.09 is listed as secured and $4,464.05 is listed as a priority claim. The unsecured portion of the claim relates to penalties.� The secured portion of the claim stems from income taxes owing for the tax years ending December 31, 1995, 1997, 1998, 1999 and 2000. The priority portion of the claim pertains to income taxes owing for the tax year ending December 31, 2001.

7214. The IRS filed a response to Debtors’ objection on September 9, 2004, arguing that Debtors’ objection is frivolous. In accordance with this Court’s Local Rules, the IRS also noticed a hearing on Debtors’ objection for October 21, 2004. Debtors received a discharge of their Chapter 7 debts on September 21, 2004.

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Weiss - Chapter 7 - Marriage Dissolution - Lien Avoidance - February 14, 2005

Case No. 04-63826-7

In this Chapter 7 bankruptcy, after due notice, a hearing was held February 8, 2005, at Butte on Debtor’s Motion to Avoid Lien under 11 U.S.C. § 522(f), wherein Debtor seeks to avoid a lien held by Janice M. Kuhn (“Janice”) against Debtor’s homestead property. At the hearing, attorney Robert T. Cummins appeared on behalf of Debtor and attorney R. Clifton Caughron appeared on behalf of Janice. Both Debtor and Janice testified and Debtor’s Exhibits A and B were admitted into evidence without objection. At the conclusion of the hearing, the Court took the matter under advisement. This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

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Weiss - Chapter 13 - Bad Faith - Conversion to Chapter 7 - January 26, 2005

Case No. 04-62792-13

Pending in this Chapter 13 case are the Trustee’s two (2) motions to convert this case to Chapter 7 filed November 10, 2004, and November 29, 2004; and the motion to convert or dismiss and motion to modify stay filed by creditor Bank of the Rockies, N.A. (hereinafter the “Bank”) on November 15, 2004. The Debtor filed objections to the Trustee’s and Bank’s motions, and hearing on these matters was held after due notice at Great Falls on December 16, 2004, at the conclusion of which the Court took all matters under advisement. After review of the record and applicable law, for the reasons set forth below the motions to convert are granted and this case is converted to a case under Chapter 7. In addition the Bank’s motion to modify stay is granted and the stay is modified to authorize the Bank to proceed with foreclosure of its collateral under applicable nonbankruptcy law, provided that the Chapter 7 Trustee appointed in this case shall have ten (10) days to request a hearing and relief.

This Court has original and exclusive jurisdiction over this Chapter 13 bankruptcy case under 28 U.S.C. § 1334(a). The Trustee’s motions to convert and the Bank’s motions to dismiss or convert and to modify stay both are core proceedings under 28 U.S.C. § 157(b)(2)(A) and (G).

At the hearing on December 16, 2004, the Debtor Bernadean Weiss (“Bernadean”) appeared and testified, represented by attorney R. Clifton Caughron. The Chapter 13 Trustee Robert G. Drummond filed a consent to the Bank’s motion to modify stay and appeared in support of both of his motions to convert. The Bank was represented by attorney Joel P. Guthals (“Guthals”), and the Bank’s president Michael E. Grove (“Grove”) testified. The Bank’s Exhibits (“Ex.”) A, B, C, D, and Trustee’s Ex. A, C, D, E and H, all were admitted into evidence without objection. At the conclusion of the parties’ cases-in-chief the Court closed the record and took all matters under advisement. The Court has reviewed the record and applicable law.� These matters are ready for decision. This memorandum contains this Court’s findings of fact and conclusions of law.

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Wilbur - Chapter 7 - Objection to Claims - Certification of Class - Professional Conduct - October 4, 2005

Case No. 02-30085-7

Pending in this Chapter 7 bankruptcy are: (1) The Trustee’s motion for sanctions as amended on May 16, 2005, (Docket No. 158) against the law firm Sullivan, Tabaracci & Rhoades, P.C. (hereinafter “STR”) and attorney Donald V. Snavely (“Snavely”); (2) Trustee’s objection, filed May 16, 2005, (Docket No. 160) to Snavely’s Proofs of Claim Nos. 35 and 38; and (3) Trustee’s objection, filed May 16, 2005, (Docket No. 161) to Proofs of Claim Nos. 33, 34 and 37 filed by attorney Quentin Rhoades (“Rhoades”) for STR. Snavely and STR filed responses in opposition to the Trustee’s motion and objections. After due notice, hearing on these matters was held at Missoula on July 7, 2005. The Trustee Gary S. Deschenes (“Deschenes”) appeared represented by attorney Steven M. Johnson. Snavely appeared for himself, and Rhoades appeared for STR at the hearing. Attorney Peter R. Jarvis (“Jarvis”), who was employed by the estate as an expert, testified. Trustee’s Exhibits (“Ex.”) B, C, D, E, F, G, H, and I, and Snavely’s affidavit marked Ex. 2, all were admitted into evidence without objection. In addition, the Court took judicial notice of the Schedules and Statement of Financial

Affairs on file, and the Proofs of Claim in dispute, and certain background facts are derived from the Court’s Memorandum of Decision entered on August 19, 2005 (“Docket No. 110"), including Snavely’s testimony at the hearing held on August 13, 2003. At the conclusion of the July 7, 2005, hearing the Court allowed Snavely to make a closing argument then took the matters under advisement. After review of the record and applicable law, these contested matters are ready for decision.

This Court has exclusive jurisdiction of this case under 28 U.S.C. § 1334(a). The Trustee’s amended motion for sanctions and objections to STR’s and Snavely’s Proofs of Claim are core proceedings under 28 U.S.C. § 157(b)(2)(A), (B), (C), (K) and (O). For the reasons set forth below, the Trustee’s amended motion for sanctions will be denied without prejudice by separate Order, which shall further provide that the Trustee’s objections to STR’s and Snavely’s Proofs of Claim are sustained. Snavely’s secured claims set forth in Proofs of Claim Nos. 35 and 38 shall be disallowed, and STR’s secured claims set forth in Proofs of Claim Nos. 33, 34 and 37 shall be disallowed and STR will be allowed a claim on the basis of quantum meruit in the total amount of $1,500.00 secured by the $75,000 settlement of the estate’s claims in Cause No. CV-98-57-M-DWM in the United States District Court for the District of Montana, Missoula Division, which was previously approved by this Court.

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Williams - Chapter 7 - Effect of Prior Filing - Dismissal - September 23, 2005

Case No. 05-62358-7

In this Chapter 7 bankruptcy, after due notice, a hearing was held August 23, 2005, in Billings on the United States Trustee’s Motion to Dismiss Pursuant to 11 U.S.C. § 707(b) filed July 19, 2005, together with Debtors’ objection thereto. Neal G. Jensen, Assistant United States Trustee, appeared at the hearing, as did Debtors’ counsel of record, Dane C. Schofield. No testimony or exhibits were offered at the hearing. The Assistant U.S. Trustee and Debtors’ counsel agreed that there are no disputed issues of fact. Debtors’ counsel merely requested an additional ten days within which to file a reply to the United States Trustee’s “Reply Memorandum in Support of Motion to Dismiss Pursuant to 11 U.S.C. § 707(b)” filed August 5, 2005. The Court granted the request made by Debtors’ counsel and on September 2, 2005, Debtors filed their “Second Reply to Trustee’s Objection.” The matter is thus ready for decision.� This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

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Wright - Chapter 13 - Disposable Income - Interest Rate - November 2, 2005

Case No. 05-62400-13

In this Chapter 13 bankruptcy, after due notice, a hearing was held on October 6, 2005, in Butte on Debtors’ Motion for Valuation of Security1 and on confirmation of Debtors’ Amended Chapter 13 Plan dated August 22, 2005. The Chapter 13 Trustee, Robert G. Drummond, was present at the hearing in opposition to Debtors’ Amended Chapter 13 Plan, as was attorney John Paul on behalf of First Liberty Federal Credit Union. Debtors were represented at the hearing by their counsel of record, Stephen R. McCue. With regard to confirmation, Debtor Kenneth I. Wright (“Kenneth”) testified. At the conclusion of the hearing, the Court took the matter under advisement.

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Wylie - Chapter 7 - Objection to Claim - Reconsideration - Failure to Respond - December 7, 2005

Case No. 05-61135-7

In this Chapter 7 bankruptcy, after due notice, a hearing was held November 15, 2005, in Butte on the Motion for Reconsideration of Claims Under F.R.B.P. 3008 filed by United Student Aid Funds, Inc./Sallie Mae (“USAF”) on September 20, 2005, together with Debtors’ objection thereto. Attorney Daniel R. Sweeney appeared at the hearing on behalf of Debtors and attorney Lewis Smith appeared on behalf of USAF. Debtor Heather Wylie and Ruth Hankins testified and Exhibits 1 through 8 and 11 were admitted into evidence without objection. The admission of Exhibits 9 and 10 was denied. At the conclusion of the hearing, the Court took the matter under advisement. This Memorandum of Decision sets forth the Court’s findings of fact and conclusions of law.

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