Aldrich v. Junkert (In re Aldrich)
| Decision Date | 05 September 2013 |
| Docket Number | Bk. No. 11-60839-RBK,BAP No. MT-12-1364-JuTaPa,Adv. No. 11-00054-RBK |
| Parties | In re: JOHN TRAVIS ALDRICH and ALDORA JUNE ALDRICH, Debtors. JOHN TRAVIS ALDRICH; ALDORA JUNE ALDRICH, Appellants, v. ALBERT STEVEN JUNKERT, Appellee. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
NOT FOR PUBLICATION
MEMORANDUM*Argued and Submitted on July 25, 2013
at Butte, Montana
Appeal from the United States Bankruptcy Court
for the District of Montana
Appearances: Craig D. Martinson, Esq., of Patten, Peterman,
Bekkedahl & Green, PLLC argued for appellants
Aldora and John Aldrich; Jack E. Sands, Esq., of
Sands Law Office, argued for appellee Albert
Steven Junkert.
Before: JURY, TAYLOR, and PAPPAS, Bankruptcy Judges.
Appellee, Albert Steven Junkert (Steve), filed an adversary proceeding against chapter 71 debtors, Aldora and John Aldrich, seeking to quiet title to real property, referred to as Tract 2, that was listed in debtors' Schedule A. After a trial, the bankruptcy court entered judgment in favor of Steve, finding an enforceable oral contract between the parties for the transfer of Tract 2 and ordering debtors to quitclaim the property to Steve upon payment of $27,956.25. This appeal followed. We AFFIRM.
This is a dispute among family members. Aldora Aldrich is Steve's sister. Tract 2, consisting of 62 acres, was part of 320 acres located in Huntley, Montana, that were owned by Steve and Aldora's father and mother, Albert and Julia Junkert. Albert and Julia had five children: Steve, Aldora, Krista Junkert, Adella Hammerstrom and Allena Junkert.
In 1985, Albert and Julia deeded 20 acres from their 320-acre parcel to debtors.3 Debtors currently reside on the 20-acre parcel. For the past forty to forty-five years, Steve lived on a 19.809-acre parcel of Albert and Julia's property (Tract 1). For thirty-five or so years, Steve operated a graveland dump truck business on Tract 2. Tracts 1 and 2 comprise the northern portion of the 320-acre parcel and debtors' 20-acre parcel lies just to the south of Tract 2.
Steve, who is developmentally disabled, graduated from high school receiving a special education certificate. Julia, while alive, kept the books for Steve's business and before 2003, Steve did not have a checking account in his name. Prior to her death, Julia would invoice Steve's customers, deposit the income from Steve's business into her personal checking account and pay all Steve's bills. Steve never had a loan in his own name and when he needed a loan for his business, the loan was obtained in Julia's name. Julia also oversaw the preparation and filing of Steve's income tax returns. After Julia passed away in 2000, Allena Junkert and Aldora took over Steve's books. They would deposit Steve's business income into their personal checking accounts and would pay Steve's bills from their personal accounts.
Pursuant to a Last Will and Testament dated June 6, 2002, Albert provided for the division of his personal assets and his 300 remaining acres. Under the Last Will and Testament, debtors were not left any property, other than the 20 acres they received in 1985. Debtors' three children (Travis, Alicia and Andrea) were willed a combined sum of 42 acres. Steve was awarded 62 acres per Albert's Last Will and Testament; Allena Junkert was awarded 62 acres, which included Albert's residence; Krista Junkert was awarded 62 acres; and Adella Hammerstrom and her children were awarded a total of 62 acres.
At the time of his death, Albert's 300 remaining acres werenot subdivided, the acreage was encumbered by a mortgage4 and Albert had other miscellaneous debts. In an effort to satisfy the mortgage and debts, Albert's Estate sold approximately 65 acres to Gabel Construction, receiving net proceeds of $58,887.00. The two representatives of Albert's Estate were also contemplating selling additional acreage to Gabel Construction to fully satisfy the mortgage and debts and to pay for the expenses associated with dividing the 300 acres. Had the Estate followed through with its plan, debtors' 20 acres would be surrounded on three sides by property owned by Gabel Construction. Aldora opposed the second sale to Gabel Construction and instead wanted to keep the property together, with her children receiving the property surrounding debtors' 20 acres.
A dispute arose between Steve and Albert's Estate over some personal assets, a claim Steve was asserting against the Estate, and a claim the Estate was asserting against Steve for gravel extracted by Steve from the property. Steve hired an attorney to help him with the dispute. At some point, Aldora joined Steve in the action against Albert's Estate, although she did not have a dispute under Albert's Will. According to Aldora, she wanted to help Steve with his claims and the paperwork.
Steve, Aldora and Albert's Estate eventually reached a resolution, which was reflected in a Stipulation dated July 20, 2004. Per the Stipulation, Steve's claim against the Estate wasdisallowed in full, the Estate's claim against Steve was disallowed in full, and personal property was divided. As for the real property, the parties agreed that Aldora and Steve could purchase property that would have been sold to Gabel Construction.
On March 31, 2005, debtors and Albert's Estate entered into a Contract for the Sale and Purchase of Real Estate, whereby debtors agreed to purchase 129.3 acres which was identified as Tracts 1 through 5: Tract 1 (Steve's residence), Tract 2 (Steve's gravel pit), Tract 3 consisting of 17.306 acres, Tract 4 consisting of 17.306 acres and Tract 5 consisting of 12.853 acres. Albert's Estate and debtors agreed on a purchase price of $119,040.00 for the entire 129.3 acres and from the purchase price, debtors were given a credit for the inheritance Steve, Travis, Alicia and Andrea would have otherwise been entitled to and for funds debtors had already advanced to the Estate. However, debtors would still need approximately $41,404 to close the sale. Someone would need to obtain a loan for this amount. In addition, Steve, Travis, Alicia and Andrea would have to waive their respective inheritances of $36,863, $8,324, $8,324, and $8,324 (the values attributed to the parcels willed to them by Albert).
Although Steve had never had a loan in his own name, he explored financing for Tract 2 from friends and acquaintances (Kathleen Barnes and Vick Reichenbach). However, he did not follow through with his efforts, instead agreeing to waive his inheritance so debtors could procure financing to close the sale. Steve and debtors orally agreed that if Steve waived hisinheritance, debtors would purchase Tracts 1 through 5 and as soon as Steve repaid what he owed, Tracts 1 and 2 would be transferred to Steve. Consistent with their oral agreement, Steve waived his inheritance and debtors obtained a loan from Yellowstone Bank to complete the purchase of Tracts 1 through 5.
The sale closed on or about May 2, 2005. The settlement statement reflected a total purchase price of $119,040. In addition to the purchase price, debtors paid settlement charges of $687.00, property taxes of $3,609.74, and county taxes from May 2, 2005, to January 1, 2006, of $646.62. From the gross amount due of $123,983.36, debtors were given a $61,835.00 credit for the inheritances waived by Steve, Travis, Alicia and Andrea. Debtors were also given a credit of $15,801, representing funds previously advanced by debtors to keep Albert's Estate liquid during the probate period. The balance owed of $46,347.36 was paid with proceeds from a Yellowstone Bank loan.5 The sum of the earnest money and the loan is $62,148.36, but of the foregoing amount, $3,609.74 was for property taxes owed on debtors' property. After subtracting the inheritance waivers and the property taxes, $58,538.62 of the total funds advanced were paid to purchase Tracts 1 through 5. Of the foregoing amount, $1,333.62 was attributable to settlement charges and county taxes, leaving funds due to the Estate of $57,205.00.
In 2007, debtors refinanced the Yellowstone Bank obligation, releasing all the real property collateral except their own 20 acres. Debtors then transferred Tracts 3, 4 and 5 to Alicia, Travis and Andrea. Debtors also formed TAA, LLC in February 2009. The Articles of Organization show Kevin and Alicia Remington as the members of TAA, LLC. Debtors transferred four of their acres, and Tracts 1 and 2 to TAA, LLC on or about February 24, 2010.
In February of 2011, TAA, LLC transferred Tract 1 to Steve.6 At this same time, TAA, LLC transferred debtors' original 20 acres and Tract 2 back to debtors.
As previously noted, Steve's home is located on Tract 1. Steve temporarily left his property from August 2, 2010, to February 1, 2011, to attend an alcohol treatment program. Steve allowed a friend, Kenny, to stay at his home while Steve was away for treatment. Steve anticipated that Kenny would operate the gravel pit during Steve's absence. Debtors, however, would not allow Kenny access to Tract 2 and when Steve returned from treatment in February 2011, he discovered debtors had posted no trespassing signs and had installed chains across the gates on Tract 2. Steve contacted the sheriff, but was advised that he would have to consult with a civil attorney because title to Tract 2 was in debtors' name. Debtors have not allowed Steve to operate his gravel business since his return from alcohol treatment.
Steve has a screener plant and other personal property located on Tract 2. Steve was advised by debtors' attorney in January 2012 that he could remove his personal property from Tract 2. However, given the time of the year, it was impossible for Steve to remove his personal property, including the screener plant, from Tract 2.
While Steve was away for alcohol treatment, debtors attempted to operate Steve's gravel business by holding themselves out as the new owners of Steve's business...
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