In re Horob Livestock Inc., Bankruptcy No. 06-60149-7.

CourtUnited States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Montana
Citation382 B.R. 459
Docket NumberAdversary No. 06-00150.,Bankruptcy No. 06-60149-7.,Bankruptcy No. 06-60150-7.,Adversary No. 07-00001.
PartiesIn re HOROB LIVESTOCK INC., Debtor, and In re Todd K. Horob, Debtor. Joseph V. Womack, Plaintiff, v. Horob Livestock Inc., James L. Horob, Bea M. Horob, Larry G. Horob, Todd. Kenneth Horob, Teresa Horob, Wells Fargo Bank, National Association, Daryle Syme, Mary Ziegler, and James Ziegler, Defendants.
Decision Date17 December 2007
382 B.R. 459
In re HOROB LIVESTOCK INC., Debtor, and
In re Todd K. Horob, Debtor.
Joseph V. Womack, Plaintiff,
v.
Horob Livestock Inc., James L. Horob, Bea M. Horob, Larry G. Horob, Todd. Kenneth Horob, Teresa Horob, Wells Fargo Bank, National Association, Daryle Syme, Mary Ziegler, and James Ziegler, Defendants.
Bankruptcy No. 06-60149-7.
Bankruptcy No. 06-60150-7.
Adversary No. 07-00001.
Adversary No. 06-00150.
United States Bankruptcy Court, D. Montana.
December 17, 2007.

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Toby Alback, Billings, MT, for Todd K. Horob.

Joseph V. Womack, Billings, MT, pro se.

Horob Livestock Inc., Williston, ND, pro se.

Kevin J. Chapman, H. Malcolm Pippin, Nilles Law Firm, Williston, ND, Kevin P. Heaney, Crowley, Haughey, Hanson, Toole & Dietrich, Jon E. Doak, Billings, MT, Laura Christoffersen, Culbertson, MT, Bernard F. Hubley, Helena, MT, for Defendants.

Todd Kenneth Horob, Williston, ND, pro se.

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Teresa Horob, Williston, ND, pro se.

MEMORANDUM of DECISION

RALPH B. KIRSCHER, Bankruptcy Judge,


The Court consolidated the above-referenced Lead Adversary Proceeding 07-00001 and Adversary Proceeding 06-00150 by Order entered June 27, 2007. Defendants Todd and Teresa Horob failed to file a timely answer in this Proceeding and upon request of the Plaintiff, the Clerk entered default against Todd and Teresa Horob on February 20, 2007, but said entry of default was subsequently set aside on February 26, 2007. Todd and Teresa Horob filed an answer contemporaneously with the stipulation to set aside default, but they have not taken any action, other than filing an answer, to defend in this Adversary Proceeding.1 Todd Horob agreed to waive his Chapter 7 discharge in a Stipulation for Waiver of Discharge dated November 16, 2006. The Stipulation for Waiver of Discharge was approved by Order entered November 21, 2006.

Through various stipulations that were filed and approved, all claims against Lyle Hove, Daryle Syme, James and Mary Ziegler, d/b/a Lake Region Livestock, Hank's Wheat Ranch, Jeanne Hoglund and Martha Heller have been resolved. In addition, by stipulation filed October 10, 2007, Farm Credit Services of North Dakota, ACA, and its subsidiaries, Farm Credit Services of North Dakota, FLCA, and Farm Credit Services of North Dakota, PCA (collectively referred to as "FCS") were dismissed from this proceeding. Likewise, the Plaintiff has either dismissed or resolved all claims for punitive and money damages and Wells Fargo Bank, N.A. ("Wells Fargo") has voluntarily dismissed all its cross-claims for punitive damages along with its civil conspiracy claims. As a result of the foregoing, the Court entered a Memorandum of Decision on October 4, 2007, denying James and Bea's request for a jury trial finding that the remaining claims in the consolidated Adversary Proceedings were equitable, rather than legal, in nature.

On October 9, 2007, prior to the dismissal of FCS from this proceeding and prior to settlement of the Plaintiffs claims against Martha Heller and Jeanne Hoglund, the Plaintiff, Wells Fargo, Larry Horob ("Larry"), FCS, Martha Heller, Jeanne Hoglund, James L. Horob ("James") and Bea M. Horob ("Bea") filed a Final Pretrial Order. The Court approved the Final Pretrial Order on October 10, 2007, and in such Order noted that the Final Pretrial Order would supersede all previously filed pleadings and would govern the course of trial unless it appeared that modification of the Final Pretrial Order was necessary to prevent manifest injustice.

After due notice, trial in the consolidated Adversary Proceedings was held October 15, 16 and 17, 2007, in Billings, Montana. At the trial, the Plaintiff, Joseph V. Womack of Billings, Montana ("Trustee") appeared as attorney for the bankruptcy

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estate. In addition, Wells Fargo was represented by attorneys William Lamdin and Kevin P. Heaney of Billings, Montana; and James and Bea were represented by attorney Kevin J. Chapman of Williston, North Dakota. Larry was not represented at the trial but maintains that his defenses to Wells Fargo's cross-claims are aligned with the defenses of James and Bea in this Proceeding. The Final Pretrial Order filed by the parties specifically provides in paragraph 1D that "[a]s his defenses, Larry Horob herein adopts and incorporates, by reference herein, any and all defenses as asserted by James and Bea Horob in this matter." Thus, Larry's attorney, H. Malcolm Pippin of Williston, North Dakota, did not appear at the trial, and attorney Chapman conducted the direct examination of Larry.

At the commencement of the trial, the parties stipulated that James and Bea's Exhibits A through LL and the Trustee and Wells Fargo's Exhibits 1, 3 through 70, 72 through 77, 80 through 118, 125, 130 through 138, 150 through 153, 156 and 157 could be admitted into evidence without objection. The parties similarly stipulated that Exhibit 2 could be admitted into evidence in accordance with the terms and conditions of an Amended Stipulation filed October 11, 2007, and approved October 12, 2007. During the trial, the parties agreed that Exhibits 118a, 118b and 118c could be admitted into evidence and the Court allowed the admission of Exhibits 71, 78, 79, 119, 141 and 155 into evidence over the objection of James and Bea. At the conclusion of the trial, the Trustee and Wells Fargo withdrew Exhibits 120 through 124, 126 through 129, 139, 140, 142 through 145 and 155. The parties also agreed that the Court could consider the deposition testimony of Jerry Grey, Richard Nichols, Duane Smith, Todd Horob, Craig Mclvor and Russ Nehring in lieu of live testimony of such witnesses. The Court heard live testimony from witnesses Jerald Lundgren, Malcolm Goodrich, Roger Cymbaluk, Jim Winchell, Russ Rogne, James, Larry, Laurie Garbel, Lois Jeanne Hoglund and Tami L. Nelson. At the conclusion of the trial, the Court granted the parties through. November 2, 2007, to file simultaneous post-trial briefs. The Trustee, Wells Fargo and James have filed their post-trial briefs and the matter is ready for decision. This Memorandum of Decision sets forth the Court's findings of fact and conclusions of law and for the reasons discussed herein, the Court finds in favor of the Trustee and Wells Fargo.

JURISDICTION

The Court has jurisdiction over these consolidated Adversary Proceedings pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), (F), (H), (K) and (O), and particularly § 157(b)(2)(F), dealing with "proceedings to determine, avoid, or recover preferences". The parties stipulate and agree, in the Final Pretrial Order that "[b]oth bankruptcies were filed voluntarily in the United States Bankruptcy Court for the District of Montana and personal jurisdiction and venue are not questioned."

BACKGROUND

The Trustee summarizes the pertinent facts in this Proceeding as follows:

1. Todd K. Horob is an individual residing in Williston, North Dakota, doing business in Montana and North Dakota. He voluntarily filed his bankruptcy petition in the United States Bankruptcy Court for the District of Montana on March 24, 2006, and an Order for Relief was entered by the Court on that date.

2. James L. Horob is an individual residing in Williams County, North Dakota,

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near Williston, North Dakota. He is the brother of Todd K. Horob.

3. Larry G. Horob is an individual residing in Williston, North Dakota. He is the father of Todd K. Horob and James L. Horob.

4. Horob Livestock Inc. is a North Dakota Corporation authorized to do business in North Dakota and Montana. Horob Livestock, Inc. voluntarily filed its bankruptcy in the United States Bankruptcy Court for the District of Montana on March 24, 2006, and an Order for Relief was entered by the Court on that date.

5. Todd K. Horob and James L. Horob are each 50% owners of the shares of stock of Horob Livestock Inc. and each is one of the two directors of the corporation. Todd is the President and Secretary/Treasurer of Horob Livestock, Inc. and James is listed as the Vice President of Horob Livestock, Inc.

6. Farm Credit Services of North Dakota ACA and its subsidiaries, Farm Credit Services of North Dakota, FLCA and Farm Credit Services of North Dakota, PCA, herein collectively referred to as "Farm Credit Services" is a federally chartered corporation whose address is 3100 10th Street SW, Minot, North Dakota 58701.

7. Wells Fargo Bank, National Association, herein "Wells Fargo," is a national banking association with an office located in Minot, North Dakota.

8. The records of the Office of the County Recorder of Williams County, North Dakota show that a portion, but not all, of the property involved in this case was and is subject to mortgages held by Farm Credit Services of North Dakota. The portion of the property that is subject to mortgages held by Farm Credit Services of North Dakota is described as follows:

Township 155 North, Range 104 West, 5th P.M.

Section 1: NW¼

Section 10: Lots 1(33.24), 2(33.16), E½ NE¼ a/k/a NE¼

Section 11: NE¼

Section 13: NW¼

Township 156 North, Range 104 West, 5th P.M.

Section 10: Lets 3(36.99), 4(36.73), E½ SE¼ a/k/a SE¼

Section 13: NW¼

Section 14: NE¼

Section 15: Lots 1(36.49), 2(36.27), E½ NE¼ a/k/a NE¼

Section 22: Lots 1(35.59), 2(35.31), E½ NE¼ a/k/a NE¼

The above described property is referred to as the "Farm Credit Mortgage Property".

9. The Farm Credit Mortgage Property secures a debt in the approximate amount of $450,000.00 owed to Farm Credit Services. Farm Credit Services' mortgages are superior to any claimed interest of the Trustee and Wells Fargo with respect to the Farm Credit Service Mortgage Property.

10. Wells Fargo has no claim or interest in the alleged property of either Todd Horob or Horob Livestock, Inc. that the Trustee seeks to recover.

11. The claim of the Trustee as to the...

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5 cases
  • In re Kasparek
    • United States
    • Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Tenth Circuit
    • 5 avril 2010
    ...notice of a greater interest than other joint owners who have record title); Womack v. Horob Livestock Inc. (In re Horob Livestock Inc.), 382 B.R. 459, 481-82 (Bankr.D.Mont.2007) (where only one of three joint tenants occupied property, trustee, as hypothetical purchaser, was not charged wi......
  • Mo. Breaks, LLC v. Burns
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    ...law. See McEvoy, 105 B.R. at 365; In re Fowler, 201 B.R. at 778 n. 5; In re Palmer, 140 B.R. at 771; see also In re Horob Livestock Inc., 382 B.R. 459, 481 (Bankr.D.Mont.2007) ("State law determines whether a trustee's status as a bona fide purchaser will defeat the rights of persons agains......
  • In re Hadad, Case No. 06-14774 (JKF) (Bankr. E.D. Pa. 5/21/2008), Case No. 06-14774 (JKF).
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    ...paid off the house that was owned by them jointly. Transfers between relatives are "carefully scrutinized." In re Horob Livestock, Inc., 382 B.R. 459, (Bankr. D. Mont. Dec. 17, 2007). See also In re Lang, 246 B.R. 463, 470 (Bankr. D. Mass. 2000) ("[m]ost courts agree that when a debtor tran......
  • In re BLX Group Inc., Case No. 09-61893-11 (Bankr.Mont. 6/8/2010), Case No. 09-61893-11.
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    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Montana
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    ...the law of the state in which the real property is located. In re Deuel, 594 F.3d 1073, 1076 (9th Cir. 2010); In re Horob Livestock Inc., 382 B.R. 459, 481 (Bankr. D. Mont. 2007). The relevant portion of § 544(a)(3) (a) The trustee shall have, as of the commencement of the case, and without......
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