In re Kake Tribal Corp.
| Docket Number | 99-01111 |
| Decision Date | 19 September 2023 |
| Parties | In re: KAKE TRIBAL CORPORATION, Debtor. |
| Court | U.S. Bankruptcy Court — District of Alaska |
MEMORANDUM AND ORDER RE REOPENING CASE AND DETERMINING THE RULE OF LAW
THIS MATTER came before the Court[1] on two related motions Creditors' Motion to Reopen Chapter 11 Case (ECF No. 787) and Creditors' Motion to Determine Rule of Law (ECF No 819).[2] The motions were filed by Mr. Fred Triem, previous class action trial counsel for certain Kake Tribal Corporation shareholders, and by Clifford Tagaban, a Kake Tribal Corporation shareholder and co-plaintiff in two Alaska state court class actions lawsuits ("the Creditors").
The history between the parties is complex and spans decades. In the twenty-plus years since the Kake Tribal Corporation ("Kake Tribal") confirmed the Fourth Amended Plan of Reorganization (the "Plan"), the parties filed various motions in Alaska state courts which resulted in rulings that significantly altered their positions. Now, in the present motions, the Creditors request the bankruptcy court reopen Kake Tribal's bankruptcy case and void the Alaska state court orders. The Creditors argue that the Alaska state court lacked jurisdiction and, because the bankruptcy court had exclusive jurisdiction, all the state court orders are void ab initio.[3]
In the Ninth Circuit, a bankruptcy court's jurisdiction is substantially narrowed after plan confirmation. When resolving disputes that require interpretation, implementation, consummation, execution or administration of a confirmed plan, bankruptcy courts typically exercise non-exclusive 28 U.S.C. § 1334(b) "related to" jurisdiction.
However, even when a Ninth Circuit bankruptcy court has exclusive jurisdiction of disputes related to a confirmed plan, the bankruptcy court may review the state court decision to determine if the confirmed plan was correctly construed. After a comprehensive review of the Alaska state court decisions at issue, this Court arrives at the same conclusions. The Alaska state courts conducted thorough and careful reviews and provided balanced, thoughtful decisions supported by applicable law.
This Court concludes the post-confirmation disputes decided by the Alaska state courts were not within the bankruptcy court's exclusive jurisdiction and, alternatively, because this Court will not disturb the well-reasoned decisions of the Alaska state courts, denies both the Motion to Reopen Chapter 11 Case and the Motion" to Determine the Rule of Law.
The class-action lawsuits against Kake Tribal.
The factual and procedural history of this case is complicated and is only briefly recounted here.[4] In the 1980s, Kake Tribal made payments to some, but not all, Kake Tribal shareholders. Some of the shareholders who did not receive payments sued Kake Tribal as the "Hanson Class" in a class-action lawsuit in the Alaska state court.[5] Mr. Tagaban was appointed Hanson Class representative and Mr. Fred Triem was appointed as class counsel. At trial, the Hanson Class prevailed and was awarded a sizeable judgment against Kake Tribal. Eventually, in 1998 after an appeal and remand, the state court judgment was recorded, creating a judicial lien. Kake Tribal's Plan of Reorganization.
Confronted with the Hanson Class' judgment,[6] in 1999 Kake Tribal filed a chapter 11 petition in bankruptcy court. Mr. Tagaban and Mr. Triem each filed proofs of claim in the bankruptcy case. On October 10, 2001, Kake Tribal filed its first plan of reorganization, and as modified, became the Fourth Amended Plan of Reorganization that was confirmed on February 19, 2002. (ECF No. 692).
The Plan set out a detailed schedule of payments Kake Tribal would make to Mr. Triem and the Hanson Class. First, the Plan required Kake Tribal to deliver the Hanson Class payments to Mr. Triem. (Plan ¶ 5.2.14)
The Plan instructed that Mr. Triem's attorney fees were to be "deducted from, and paid out of, the payments made to" the Hanson Class. (Plan ¶ 5.2.14)
Kake Tribal was to make an initial payment of $200,000 to the Hanson Class members. (Plan ¶ 5.2.14.2) Next, between 2002 and 2006, the Hanson Class was to be paid (after Class 1 claims were fully paid) quarterly, a percentage "all cash received in the preceding calendar quarter from or as a result of the Land Exchange." (Plan ¶ 5.2.14.3). Finally, beginning in 2005, the Hanson Class was to be paid annually on June 30, from Kake Tribal's "cumulative Adjusted Earnings,"[7] and interest was to accrue on the balance at 6.5% per annum. (Plan ¶ 5.2.14.4).
Section 9.7 of the Plan provided that the bankruptcy court would retain jurisdiction until the Plan was "fully consummated"[8] for issues including but not limited to:
The Plan also authorized the Hanson Class Representative to "negotiate with the Debtor after confirmation of this Plan." (Plan ¶ 1.21) The Plan provided the "Hanson Class Representative shall have the authority to release or subordinate any lien or security for the Claims of the Hanson Class in accordance with this Plan." (Plan ¶ 1.21)
Finally, the Plan provided the "Court shall have power to designate successor Hanson Class Representatives on motion of the Debtor or the holder of any Allowed Claim." (Plan ¶ 1.21)[9]
The order confirming the Plan provided that the bankruptcy court retained jurisdiction to resolve any disputes and adjudicate "all controversies" concerning the allowance of a claim:
This court shall retain jurisdiction of this Chapter 11 case for the purposes provided in this Order, in any injunction issued by this Court, in the Plan and under the Bankruptcy Code, and for the purpose of resolving any disputes arising with respect to the Plan or any document executed pursuant to the Plan, and to adjudicate all controversies concerning the classification or allowance of any claim.
After the bankruptcy court confirmed the Plan, Kake Tribal made the initial distribution to Hanson Class members and some of the required payments.[10] Kake Tribal later asserted it did not make the annual payments because the Tribe had "not generated any profits from which payments under the [Plan] are to be made."[11]
Post-Confirmation proceedings in Alaska state courts.
In 2008, Mr. Triem filed a motion in the Alaska state court requesting authorization for the Hanson Class to execute on its judgment against Kake Tribal under Alaska state law.[12] This began several years of post-confirmation litigation in Alaska state courts between Mr. Triem, the Hanson and Martin Class members, and Kake Tribal.
In September 2015, members of the Hanson Class moved in the Alaska state court to replace both Mr. Triem as counsel and Mr. Tagaban as class representative. (ECF No. 803, Ex. 4)[13] Before deciding the motion, the Alaska state court held an evidentiary hearing on September 22, 2016, and heard testimony from five witnesses and reviewed several exhibits. (ECF No. 803, Ex. 6 at p. 3) Ultimately, the Alaska state court issued a 31-page order that granted the motion in part and ordered the removal of both Messrs. Triem and Tagaban.[14] (ECF No. 803, Ex. 6)
Three years later, on November 14, 2019, the successor Hanson Class representative Paul Fay and counsel Michael P. Heiser filed a motion in the Alaska superior court "to approve of a Hanson Class vote to waive and forgive the remaining debt owed under the final judgment entered on June 19, 1998." (ECF No. 803, Ex. 7) Mr. Triem objected and argued that the Alaska state court lacked subject matter jurisdiction because the bankruptcy court had exclusive jurisdiction. (ECF No. 804, Exs. 3, 4)
On November 25, 2019, members of the Martin Class also moved in the Alaska state court to remove the Martin Class representative and to "authorize the release of the Martin Class Deed of Trust and the forgiveness of the debt secured thereby." (ECF No. 803, Ex. 9, p.4)[15]
On February 18, 2020, the Alaska state court granted the Hanson Class motion to "waive and forgive the remaining debt" that Kake Tribal owed to the Hanson Class ("the Hanson Class Decision"). (ECF No. 804, Ex. 5) The Hanson Class Decision did not address Mr. Triem's argument contending that the bankruptcy court had exclusive jurisdiction to resolve the dispute.
The Alaska state court found that the Civil Rule 60 requirements were met and concluded that granting the motion was in the interest of all the parties. The order included a provision that Kake Tribal still was required to pay directly to Mr. Triem "whatever remains to be owed" of the class counsel attorney fee award. (ECF No. 804, Ex. 5)
On February 24, 2020, the Alaska superior court addressed the Martin Class motion to appoint a new class representative and to "release or discharge" the debt owed to the Martin Class. Nauska Sr. v. Kake Tribal Corp., 2020 WL 8182097 (Alaska Superior Court...
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