MarMc Transportation, Inc.

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
In re
MARMC TRANSPORTATION, INC.,
)
)
)
)
)
Case No. 	10-20653
Chapter 11
Debtor.
MEMORANDUM OPINION ON OBJECTION TO PROOFS OF CLAIM
OF FREMONT AVIATION
On September 21, 2011, this matter came before the court for an evidentiary
hearing on the Objection to Proofs of Claim of Fremont Aviation (nos. 14 and 41) filed
by MarMc Transportation, Inc. ("MarMc") and the Response filed by Fremont Aviation
LLC ("Fremont Aviation"). The Debtor was represented by Stephen Winship. Fremont
Aviation was represented by Drew Perkins. The court having considered the testimony,
evidence, the arguments of the parties, and applicable law, is prepared to rule.
Facts
MarMc filed for Chapter 11 bankruptcy protection on June 3, 2010. Fremont
Aviation filed two unsecured claims: (1) Claim no. 14 in the amount of$54,981.20; and,
(2) Claim no 41 in the amount of$131,874.07. MarMc objects to the claims alleging
that it is not responsible for the claims, as Mark Richardson personally incurred the debt,
not on behalf ofMarMc.
Mr. Eli Bebout ("Bebout") testified that Fremont Aviation was organized as a
limited liability company with R&N Investment, LLC ("R&N") and Mark A. Richardson
Case 10-20653 Doc 439 Filed 12/19/11 Entered 12/19/11 10:50:43 Desc Main
Document Page 1 of 8

("Richardson") as its members and co-managers. Each member received a fifty percent
(50%) interest in the limited liability company. The Operating Agreement, signed by
both members, lists the initial capital contributions as:
Name and Address 	Initial Capital Contribution
Mark A. Richardson 	$500,000.00
6850 W. Yellowstone Highway
Casper, WY 82604
R&N Investment, LLC 	$500,000.00
4424 Skyline Drive
Riverton, WY 82501
Mr. Bebout testified that the members deviated from the Operating Agreement.
The actual contributions were: a 1981 King Air 200 aircraft ("Aircraft") from Richardson
and R&N contributed a hanger and cash in the amount of$350,000.00. The deviations
were discussed and memorialized in the minutes for the annual meeting for Fremont
Aviation. At the time that Fremont Aviation was organized, it was Bebout's
understanding that Richardson owned the Aircraft, "outright," free and clear ofliens.
Initially, the members, Richardson and R&N were to split the costs and expenses
equally, or fifty/fifty. 	The costs were divided into two categories: fixed and variable.
Fixed costs included, but were not limited to: hanger costs, insurance and heat. Variable
costs included items such as fuel, payroll expenses and airplane maintenance. Mr.
Bebout testified that in 2009, by oral agreement, the members modified the ratio so that
Richardson was paying 75% of the fixed expenses, as Richardson was using the aircraft
Page 2
Case 10-20653 Doc 439 Filed 12/19/11 Entered 12/19/11 10:50:43 Desc Main
Document Page 2 of 8

for a greater percentage of time. The proportional share was determined by a review of
the monthly flight logs to determine the airplane's usage and by whom.
Additionally the Operating Agreement provided, in part,
"Manager shall have full power and authority ... to manage, maintain
and operate the Aircraft on behalf of the Company under the provisions of
the U.S. Federal Aviation Regulations Par[t]. 91, including without
limitation, Federal Aviation Regulation Part 91, Section 91.501..." 1
"Manager shall mean one or more managers. 	Specifically, 'Manager' shall
mean Eli D. Bebout and Mark A. Richardson or any other persons or entity
that succeed such Manager ... " 2
Mr. Bebout testified that this section of the Operating Agreement refers to the
ownership of the limited liability company and the utilization of the aircraft. It provides
that Mr. Richardson can own the airplane and MarMc could utilize the airplane without
violating part 91 of the FAA rules and regulations. Part 91 would not allow Fremont to
operate the aircraft for lease for hire. However, the owners and the owners' entities are
allowed to use the aircraft.
Mr. Bebout testified that it was his understanding that the aircraft was used by
MarMc for work purposes to fly crews to work sites, including work with Monster. 3 Mr.
Richardson represented to him that MarMc was to be billed.
Page 3
1 Exhibit 2, Page 15.
2 !d. at page 3
3 The reference to "Monster" is to Monster Heavy Haulers, LLC.
Case 10-20653 Doc 439 Filed 12/19/11 Entered 12/19/11 10:50:43 Desc Main
Document Page 3 of 8

Discussion
MarMc alleges that the claims are not allowable claims of its bankruptcy estate,
but the personal debt of Mark Richardson ("Richardson"). Fremont Aviation argues that
the claims are allowable as Richardson, MarMc's president and one-half shareholder,
either with apparent or implied authority, authorized the use of the Aircraft for MarMc,
the bills were sent to MarMc and paid by MaMc.
A properly filed proof of claim constitutes prima facie evidence of the validity and
amount of the claim. 4 Such a claim is deemed allowed unless a party in interest objects. 5
The objecting party has the burden of going forwarded with evidence supporting the
objection. Such evidence must be of a probative force equal to that of the allegations
contained in the proof of claim. However, an objection raising only legal issues is
sufficient. Once the objecting party has reached this threshold, the creditor has the
ultimate burden of persuasion as to the validity and amount of the claim. 6 The validity of
a creditor's claim is determined by rules of state law. The bankruptcy court is required to
determine validity or invalidity of the contract by looking to the law of the state which
the court found that the contract was made and primarily payable. 7
Are the claims valid?
Page4
MarMc argues that the Fremont Aviation claims should be disallowed as the
4 Fed. R. Bankr. P. 300l(t).
5 11 U.S.C. § 502(a).
6 In re Geneva Steel Co. 260 B.R. 517 {101h Cir. BAP 2001) In re Harrison, 987 F.2d 677 (lOth Cir. 1993).
7 Grogen v. Gardner, 498 U.S. 279 (1991).
Case 10-20653 Doc 439 Filed 12/19/11 Entered 12/19/11 10:50:43 Desc Main
Document Page 4 of 8

organization of Fremont Aviation was with Richardson, individually; the debts were
incurred by Richardson, individually and not in behalf of MarMc; and Richardson did
not have authority to incur these debts on behalf ofMarMc.
Ms. Cindy Richardson, vice president and co-owner of MarMc testified that she
was not aware of any resolution that authorized MarMc to pay for any expenses of the
aircraft. 	She was aware that Mr. Richardson used the airplane, as their children were
included in some trips. 	She also testified that she is not aware of the working
relationship between MarMc and Monster.
The Wyoming Supreme Court held that if the officers of a corporation exceed
their authority and the act is one that could have been authorized in the first instance by
the board of directors, the act may be expressly or impliedly ratified and thus be rendered
just as binding as if it had been authorized when done. 8
Page 5
"Implied ratification of a previously unauthorized act may result
from (1) Accepting and retaining the benefits of the act, (2) silence,
acquiescence, or failure to repudiate, or (3) other affirmative acts showing
an adoption of the act or contract. Ratification require full knowledge of
all the material facts on the part of the corporate principal. Although actual
knowledge of the act is required, directors are held to know that which they
could have ascertained with slight diligence. A director is chargeable with
knowledge of those corporate affairs which it is his duty to know. 	Whether
or not ratification exists is a question of fact where more than one inference
can be drawn from the evidence." 9
It is uncontested that Mr. Richardson did not have express authority to incur debt
8 Lahnston v. Second Chance Ranch Co., 969 P.2d 32 (Wyo. 1998).
9 Id at 36.
Case 10-20653 Doc 439 Filed 12/19/11 Entered 12/19/11 10:50:43 Desc Main
Document Page 5 of 8

for the use of aircraft. However, he was operating MarMc during the time that the debt
was incurred. Mr. Bebout testified that he was lead to believe, at first, that Mr.
Richardson was the sole owner of MarMc; that the aircraft usage was attributed to
MarMc on the flight logs; that the invoices were sent to MarMc and payments were
received from MarMc prior to 2009 for the fixed and variable expenses.
The court finds that Richardson's acts of incurring debt on behalf ofMarMc are
acts that could have been authorized in the first instance by the board of directors.
Incurring debt, during the day-to-day operations of a corporation is common place and
could have been authorized by the board. MarMc accepted and retained the benefits of
the usage of the aircraft. The court's review of the flight logs reflects that the aircraft
was used by MarMc over the course of three years. Additionally, MarMc was billed; and,
paid the invoices from MarMc's bank accounts for the 2007 and 2008 expenses. None
of the payments received for invoices billed to MarMc were paid by a check from Mark
Richardson, individually.
During this time, neither MarMc' s management or board of directors questioned
or repudiated the expenses. The management, Richardson, was incurring the debt and
the board of directors was silent. Therefore, the court finds that MarMc impliedly
ratified the transaction and the claims are valid.
Are the claims' amounts valid?
Fremont filed two proofs of claim: (1) Claim No. 14 in the amount of$59,981.20,
filed on June 23, 2010; and, (2) Claim No. 41 in the amount of$131,874.07, filed on
Page 6
Case 10-20653 Doc 439 Filed 12/19/11 Entered 12/19/11 10:50:43 Desc Main
Document Page 6 of 8

October 12, 2010.
Claim No. 14. The claim amount is summarized as the hours of rental of the
aircraft for the months of February 2009 through June 2009 for the total amount of
$59,981.20. Mr. Bebout testified that each month directly corresponds to the pilot's log
which reflects the usage and by whom. The court finds that the testimony is credible and
the creditor has met the burden of amount of Claim No. 14.
Claim No. 41. The claim is itemized to include the following:
• 	~ of Atlantic Aviation Invoices paid by Fremont Aviation .... $11,021.08
• 	~ ofTrajen Flight Services Invoices paid
by Fremont Aviation 	.................................. $12,101.77
• 	58% of 10 months of 2007 Hanger rent paid
by Fremont Aviation 	.................................. $10,150.00
• 	74% of 12 months of2008 hanger rent
paid by Fremont Aviation 	.............................. $15,540.00
• 	50% of 12 months of2009 hanger rent
paid by Fremont Aviation 	.............................. $10,500.00
• 	~of Repair to King Air paid by Fremont Aviation 	.......... $49,580.32
• 	Unpaid Invoices owed by Fremont Aviation by Marmc .... 	<$59,981.20>
[This amount was deducted as it constitutes Claim No. 14.]
• 	Credit owed Fremont Aviation by Marmc for
Steve Shafer's salary paid by Nucor, Inc. Ck #10184. 	. ...... $20,743.00
Mr. Bebout testified that Fremont Aviation did not have the funds to pay its debts,
so Nucor, one of his entities, paid the pilot's, (Steve Shafer) salary. The claim for
invoices for Atlantic Aviation and Trajen were for one-half of the total bills for required
inspections, checking propellers and routine maintenance for the aircraft. 	Mr. Bebout
testified that pursuant to the oral agreement between the members, MarMc was to pay a
great share of the fixed costs. 	However, in 2009, Mr. Bebout adjusted that downward as
Page 7
Case 10-20653 Doc 439 Filed 12/19/11 Entered 12/19/11 10:50:43 Desc Main
Document Page 7 of 8

MarMc has ceased using the plane, stopped paying the bills and "the plane sat parked."
Based upon the testimony, the court finds that the creditor carried his burden that the
claim amounts are valid and allowable.
The court having determined that Fremont has carried its burden as to the validity
and amount of Claim No. 14 and Claim No. 41, allows the claims.
This opinion constitutes the Court's findings of fact and conclusions of law. A
separate order shall be entered pursuant to Fed. R. Bankr. P. 9021.
cc:
Page 8
DATED this ..,Ll_day ofDecember, 2011.
Stephen Winship
Drew Perkins
By the Court
Case 10-20653 Doc 439 Filed 12/19/11 Entered 12/19/11 10:50:43 Desc Main
Document Page 8 of 8