Robert M Lane

In re
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
ROBERT M. LANE
Debtor.
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Case No. 	11-20398
Chapter 7
OPINION ON DEBTOR'S MOTION TO COMPEL TRUSTEE
TO COMPLY WITH TERMS OF SETTLEMENT
This matter ("Motion") initially came before the court for an evidentiary hearing
on January 15, 2014. 	Gary A. Barney ("Trustee") filed an objection. The parties
stipulated that the testimony and exhibits presented to court at a prior hearing would be
incorporated into the record for the purpose of this matter. The court continued the
hearing to allow the Trustee the opportunity to determine if discovery was necessary to
respond to Debtor's witness's surprise exhibit. Thereafter, the matter was continued,
several times, returning before the court on November 4, 2014.
Debtor requests that the court order the Trustee to perform certain terms under the
Debtor Settlement Agreement, entered into between the parties and approved by the
court on June 20, 2013. 1 Debtor alleges that Trustee failed to: (1) tum-over Debtor's
retirement assets valued at $2.5 million; (2) release the liens by filing UCC-1 forms on
Debtor's automobiles and other assets; (3) tum over numismatic coins; and (4) requests
attorney fees and costs for bringing this motion. Additionally, during the course of the
1 Docket No. 332.
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hearing, Debtor asserted: (1) Trustee breached his duties as a trustee; (2) canceled
Debtor's health insurance in violation of the automatic stay; (3) proposed to sell Debtor's
home in Santa Barbara, California at a reduced price; and, (4) had not diligently pursued
the sale of the Chatham shares or the St. Catherine's real estate.
The Trustee asserted that: (1) Debtor's Motion is a continuing "objection to the
Trustee's proposed sale of estate assets;" (2) the retirement assets were never in the
Trustee's possession; (3) the Debtor Settlement Agreement does not require the Trustee
to "delete security interests" beyond the Court's approval order to release liens on the
assets to be retained by the debtor, but to accommodate the Debtor, Trustee prepared and
recorded lien releases; and, (4) Debtor's request for legal fees and expenses is unfounded
as the Trustee is not in violation of the Debtor Settlement Agreement and as Debtor
represents himself, he is not entitled to legal fees.
Findings of Facts
This has been an extremely litigious chapter 7 bankruptcy case. Debtor filed his
petition and schedules on April 19, 2011. At that time, Debtor was represented by
counseU Debtor received his chapter 7 discharge on August 4, 2011. Thereafter, the
Trustee filed adversary proceedings to recover assets against Debtor and related entities. 3
2 Over the course of this case, Debtor was initially represented by counsel, who withdrew on January 2,
2013. Debtor proceeded prose in the base case until he retained attorneys in June 2014. Debtor's attorneys then
withdrew in September 2014. At the time of the November, 2014 hearing, Debtor was again proceeding, prose.
3 The related entities included: The Riverbend Ranch Trust, Matthew W. Lane, Trustee of the Riverbend
Ranch Trust I; Boulder Investment Trust, Colleen Lane, Trustee of the Boulder Investment Trust; Windriver Corp of
WY, LLC, and Oatrucua E. Lane, Managing Director ofWindriver Corp ofWY, LLC. [Adversary Case. No. 12-
2013].
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Trustee also filed an adversary to revoke Debtor's discharge. Numerous contested
matters were also filed including, but not limited to (and relevant to this matter):
Trustee's objection to Debtor's claimed exemptions; Trustee's motion for a protective
order; and, Debtor's motion for sanctions. The Trustee entered into the Family
Settlement Agreement resolving the adversary proceeding with the related entities for
tum-over of estate assets. Debtor objected to the approval of Family Settlement
Agreement. Hearings were convened on the Trustee's motion regarding Debtor's
claimed exemptions and the matter before this court. Thereafter, Trustee and Debtor
entered into the Debtor Settlement Agreement to resolve all pending litigation.
The terms of the Debtor Settlement Agreement state, as relevant:
"Notwithstanding the Family Settlement Agreement
provision ... Trustee has agreed with the debtor in the Debtor Settlement
Agreement that the following assets shall not be turned over to the Trustee,
but instead shall be excluded from the Disputed Property, shall be turned
over to the debtor, and shall not be Property of the Bankruptcy estate
(collectively, the "Debtor Retained Property."):
(a) Assets in Debtor's IRA and Penobscot Pension Plan in an
amount not to exceed $2.5 million; any assets therein exceeding
collectively $2.5 million, however, shall be turned over to the Trustee;
(b) The 'Collectibles' identified on Exhibit A to the Initial
Settlement Agreement, which include ... numismatic coins ...
(c) Debtor's 2013 Subaru, 2008 Toyota Prius, and 1989 Mercedes
Benz 5601. .. "
Debtor's Schedule B lists the following two assets, with values and claiming each
as exempt.
• 	"IRA (App 99%) from roll overs from retirement plans and growth of
fund)" with a current value of$656,039.00; and,
• 	"Pension (value estimated)
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Penobscot Enterprises (Estimated Balance)" with a current value of
$588,240.00.
As stated, Trustee objected to the claimed exemptions and the court held a hearing
on October 2, 2012. At the hearing the parties reported that a "global settlement" had
been reached to resolve pending adversary proceedings and contested matters. The court
was asked to continue the hearing, indefinitely, to allow the parties to memorialize the
agreement. The Debtor Settlement Agreement and Family Settlement Agreement were
approved by the court on June 19, 2013. 	Subsequently, the parties executed a
Modification of Settlement Agreement and Mutual Release4 also referred to as the "Art
Settlement Agreement," which states,
"2. 	Pension Assets.
a. 	The Debtor is owed gold and silver coins valued at
$470,317.58 as part of the Pension Assets under Section 5.A. ofthe
Settlement Agreement. Debtor also contends he is owned additional
Pension assets, which the Trustee disputes. This Agreement does not
waive any of Debtor's claims to additional Pension Assets, or the Trustee's
defenses thereto.
b. 	Rather than funding that sum in kind or in liquidation of
the gold and silver coins that are included in the Pension Assets, the
Trustee will forthwith deliver, convey and assign to the Robert M. Lane
IRA the artwork described on Exhibit A attached and incorporated into this
Modification. 	Such conveyance and assignment will be by Trustee's Bill
of Sale without warranty of title or otherwise, an on an "as-is, where-is"
basis.
c. 	The value of the artwork described on Exhibit A is
$470,700.00 which is $382.42 more than the Debtor is owed under Section
5.A. of the Settlement Argument. The Trustee hereby waives any
obligation of the Debtor to reimburse the Debtor's Bankruptcy Estate for
such excess."
4 Lane Exhibit No. 17.
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The Trustee's Bill of Sale was executed on October 23,2013 conveying the
artwork, as agreed, to the Robert M. Lane IRA. Before the Trustee could release
physical possession of the artwork to the Debtor, Trustee was served a writ of
garnishment based upon an ongoing action between Debtor and his ex-spouse, Vickie
Lane. Ms. Lane executed on Debtor's property to satisfy her judgment from the
California court. Trustee was under a court restriction to not distribute any of Debtor's
property that he held until the litigation regarding the execution was resolved in the
Ninth Judicial District Court in Teton County, Wyoming, regarding the collection efforts
ofMs. Lane.
Discussion
Debtor's IRA and Penobscot Pension Plan
Debtor argues that the Trustee failed contribute assets into Debtor's retirement
fund to insure its balance at the amount of$2.5 million dollars under the terms of the
Debtor Settlement Agreement. Based on pleadings that the Trustee filed, Debtor asserts
that the balance of the retirement accounts is a moving target. The court agrees. The
balance of the retirement accounts was not clear to the court until now. Its review of the
pleadings, testimony and evidence reflect that the moving target is based largely upon the
actions of the Debtor.
The retirement funds are assets ofDFWU, LLC ("DFWU"). Debtor's sister,
Patricia E. Lane ("Patricia") and mother, Patricia A. Lane ("Mother") each owned one
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share of the limited liability company with Debtor owning the balance. 5 Patricia's
testimony, through her deposition, reveals that DFWU was formed at Debtor's request
after Debtor's divorce judgment was entered, but before he filed for bankruptcy
protection. Mother was named as president and Patricia was the manager, although
Patricia stated that she did not understand her role in DFWU. Patricia testified that
Debtor controlled and transferred funds into DFWU's bank account at Bank of Jackson
Hole, himself, or instructed her what to do regarding payments using the funds. 	A
subsequent bank account was opened with Wells Fargo Bank under Patricia's and
Mother's names with a deposit in the amount of $599,500.00. Additional deposits were
made in the amounts of$106,000.00; $557,784.95 (Oct. 5, 2012); $369,397.47 (Oct. 12,
2012); and $397,000.00 (Nov. 6, 2012). Patricia testified that all the transactions were
from DFWU funds, transferred by the Debtor and totaled "a little more than two million
dollars. " 6
Patricia testified that the she used the funds to purchase a vehicle for Debtor and
pay the taxes for the transaction, pay Patricia's credit card expenses incurred by Debtor,
and cash sent to the Debtor in increments of$1,000.00 to $3,000.00, based upon his
requests.
During the time period between September to Christmas, 2012, Debtor presented
5 The court's use of first name and titles for Patricia E. Lane and Patrica A. Lane is for clarity sake,
meaning no disrespect to either individual.
6 The court's calculation ofthe transactions show a total amount of funds transferred of$2,029,682.42.
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to Patricia, the "Loan Agreement Between DFWU, LLC and Patricia E. Lane Dated
June 23, 2010" for her signature. 	She was certain that she did not execute the document
in June 2010, although the document has that date in its heading. The terms of the loan
do not require Patricia to provide any security as collateral or make any payment on the
loan until its maturity date of June 23, 2040.
On November 16, 20 12, Patricia issued a check to J.R. Harlan, LLC in the amount
of$1,800,000.00 upon the instructions of the Debtor and provided the check to him.
Patricia had formed the J .R. Harlan, LLC entity in Pennsylvania with the assistance of an
attorney, as instructed by Debtor. Debtor later presented the check to the bank in
November 2013. However, the bank refused to honor the check. Patricia she did not
know the reason for the long delay between the time that she issued the check and that
the Debtor attempted to deposit it. However, during that time, Patricia transferred the
funds from the account with her Mother, into a separate account under her name only.
The funds are currently in Patricia's possession. The court, in comparing dates,
documents and events, finds Patricia's testimony to be credible. Debtor's testimony
regarding J.R. Harlan, LLC was evasive and unbelievable.
Debtor presented testimony and evidence of Roger E. Wilde, of ANACAPA
Valuations, Inc. who testified regarding the value of Debtor's Pension Assets in the
Penobscot Pension Trust. Mr. Wilde discounted the value of the Pension Assets based
upon the unsecured, high-risk loan to Patricia of the 1.8 million dollars. Although this
testimony and evidence was accepted by the court, it does not find that discounting the
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value of the Pension Assets to be equitable, based upon Debtor's actions of non-
disclosure and subterfuge. The court will not discount the Pension Assets based upon
this evidence.
The court's review ofthe history of the Pension Assets reflects that Debtor failed
to properly disclose the value of his Pension Assets upon filing his bankruptcy petition
and schedules, which had a value of$2,029,000.00 at the time the Debtor filed for
bankruptcy protection. Debtor, on his own or through directions to Patricia, transferred
the funds for his benefit and use. Thereafter, he produced the Loan Agreement
transferring the balance of the Pension Assets to Patricia's personal control. The court
finds that the value of the Pension Assets, for the purpose of the Debtor Settlement
Agreement, was $2,029,682.42, leaving a balance of $470,317.58 owed to Debtor.
The parties agreed that Debtor would be paid the balance owed to him for his
Pension Assets in gold and silver coins. Debtor chose to use the amount owed to him in
gold and silver coins to purchase artwork as set out in the terms of the modification to the
Debtor Settlement Agreement known as the Art Settlement Agreement. Trustee provided
Debtor the bill of sale for the transaction. The bankruptcy estate does not owe any
further amounts to Debtor regarding the 2.5 million dollars of Pension Assets. Debtor's
Pension Assets and purchased artwork total over the 2.5 million dollars that Debtor was
allowed to retain by the Debtor Settlement Agreement. As to the physical control of the
artwork, the Trustee may only follow the orders of the state court, regarding the pending
litigation regarding distribution to the Debtor.
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Numismatic coins
Debtor asserted that he did not receive the numismatic coins under the Debtor
Settlement Agreement. This court disagrees. Debtor was owed $$470,317.58 in gold
and silver coins, which he chose to exchange for artwork. Although Debtor did not
agree, the court found testimony of the Trustee's expert, Mark Heitz, regarding the
classifications of the coins also to be credible. Coins sold by the bankruptcy estate were
not numismatic coins. The numismatic coins were accounted for and provided to the
Debtor under the terms of the Debtor Settlement Agreement and subsequent
modification, i.e. Art Settlement Agreement.
Vehicles
During the course of the testimony, Debtor conceded that the Trustee had
provided lien release documents per his request. This issue was resolved.
Cancellation of Debtor's insurance in violation of the automatic stay
The terms of the Debtor Settlement Agreement provided that the Trustee "retains
the sole and exclusive right and discretion, for any reason and at any time, to remove
Debtor as manager of Saint Catherine Hospital of Indiana, LLC and Saint Catherine
Healthcare, LLC ... " The testimony reflects that the Trustee exercised this option and
removed Debtor. Based upon Debtor's statements, this resulted in the cancellation of
Debtor's health insurance. Debtor requested that the court order the Trustee to take
action to reinstate Debtor's medical insurance. The court's review of Debtor Settlement
Agreement shows that the agreement does not order the bankruptcy estate to be
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responsible for maintaining Debtor's health insurance. The Trustee did not violate the
Debtor Settlement Agreement.
Sale of assets (Santa Barbara house. Chatham shares and Saint Catherine Hospital)
Debtor alleges that the Trustee did not diligently pursue assets of the estate
breaching his duties as a trustee. Debtor asserts that the Chatham shares and Saint
Catherine Hospital assets are substantial and the Trustee should be ordered to pursue
those assets leaving Debtor the residence of the Santa Barbara house. The court's review
of the Debtor Settlement Agreement reflects that the Trustee complied with the generous
terms allowing Debtor to live in the residence which is an asset of the bankruptcy estate
for over a year, while the bankruptcy estate paid for the expenses and maintenance of the
property. 	The court's review of the record reflects that the Trustee continues to pursue
the bankruptcy estate's minority interest in Chatham and the sale of the Saint Catherine
Hospital, both of which are difficult assets to reduce to cash. Trustee has not violated,
either the Debtor Settlement Agreement, nor his fiduciary duties.
In conclusion, based upon the above analysis, it is apparent to the court that the
Debtor continues efforts to control the outcome of this bankruptcy case. The court is
well aware of the transactions that have been undertaken to pursue these assets and
reduce each to cash. The court does not find that the Trustee breached his duty in selling
and/or pursuing these assets. Additionally, the court finds that the Debtor agreed to
waive standing in the Debtor Settlement Agreement regarding the sale of assets but
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continues to interfere with the sale of the assets and attempts to assert control of the
bankruptcy estate process.
Attorney fees and costs
The court finding that the Trustee has not breached the Debtor Settlement
Agreement denies any requests for legal fees or costs to the Debtor.
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.
DATED this~ day of December, 2014.
Service to:
Robert Lane
John Smiley
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