|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
JACQUELINE GAIL KING, No. 92-12618
Memorandum re Claim #24
A full review of all the evidence and argument in this matter has left the court with the
impression that Chapter 7 trustee Charles E. Sims' objection to Claim #24, filed by the Mary Gerstein
Revocable Trust, involves a single, simple issue and numerous red herrings. The parties are reminded
that FRBP 3008 provides for reconsideration of claims, and may be used to bring to the court's
attention an issue overlooked or considered irrelevant. However, if such a motion is made the court
expects complete briefs from both sides.
The only issue the court can see is whether the Trust has an unsecured claim for $24,000.00
based on a loan the Trust made to debtor Jacqueline King in 1992. The original amount of the loan was
$38,400.00. However, the parties seem to agree that $14,400.00 in principal was forgiven in 1993.
There was evidently a post-hoc attempt by King, as part of pre-bankruptcy planning, to secure
the obligation with a deed of trust to her residence. The trustee obtained an agreement with the Trust
to set aside the deed of trust as a preference. The court sees little or no relevance to this fact, although
the parties spent some time confusing the court with it.
In her declaration, King calls the deed of trust the product of a fraudulent conspiracy concocted
by some non-lawyer she had the misfortune to consult. However, she goes on to call her obligation to
the Trust "contrived." The evidence does not support her assertion.
There is no written promissory note evidencing the debt. However, the Trust has produced a
handwritten memo which reads: "Allan [Gerstein, the trustee of the Trust]: Here's your loan statement
projected out. I'm going to have to wait until my building project is done before considering paying it
off. See you soon. xxoo J." Beneath this, typewritten, the document says:
Mary Gerstein Living Trust Loan
July 1, 1992: $38,400
7% per year, compounded yearly, paid monthly
Interest only payments, 30 year balloon
Reduced on Jan.1, 1993 to: $24,000
The court finds that this document is sufficient to create a clear, definite obligation. All of the
evidence, much of it created by King herself, leads the court to the conclusion that while the deed of
trust may have been "concocted," the obligation itself was real and enforceable.
Pursuant to § 502(b)(2) of the Bankruptcy Code, interest is not allowable on unsecured claims.
It may be that there is sufficient money in the estate to pay interest pursuant to § 726(a)(5). However,
in such case the interest is computed at the legal rate and has no bearing on the allowed amount of the
claim. Accordingly, the Trust will be deemed to have an allowed unsecured claim for $24,000.00.
Counsel for the Truste shall submit an appropriate form of order, which counsel for Sims has
approved as to form.
Dated: August 17, 2000 ___________________________