Mitchell v. Burt & Gordon, P.C. (In re Stein)

203 B.R. 736, 1996 U.S. Dist. LEXIS 19795
CourtDistrict Court, D. Oregon
DecidedDecember 24, 1996
DocketNo. 392-33885-S7; Adversary No. 92-3112-S; Civil No. 93-438-FR
StatusPublished

This text of 203 B.R. 736 (Mitchell v. Burt & Gordon, P.C. (In re Stein)) is published on Counsel Stack Legal Research, covering District Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mitchell v. Burt & Gordon, P.C. (In re Stein), 203 B.R. 736, 1996 U.S. Dist. LEXIS 19795 (D. Or. 1996).

Opinion

OPINION

FRYE, District Judge:

The matter before the court is defendant Andrea Bushnell’s motion for judgment on the pleadings (# 248).

BACKGROUND

This is an adversary proceeding in which the trustee in bankruptcy, John H. Mitchell, is seeking to recover property from the bankruptcy estate of the debtor, Alexander V. Stein, damages, attorney fees, and costs. The trustee has alleged six claims for relief as set forth in the amended pretrial order: (1) avoidance of fraudulent transfer under O.R.S. 95.200 et seq.; (2) breach of fiduciary duty; (3) tortious breach of good faith and fair dealing; (4) to set aside the Sheriffs sale; (5) turnover of property of the estate under 11 U.S.C. § 542(a); and (6) recovery of avoided transfer under 11 U.S.C. § 550(a)(1).

UNDISPUTED FACTS AND FACTS AS SET FORTH BY THE TRUSTEE IN THE AMENDED PRETRIAL ORDER

Alexander Stein was a client of the defendant, Burt & Vetterlein, P.C. (B & V).

On August 10, 1988, Stein obtained 71,500 shares of stock in the company, In Focus Systems, Inc. (IFS).

On September 16, 1988, Stein delivered to B & V a stock certificate for all 71,500 shares of his IFS stock.

On December 20, 1988, the defendants, B & V, Robert G. Burt, and Mark A. Gordon notified Steven Hix, President of IFS, that Stein had pledged to B & V Stock Certificate No. 6 representing 71,500 shares of stock in IFS.

On January 12, 1989, Stein signed an alleged consent to pledge the IFS stock to B & V.

On August 30,1989, Stein delivered to B & V all of his shares of stock in the Premium Companies.

In 1989, the defendant, Andrea L. Buslj-nell, commenced a research project to determine the best manner in which to separate Stein from the shares of IFS stock. Bushnell determined that this could be accomplished by the execution of a confession of judgment in favor of B & V followed by a writ of garnishment issued by the attorney for the purpose of effecting an execution against the stock certificates. Bushnell told Stein that he had to sign the confession of judgment; that he could not consult with another counsel; and that he could not leave the office until and unless he did so. Amended Pretrial Order, pp. 9-10.

On September 25, 1989, Stein executed a confession of judgment in favor of B & V in the amount of $54,936.23, plus interest at the rate of 12% per year. On October 5, 1989, the confession of judgment was entered in the Circuit Court of the State of Oregon for the County of Multnomah.

On October 31, 1989, B & V purchased Stein’s stock in IFS for $5,000 at a Sheriffs sale conducted at the direction of B & V.

On November 16, 1989, B & V purchased the stock held by Stein in the Premium Companies for $1,000 at a Sheriffs sale conducted at the direction of B & V.

In January of 1990, B & V contacted IFS to obtain a replacement stock certificate for the stock it had purchased in IFS.

[738]*738On June 21, 1990, Stock Certificate No. 9 dated June 15, 1990, representing 71,500 shares of IFS stock, was issued to B & V.

On December 28,1990, Stein filed a motion to set aside the confession of judgment executed on September 25,1989.

On December 28, 1990, the IFS stock which was issued to B & V was sold in the initial public offering by IFS for $1,350,000. After expenses, the net proceeds of this sale of stock in the amount of $1,262,690 were interpled in the registry of the Circuit Court of the State of Oregon for the County of Multnomah. The net proceeds are still held there. Defendants Gordon, Bushnell and Vetterlein do not make any claim to the net proceeds of the sale of the IFS stock on December 28,1990.

On July 15, 1991, Stein filed a Chapter 11 bankruptcy petition.

On June 8, 1994, the Court of Appeals for the State of Oregon vacated the confession of judgment executed by Stein in favor of B & V on September 25, 1989. The Oregon Supreme Court denied review of the decision of the Court of Appeals.

CONTENTIONS OF BUSHNELL

Defendant Andrea Bushnell moves this court for judgment on the pleadings in her favor on the first claim for avoidance of fraudulent transfer on the independent grounds that (1) she was not a transferee of the stock; and (2) it is undisputed that she makes no claim to the interpled funds which are the proceeds of the allegedly fraudulent transfer. In addition, Bushnell claims that punitive damages and attorney fees are not recoverable on the first claim as a matter of law.

Bushnell further moves for judgment on the pleadings on the second claim for breach of fiduciary duty on the grounds that this claim is not alleged against her individually and that she makes no claim to the interpled funds.

Finally, Bushnell moves the court for judgment on the third, fourth, fifth and sixth claims for relief on the grounds that she makes no claim to the interpled funds.

CONTENTIONS OF THE TRUSTEE

The trustee contends that Bushnell is liable under the first claim for avoidance of fraudulent transfer because Bushnell was a person who would benefit from the fraudulent transfers. The trustee contends that punitive damages are also appropriate on this claim.

The trustee contends that Bushnell is ha-ble under the second claim for breach of fiduciary duty because the amended pretrial order sets forth that Bushnell engaged in activity in violation of her fiduciary trust with Stein. The trustee points out that punitive damages are not sought against Bushnell on the second claim for breach of fiduciary duty.

The trustee agrees that liability is not alleged against Bushnell on the third, fourth, fifth and sixth claims for relief.

APPLICABLE STANDARD

Judgment on the pleadings is appropriate when, even if ah material facts in the pleadings under attack are true, the moving party is entitled to judgment as a matter of law. Hal Roach Studios v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir.1990). In this case, the amended pretrial order has been lodged by the parties and constitutes the relevant pleading. Fed.R.Civ.P. 16(e); L.R. 235-2(d).

ANALYSIS

The trustee concedes that (1) Bushnell is not named as an individual defendant in claims three through six; and (2) punitive damages are not claimed against Bushnell individually in the second claim for breach of fiduciary duty. The only claims asserted in the amended pretrial order against Bushnell individually are the first claim for fraudulent transfer and the second claim for breach of fiduciary duty.

The trustee initially contends that the motion of Bushnell for judgment on the pleadings should be denied on the grounds that on April 2, 1993, the bankruptcy court denied a motion for summary judgment filed by Bushnell, and that the doctrine of res judicata bars the motion before this court. [739]

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Bluebook (online)
203 B.R. 736, 1996 U.S. Dist. LEXIS 19795, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mitchell-v-burt-gordon-pc-in-re-stein-ord-1996.