Pocatello

by

In re McGuire, Part II

Decision: In re Richard Michael McGuire and Dolores Sue McGuire, Case No. 12-41681-JDP (Bankr. D. Idaho, 8 Sep. 2014)
Judge: Honorable Jim D. Pappas, United States Bankruptcy Judge
Counsel for Debtors: Paul Ross, Idaho Bankruptcy Law, Paul, Idaho
Trustee: Gary L. Rainsdon, Twin Falls, Idaho
Trustee’s Counsel: Daniel C. Green and Brett R. Cahoon, Racine, Olson, Nye, Budge & Bailey, Chartered, Pocatello, Idaho

Background

Richard and Dolores McGuire filed a Chapter 7 petition on 12 December 2012. The Trustee thereafter liquidated certain non-exempt assets, generating approximately $13,950. With funds on hand, the Trustee filed a notice of assets on 22 January 2013, advising creditors they had 90 days to file proofs of claim or receive nothing. No creditors filed timely claims.

On 3 June 2013 — 132 days after the Trustee’s notice — Utah Central Credit Union (“UCCU”) filed a tardy proof of claim. On 18 June 2013, the Debtors objected to the claim on several grounds, including that it was untimely. Although UCCU failed to respond to the Debtors’ objection at all, the Trustee filed a response on 25 June 2013 defending the claim and arguing that the Debtors’ own schedules established prima facie that the debt was owed. That same day the Trustee sought to employ Racine Olson as counsel.

Debtors’ counsel promptly raised a standing concern by email, questioning whether the Trustee had legal authority to defend a single creditor’s proof of claim. Trustee’s counsel had already begun researching the standing question before that email arrived — a fact reflected in the billing records — but pressed forward regardless.

The Debtors also discovered that UCCU had sold their collateral postpetition, on 27 December 2012, in apparent violation of the automatic stay. Rather than pursue a contempt action against UCCU for the stay violation, the Trustee entered into a stipulation with UCCU under which UCCU would pay the Trustee $10,100 (the proceeds of the postpetition sale) in exchange for an allowed unsecured claim of $44,265.32. The Trustee filed a motion to approve the compromise under Rule 9019.

At an August 2013 hearing, the Court questioned Trustee’s standing and ordered briefing. Before filing that brief, however, Trustee’s counsel entered into the stipulation with UCCU. At an October 2013 hearing, the Court ruled that the Trustee lacked standing to oppose the Debtors’ objection to UCCU’s claim, struck the Trustee’s response, sustained the Debtors’ objection, and disallowed UCCU’s claim. The Court also denied the Trustee’s motion for a Rule 2004 examination of the Debtors, finding no valid grounds for it. The Court indicated the proposed compromise appeared to be a frivolous endeavor in light of the disallowance but invited further briefing if additional grounds existed.

Trustee’s counsel filed a memorandum in support of the compromise that contained no reference to the law governing approval of compromises and did not provide the additional factual or legal basis the Court had requested. The Court denied the compromise. A second creditor, Bank of America, filed a claim in October 2013; the Debtors objected; Bank of America never responded; and the Court disallowed that claim as well. With no allowed creditor claims remaining, Trustee’s counsel filed an Application for Compensation seeking $5,430.00 from the estate funds generated by liquidation of the Debtors’ assets.

The Debtors objected to the Application and simultaneously requested an award of attorneys’ fees and costs against the Trustee and Trustee’s counsel. A hearing was held on 12 May 2014. On 23 May 2014, Trustee’s counsel withdrew the Application. The Court then ordered briefing on the Debtors’ fee request and, after receiving the parties’ submissions, issued its Memorandum of Decision on 8 September 2014.

The Debtors’ Request for Fees

The Debtors sought attorneys’ fees and costs they incurred in: (1) supplementing their objection to UCCU’s proof of claim; (2) opposing the Trustee’s motion for a Rule 2004 examination; (3) objecting to the Trustee’s motion to approve the stipulation; (4) responding to the Trustee’s memorandum in support of the stipulation; and (5) objecting to the Application for Compensation. They grounded their request in § 105(a) of the Bankruptcy Code and Federal Rule of Bankruptcy Procedure 9011.

Their core argument was that the Trustee and Trustee’s counsel had acted without statutory authority throughout the case, defending a single creditor’s claim to the detriment of the estate and the Debtors, filing a motion for a 2004 examination for the improper purpose of harassing the Debtors and rehabilitating UCCU’s deficient claim, and pursuing a stipulation that had been characterized by the Court itself as likely frivolous — all without any supporting law. Debtors argued that seeking remuneration for those activities constituted bad faith, and that the Application for Compensation was itself filed in bad faith.

The Trustee’s Response

Trustee’s counsel argued that the standing issue was a genuine, complex question of first impression on which no controlling authority existed, that the Court had itself requested briefing on it, and that the work performed in that connection was done in good faith. Counsel further contended that the stipulation with UCCU was a reasonable settlement at the time it was entered into, before the unforeseen circumstances — UCCU’s claim being disallowed, and the Debtors objecting to Bank of America’s subsequently filed claim — rendered it of no value to the estate. Counsel also noted that the U.S. Trustee’s Office had reviewed the Application and raised no objection to it. Finally, counsel argued that the Debtors’ fee request did not comply with Rule 9011’s procedural requirements and offered no legal basis for the award sought.

The Court’s Ruling

Judge Pappas denied the Debtors’ request for attorneys’ fees and costs in full.

Section 105(a). The Court acknowledged its inherent authority under § 105(a) to sanction parties and attorneys for misconduct in bankruptcy proceedings, but emphasized that this power must be exercised with restraint and may be invoked only upon an explicit finding of bad faith or willful misconduct — something more egregious than mere negligence or recklessness. While the Court found the Trustee’s conduct at times overzealous and displaying a lack of prudence and good judgment — particularly the decision to liquidate non-exempt assets and solicit creditor claims when no timely claims had been filed, and the continued pursuit of the UCCU stipulation after the claim was disallowed — it declined to conclude that those actions rose to the level of bad faith or willful misconduct. A trustee’s primary statutory duty under § 704(1) is to collect and reduce estate property to money, and the Court was not prepared to penalize the Trustee after the fact for zeal in performing that duty. The § 105(a) request was denied.

Rule 9011. Rule 9011 requires that a motion for sanctions be made separately from other motions and that the moving party provide a 21-day safe harbor notice before filing the motion with the Court. The Debtors had done neither — their fee request appeared within their objection to the Application for Compensation, not in a separate motion, and no safe harbor notice was given. Because those requirements are mandatory rather than discretionary, the Court declined to award sanctions under Rule 9011.

Why This Matters

  1. A Chapter 7 trustee’s decision to liquidate non-exempt assets is committed to the trustee’s discretion. The Court expressly declined to penalize the Trustee for liquidating assets before knowing whether any creditors would file allowed claims. Courts will generally not second-guess a trustee’s administration decisions after the fact, even when the economic reality later makes those decisions look unwise.

  2. Overzealous conduct is not the same as bad faith. Section 105(a) sanctions require an explicit finding of bad faith or willful misconduct — something more than negligence or recklessness. A trustee and counsel who press losing arguments in good faith, even arguments the court finds lacking in prudence and judgment, are unlikely to face § 105(a) sanctions.

  3. Rule 9011 procedures are mandatory, not discretionary. A party seeking sanctions under Rule 9011 must file a separate motion and provide a 21-day safe harbor notice before bringing that motion to the Court. Embedding a sanctions request inside another filing will not suffice, and courts will not overlook the procedural deficiency even when the underlying conduct is arguably sanctionable.

  4. A trustee who lacks standing to defend a creditor’s claim may still not face fee-shifting. Despite the Court having found that the Trustee lacked standing to oppose the Debtors’ objection to UCCU’s proof of claim, the Court declined to treat that lack of standing as evidence of bad faith. Counsel had genuinely researched the question, found no controlling authority, and presented it to the Court as an issue of first impression — which is precisely the kind of good-faith conduct that defeats a sanctions claim.

  5. The § 9011 safe harbor is essential to any sanctions strategy. Practitioners who believe opposing counsel is acting improperly must issue a written safe harbor notice, wait 21 days, and then — if the conduct is not corrected — file a standalone motion. The requirement is not a formality to work around by framing the request as part of a larger objection.


Full Decision: Available on PACER, Case No. 12-41681-JDP, Doc. 85 (Bankr. D. Idaho 8 Sep. 2014)

Decision re Atty FeesDownload
by

In re McGuire, Part I

Decision: In re Richard Michael McGuire and Dolores Sue McGuire, Case No. 12-41681-JDP (Bankr. D. Idaho, 4 Oct. 2013)
Judge: Honorable Jim D. Pappas, United States Bankruptcy Judge
Counsel for Debtors: Paul Ross, Idaho Bankruptcy Law, Paul, Idaho
Chapter 7 Trustee: Gary L. Rainsdon, Twin Falls, Idaho
Trustee’s Counsel: Brett R. Cahoon and Daniel C. Green, Racine, Olson, Nye, Budge & Bailey, Chtd., Pocatello, Idaho

Background

Richard and Dolores McGuire filed a Chapter 7 petition on 12 December 2012. Their schedules listed two vehicle deficiency debts: $24,265 to Chartway Federal Credit Union and $48,363 to Utah Central Credit Union, the latter being a division of Chartway. At the time of filing, the Debtors believed the collateral — a 2005 McKenzie Medallion trailer repossessed by Utah Central on 21 September 2012 — had long since been sold. In January 2013, having liquidated non-exempt assets of the estate (principally cash value from the Debtors’ life insurance policies), the Trustee filed a Notice of Assets directing creditors to file proofs of claim by 22 April 2013. The estate held approximately $13,951.

Utah Central filed its proof of claim on 3 June 2013 — forty-two days after the claims bar date — asserting a deficiency of $34,165.32 and attaching only an account printout to the filing. It was the only proof of claim filed in the case. When the Debtors received the claim documents, they discovered for the first time that Utah Central’s auction yard had sold the trailer on 27 December 2012 — eleven days after the Bankruptcy Noticing Center had mailed Utah Central and Chartway notice of the bankruptcy filing, and fifteen days after the automatic stay had taken effect.

The Debtors’ Objection

Debtors filed an objection to Utah Central’s proof of claim on 18 June 2013, raising three grounds for disallowance. First, the claim was tardily filed in violation of Federal Rule of Bankruptcy Procedure (“FRBP”) 3002(c), which stripped it of prima facie validity under FRBP 3001(f) and the analysis in In re Parrott Broadcasting Ltd. Partnership, 492 B.R. 35 (Bankr. D. Idaho 2013). Second, the claim lacked the written loan documents, security agreement, and UCC disposition notices required by FRBP 3001(c), further defeating any presumption of validity. Third, and most significantly, Utah Central had sold the collateral in violation of the automatic stay — an act that was void under In re Schwartz, 954 F.2d 569 (9th Cir. 1992) — and had done so without providing the Debtors with the notice of disposition required under Idaho Code § 28-9-611, rendering the sale commercially unreasonable and precluding any deficiency claim under Idaho Code § 28-9-626.

On that last point, Debtors relied on the presumption codified in Idaho Code § 28-9-626(c)–(d): where a secured creditor cannot establish that its disposition of collateral was commercially reasonable, the value of the collateral is presumed to equal the outstanding debt, eliminating the deficiency. In re Walter B. Scott & Sons, Inc., 436 B.R. 582 (Bankr. D. Idaho 2010). Because Utah Central’s sale was both void as a stay violation and deficient for lack of notice to the Debtors, the deficiency claim was unenforceable under § 502(b)(1) as a matter of applicable Idaho law. Debtors amended Schedules B, C, and F to reflect the claim as disputed and unliquidated in light of the post-petition sale.

The Trustee’s Response and the Standing Dispute

Utah Central filed no response to the Debtors’ objection. The Trustee, however, filed his own response on 25 June 2013, arguing that the claim should be allowed as a tardy general unsecured claim under § 726(a)(3) and that the Debtors were judicially estopped from contesting a debt they had sworn to in their schedules.

The Trustee also moved for a Rule 2004 examination of the Debtors, seeking testimony and documents to rehabilitate the claim. Debtors objected to both the Trustee’s response and the 2004 motion, filing a detailed Supplement on 22 August 2013 raising the Trustee’s lack of standing to defend a creditor’s proof of claim. At the 27 August 2013 hearing, Judge Pappas questioned the Trustee’s counsel directly from the bench: whether the Trustee had any legal authority to step into a creditor’s shoes and defend its proof of claim over the Debtors’ objection when the creditor itself had declined to respond. Unable to identify a statute or case squarely on point, Trustee’s counsel conceded that if other creditors were in the case, the Trustee would likely not be taking the same position. The Court ordered supplemental briefing on the standing issue.

Before briefing was complete, the Trustee negotiated a stipulation with Utah Central by which Utah Central agreed to turn over the $10,100 in post-petition sale proceeds to the Trustee in exchange for allowance of an increased unsecured claim of $44,265.32 — the original deficiency plus the proceeds returned. The Trustee moved to approve the compromise under Rule 9019, arguing the standing issue was now moot. The Trustee further argued that his expectation of a § 326 commission gave him a constitutionally protected property interest sufficient to confer standing, and that his authority under § 501(c) to file claims on a creditor’s behalf provided an analogous basis to defend them.

Debtors objected to both the standing argument and the proposed compromise. On standing, Debtors invoked Caplin v. Marine Midland Grace Trust Co., 406 U.S. 416 (1972), and its three-factor framework — lack of statutory authority, absence of a derivative estate right, and inconsistency with the creditor’s own interests — as well as Williams v. California 1st Bank, 859 F.2d 664 (9th Cir. 1988), and In re Folks, 211 B.R. 378 (B.A.P. 9th Cir. 1997), for the proposition that a trustee may not assert particularized creditor rights. On the compromise, Debtors argued that retroactive annulment of the stay was improper under In re Schwartz and In re Franck, 171 B.R. 893 (Bankr. D. Idaho 1994), that the Trustee lacked standing to seek stay relief belonging to Utah Central, and that even with annulment the claim remained independently defective on timeliness, documentation, and UCC notice grounds.

The Court’s Ruling

Judge Pappas issued an oral ruling on 4 October 2013, describing the case as “truly an extraordinary” one that “borders on the bizarre when it comes to the bankruptcy world.” The ruling resolved all pending matters against the Trustee.

On mootness. The Court rejected the Trustee’s argument that the stipulation mooted the standing dispute. Citing Powell v. McCormack, 395 U.S. 486 (1969), the Court found the Debtors retained a live, legally cognizable pecuniary interest in the outcome of their objection — specifically, the potential for a surplus return of the estate funds to them — that the contingent, unapproved stipulation did not extinguish.

On the Debtors’ standing. The Court confirmed that Debtors had standing to object. While Chapter 7 debtors ordinarily lack standing to contest creditor claims because they have no pecuniary interest in the outcome, the potential surplus here gave the Debtors a direct money interest, satisfying the requirements identified in In re Lona, 393 B.R. 1 (Bankr. N.D. Cal. 2008), and the Ninth Circuit’s analysis in Menick v. Hoffman, 205 F.2d 365 (9th Cir. 1953).

On the Trustee’s standing. The Court held the Trustee lacked both constitutional and prudential standing to defend Utah Central’s claim. The Trustee failed to establish injury in fact, as his expectation of a § 326 commission was an unvested property interest not protected by the Fifth Amendment under Board of Regents v. Roth, 408 U.S. 564 (1972). More fundamentally, the Trustee was asserting the individual rights of a creditor — not a right of the bankruptcy estate — in violation of the prudential standing requirement that a litigant assert only its own legal rights. In re Veal, 450 B.R. 897 (B.A.P. 9th Cir. 2011). The Court drew on the U.S. Trustee’s Handbook and its own decision in In re Wisdom, 478 B.R. 394 (Bankr. D. Idaho 2012), for the principle that a Chapter 7 trustee is a fiduciary for all estate beneficiaries — creditors and debtors alike — and may not advocate for a single creditor contrary to the debtors’ interests solely to generate a commission. The Court also followed In re Lyon, a 2011 Western District of North Carolina decision questioning a trustee’s standing to rehabilitate nonresponsive creditors’ claims, and In re Padget, 119 B.R. 793 (D. Colo. 1990), for the proposition that a trustee has no duty to protect creditors against the consequences of filing late or insufficient claims. Section 501(c), the Court held, was simply inapplicable: it permits a trustee to file a claim when a creditor does not, but Utah Central had filed its own claim, making the statute’s conditions inapplicable and its rationale impossible to extend by analogy. The Trustee’s response was stricken.

On the merits of the objection. With the Trustee’s response stricken and the creditor having filed none of its own, the Court turned to the merits. The claim was denied on two independent grounds. First, the post-petition sale of the collateral was void as a violation of the automatic stay. Because § 502(b)(1) disallows claims that are unenforceable under applicable law, and because a void sale cannot support a deficiency, the claim failed at the threshold. Second, Utah Central bore the burden under Idaho Code § 28-9-626 to demonstrate a commercially reasonable disposition, and it had supplied no proof — no loan documents, no security agreement, no UCC disposition notices — that its sale met that standard. The § 28-9-626 presumption therefore applied: the collateral was deemed worth the full amount of the debt, leaving nothing to support a deficiency.

On the Rule 2004 motion. Because the Trustee’s stated purpose for the examination was to gather evidence in support of Utah Central’s claim, and the claim had been disallowed, the motion lacked any valid basis. It was denied.

On the compromise. With the claim disallowed, the Court found the proposed arrangement — recovering $10,100 from Utah Central, taking a commission, and immediately distributing the proceeds back to that same creditor on an allowed claim — would generate no benefit for any party other than the Trustee. The Trustee was given seven days to either withdraw the motion or provide additional briefing showing good cause for approval; he subsequently filed additional briefing, which the Debtors opposed, and a final Order Denying the Motion to Approve Compromise was entered on 7 January 2014.

Why This Matters

  1. A Chapter 7 trustee lacks standing to defend a creditor’s proof of claim against a debtor’s objection. No statutory provision — not § 501(c), not § 704(a)(5), not FRBP 3007 — confers authority on a trustee to rehabilitate a creditor’s claim. The trustee’s duty runs to the estate as a whole, not to individual creditors. Defending a particular creditor’s claim is the mirror image of the trustee’s actual duty under § 704(a)(5): to examine claims and object to those that are improper.
  2. A trustee’s expectation of a § 326 commission is not a constitutionally protected property interest. An unvested expectation of future compensation does not satisfy the injury-in-fact requirement for constitutional standing and is not property protected by the Fifth Amendment. A trustee who accepts an appointment accepts the risk that distributions — and commissions — may be zero.
  3. A sale of collateral in violation of the automatic stay is void and cannot support a deficiency claim. Under In re Schwartz and its progeny, post-petition collection actions taken without stay relief are void ab initio. A deficiency claim premised on a void disposition is unenforceable under § 502(b)(1) and applicable state law regardless of whether the creditor received notice of the bankruptcy.
  4. Failure to provide UCC disposition notice to the debtor bars a deficiency claim. Idaho Code § 28-9-611 requires the creditor to send the debtor reasonable authenticated notification before disposing of collateral. Where the Debtors received no such notice and no post-default waiver existed, the § 28-9-626 presumption applied — the collateral was deemed worth the full outstanding debt — and the deficiency was eliminated.
  5. A tardily filed proof of claim lacking required documentation is not entitled to prima facie validity. FRBP 3001(f) affords prima facie effect only to claims filed in accordance with the applicable rules. A claim filed after the bar date and without the writings required by FRBP 3001(c) carries no presumption of validity, shifting the full burden to the claimant — a burden a nonresponsive creditor cannot meet.
  6. Debtors in a surplus estate have standing to object to creditor claims. Where disallowance of a claim would produce a surplus returned to the debtors, the debtors have a direct pecuniary interest sufficient to confer standing as parties in interest. Practitioners with asset Chapter 7 cases should evaluate whether surplus potential gives clients this otherwise-unavailable right.
  7. A Rule 9019 compromise that generates no net benefit to the estate should not be approved. A compromise that recovers funds from a creditor only to pay a trustee commission and distribute the remainder back to that same creditor on an allowed claim fails the In re A & C Properties, 784 F.2d 1377 (9th Cir. 1986), requirement that a compromise be fair and equitable and serve the paramount interest of creditors.

Full Decision: Oral ruling transcribed, Case No. 12-41681-JDP (Bankr. D. Idaho 4 Oct. 2013); Order Re Pending Matters, Doc. 57 (4 Oct. 2013); Order Denying Trustee’s Motion to Approve Compromise Under Rule 9019, Doc. 73 (7 Jan. 2014)

Transcript – DecisionDownload
by

German Immigrants Faced Rough Winters

This is a story that ran in the Idaho State Journal 7 April 2013.

    Editor’s note: The information for this story comes from an account of pioneer life written by Marlene Christensen, granddaughter of Charles Nuffer, in 1949.

Charles August Nuffer

    In the late 1800s, the line between Northern Utah and Southeast Idaho was pretty blurred, but the hardships endured by pioneers knew no state lines.

    One of the many immigrants who settled in this harsh frontier was Charles August Nuffer, who came to Logan, Utah, with his German parents in 1880. The family eventually settled in Worm Creek near Preston.

    His granddaughter, Marlene Christensen, pieced together diary and verbal accounts of the Nuffer family’s struggles to survive. It paints a story as seen through the young eyes of Charles Nuffer.

    “After three weeks, we found a little old log house with one room and dirt roof and plenty of bed bugs to keep us company,” Nuffer recalled. “It was on a vacant lot on the street going to the college just east of the canal.”

    The log house with the dirt roof was traded for a home belonging to Jacob Engle within a month, but Nuffer’s father struggled to find work.

     “Father would go out wherever he could get some work,” Nuffer said. “He worked on the threshing machines, and I went with him to help, and he got a bushel of wheat a day. Grandma Spring, Regine and I went out in the north field to glean wheat, we would cut the head off and put them in a sack. Father threshed them out with the flail and it made about 16 bushels.” Nuffer said the effort fed the family, and his brothers, John and Fred, earned money to pay the rent.

    There were other chores to attend to as well.

     “We had to get the wood from the hills nearby,” Nuffer said. “They have brought a team and an old wagon so we went to get some wood. Father told me to drive, as I drove out the gate and over a little ditch, the tongue dropped down and the reach came up and the team ran away. I fell under the horse’s feet and received a broken shoulder, and the horses ran around the block and back in the gate.”

    Nuffer was 10 years old when this happened.

    The next order of business for the young German American was to master the language.

    “I went to school a few month during the winters of 1881 and 1882 and learned to speak English,” Nuffer said. “We lived in Providence from June 1880 until October 1883. So from here we went to Idaho, the place the Lord has chosen for us to build our future home.”

    It would take herculean effort and stout horses to pull the family’s belongings to Worm Creek. Paradise didn’t await the Nuffer family.

    “On arriving at Worm Creek (Preston), we found a place with a house on it, a log house about 14 by 16 feet, all one room, with dirt roof, no fence around it and no plowed land, and when it rained the mud would run down the walls, and we had to set pans on the bed to catch the rain,” Nuffer said.

    Winter brought even bigger challenges. Nuffer talked about a trip to retrieve straw purchased from farmers in Richmond and Smithfield, Utah.

    “The snow was so deep Regine and I filled some big sacks we had brought from the Old Country with straw and tied on the hand sled and pulled it over the crested snow for home,” Nuffer said. “The Miles’ were the only family that were living on the creek besides us on what is now known as the Webster Ranch, and we lived on what is now known as the Fred Wanner Place. The Miles family ran out of feed for their cattle in March and they shoveled a path over the south side of the hills where the wind and sun had taken snow off the grass that had started to grow, and when they drove the cattle thought the path you could not see them because the snow was so deep.”

    That was the long winter of 1884.

    Undeterred by winter, the family then moved to Cub River and started building a new log home. Lumber was in short supply.

    “They had lumber at the sawmill but they would not sell us any for wheat, and the store in Franklin did not pay cash for it,” Nuffer said. “Father had already laid some lings down to put in the floor on so we just had to step over them all winter, but maybe it was a good thing as we got the warmth from the earth as we only had a lumber roof over us 14 feet to the top and just a four-hole cook stove to warm the house and wood to burn, and it was not at all dry.”

    The hardships didn’t deter the family’s faith.

    “Still we were happy and thanked the Lord for what we had,” Nuffer shared. “Mother would read a chapter from the Bible. We would have prayer and go to bed.”

    By Christmas, things grew tougher.

    “On Christmas Day 1884, Father sent me over to John’s after 25 pounds of flour,” Nuffer said. “The snow was up to my knees. After that flour was gone we had to grind the wheat in the coffee mill as no one went to the store any more that winter until Father and I each carried a basket of eggs to the store in Franklin on March 2 over 2 feet of frozen snow to buy some groceries. We could not buy much as we had no money.”

    To help make ends meet, Nuffer’s mother baked sugar beets in the oven and ground them up to make a sweet sugary substance to put on the family’s “bread and mush.”

    The final leg of the winter provided even more trials for the emigrant family.

    “Finally the cow went dry so we had no milk for some time and no sugar, but we got thought the winter without any sickness,” Nuffer said. “But we thanked the Heavenly Father for what we had.”

150th Territorial Series

To commemorate the 150th anniversary of Idaho becoming a territory, the Journal will continue historical stories about life in the early frontier each Sunday. A special event will be held July 4 at the Fort Hall Replica in Pocatello to mark its 50th anniversary with additional sesquicentennial recognition.

by

In re Cantu

Decision: In re Rebecca Cherie Cantu and Alejandro Cantu, Case No. 14-40254-JDP (Bankr. D. Idaho, 26 Aug. 2014)
Judge: Honorable Jim D. Pappas, United States Bankruptcy Judge
Counsel for Debtors: Paul Ross, Idaho Bankruptcy Law, Paul, Idaho
Chapter 7 Trustee: Gary L. Rainsdon, Twin Falls, Idaho
Trustee’s Counsel: Brett R. Cahoon and Daniel C. Green, Racine, Olsen, Nye, Budge & Bailey, Chtd., Pocatello, Idaho

Background

Rebecca and Alejandro Cantu filed a Chapter 7 bankruptcy petition on 20 March 2014. In the months leading up to their filing, two creditors — NCO Financial and Bonneville Billing and Collections — had been garnishing their wages pursuant to state court judgments. NCO, collecting on student loans, garnished 15% of Ms. Cantu’s wages each pay period under federal law. Bonneville garnished an additional 10% under state law. Idaho only allows a maximum of 25% to be garnished from an individual’s wages. Over the 90-day preference period preceding the petition date, the two creditors combined had garnished a total of $1,536.93 from the Debtors’ paychecks.

On their amended Schedule B, Debtors listed the garnished funds as personal property and claimed $1,500 of that amount exempt under Idaho Code § 11-605(12) — a wage exemption statute enacted by the Idaho Legislature in 2010, and one that, as Judge Pappas noted, had never been interpreted by any court.

The Trustee’s Objections

The Chapter 7 Trustee filed two objections in sequence. The first, argued simply that the garnished funds were not “disposable earnings receivable” because they had already been paid to the creditors prior to the bankruptcy filing. When the Debtors amended their Schedule C to increase the claimed exemption from $1,086.53 to the statutory maximum of $1,500, the Trustee withdrew the first objection and filed a more detailed second objection through retained counsel.

The second objection raised two grounds. First, the Trustee argued the garnished funds were avoidable preferences under 11 U.S.C. § 547(b) — transfers made within 90 days of filing to specific creditors on account of antecedent debt — and that the Debtors were therefore barred from exempting them under § 522(g), which limits a debtor’s ability to exempt property recovered by the trustee to situations where the debtor could have exempted the property absent the transfer. Second, the Trustee contended that because the Debtors had received a benefit from the garnishments — reduction of their judgment debts — the funds had effectively been “paid” to them, and thus did not qualify as unpaid wages under Idaho Code § 11-605(12).

The Debtors’ Responses

This firm filed two responses on behalf of the Debtors, tracking the Trustee’s evolving objections.

On the statutory interpretation question, Debtors argued that Idaho Code § 11-605(12) means exactly what it says: the exemption applies to earnings that “have been earned but have not been paid to the individual.” The garnished funds were unquestionably earned by Ms. Cantu through her personal services, and they were never paid to her — they were diverted directly to her creditors via the sheriff. The statute does not require that funds be “receivable,” nor does it specify where the funds must be held. The Trustee’s position that the funds were “effectively paid” to the Debtors because they reduced outstanding debts stretched the statutory language beyond its plain meaning.

On the § 522(g) issue, Debtors argued that the garnishments were not voluntary transfers — they were compelled by court order — and that the funds had not been concealed, as they were fully disclosed on Schedule B and the Statement of Financial Affairs. Because the property could have been exempted under Idaho Code § 11-605(12) had it remained with the employer and not yet been paid, the Debtors were entitled to claim the exemption on any funds recovered by the Trustee under § 522(h).

The Court’s Ruling

Judge Pappas ruled in favor of the Trustee and sustained the objection, disallowing the exemption. The Court’s analysis turned entirely on the meaning of the phrase “have not been paid to the individual” in Idaho Code § 11-605(12).

The Court acknowledged that the statute had never been interpreted by any court since its enactment in 2010, and that the phrase “paid to the individual” was arguably ambiguous. However, the Court concluded that reading the statute in context — as required under Idaho rules of statutory construction — compelled the conclusion that the garnished wages had been paid.

The Court’s reasoning proceeded on several fronts:

From the employer’s perspective, the wages were indisputably paid. The employer transferred the full amount owed to Debtors — some directly to them, and the garnished portion to the sheriff on their account — satisfying its payroll obligation in full.

From the Debtors’ own perspective, the Court found the wages had likewise been paid. The garnished sums reduced the Debtors’ outstanding judgment debts, conferring a direct financial benefit. To hold otherwise, the Court noted, would potentially require employers to pay the garnished amounts twice — once to the sheriff, and again to the debtor following a successful exemption claim — a result the Idaho Legislature could not have intended.

The Court also rejected the Debtors’ reading as internally inconsistent with Idaho’s garnishment statutes. Idaho Code § 8-509(b) expressly directs an employer-garnishee to “pay” the earned wages to the sheriff for the creditor’s benefit. Treating those same wages as simultaneously “paid” for garnishment purposes and “unpaid” for exemption purposes would create an irreconcilable conflict between the two statutes. As the Court observed, while exemption statutes are to be construed liberally in favor of debtors, statutory language should not be “tortured” in the name of liberal construction.

Because it resolved the case on the § 11-605(12) issue, the Court declined to reach the Trustee’s alternative argument under § 522(g).

Why This Matters

1. A case of first impression on Idaho Code § 11-605(12). The Court explicitly noted that no prior case had interpreted this 2010 wage exemption statute. This decision remains the leading — and only — authority on its meaning and scope. Idaho practitioners advising debtors on wage garnishment situations should be aware of its limitations.

2. “Paid to the individual” means paid on the individual’s account, not just into their hands. The Court’s construction of the statute is broad: wages diverted to a creditor through garnishment are treated as paid for exemption purposes, even though the debtor never personally received them. Debtors who suffer pre-petition garnishments cannot use § 11-605(12) to recapture those funds in bankruptcy.

3. The interplay between § 547 preferences and § 522(g) exemptions is complex. Where a trustee seeks to avoid a pre-petition garnishment as a preference, the debtor’s ability to claim an exemption in the recovered funds depends on whether the property could have been exempted in the first instance. This case illustrates how critical it is to identify viable exemption authority before asserting the right to avoid a transfer under § 522(h).

4. Debtors should assert wage exemptions in state court before filing. The Court noted, in a footnote, that Idaho Code § 8-519 permitted the Debtors to have raised an exemption claim in state court at the time of the garnishment. No such claim was made. Practitioners should advise clients facing wage garnishment to promptly evaluate available exemptions under state law — before funds leave the employer’s hands.

5. Liberal construction has limits. Idaho courts construe exemption statutes in favor of debtors, but that principle does not authorize courts to rewrite statutory language. Where plain meaning and statutory context point clearly in one direction, liberal construction will not overcome them.

Full Decision: Available on PACER, Case No. 14-40254-JDP, Doc. 51 (Bankr. D. Idaho 26 Aug. 2014)

Exemption DecisionDownload
by

Preston England Dedication Handkerchief

Preston England Temple Dedication Handkerchief

On 5 April 2020, I had to go digging to find my Hosanna Shout Handkerchief. It was the 200th Anniversary of the First Vision of Joseph Smith Jr. and President Russell M. Nelson had indicated we would be having a Hosanna Shout the day before to honor and celebrate. At some point on that day I snapped this picture of my handkerchief.

This handkerchief was given to me in Runcorn, England by John and Rose Byrom. It had been used in the Hosanna Shout for the Preston England Temple Dedication. I do not know who it belonged to or why it was being given to some missionary from Idaho, but I gladly accepted it. I got to use it for the first time on 8 October 2000 in the Manchester England Stake Center for the dedication of the Conference Center in Salt Lake City, Utah. Several days later I recall my companion, Elder Gheorghe Simion, telling me that during the night he heard me muttering the Hosanna Shout in my sleep. Later, again, we were in the car and he told me I should stop saying the Hosanna Shout under my breath. I had not realized I was doing it. But I do catch myself once and a while repeating its words to myself on particular occasions. It is deeply entrenched in my soul.

As I sat thinking about this handkerchief in 2020, I was thinking about all the occasions on which I have had the privilege of using it since then. For a record, I thought I better list the dates this handkerchief was used for a Hosanna Shout. I have updated it even for additional uses since 2020, particularly in dedicating our own Burley Idaho Temple.

Preston England Temple – 7-10 June 1998 – Preston England Temple, Chorley, England. I did not use it, someone else did.

Conference Center – 8 October 2000 – Manchester Stake Center, Altrincham, England.

Winter Quarters Nebraska Temple – 22 April 2001 – Branson Chapel, Branson, Missouri.

Nauvoo Illinois Temple – 27 June 2002 – Branson Chapel, Branson, Missouri.

Boise Idaho Temple – 18 November 2012 – Paul Idaho Stake Center – Paul, Idaho.

Provo City Utah Temple – 20 March 2016 – Kaysville Utah South Stake Center, Kaysville, Utah.

Idaho Falls Idaho Temple – 4 June 2017 – Burley West Idaho Stake Center, Burley, Idaho.

Meridian Idaho Temple – 19 November 2017 – Burley West Idaho Stake Center, Burley, Idaho.

Palm Sunday – 5 April 2020 – Ross Home, 819 Fairmont Street, Burley, Idaho.

Pocatello Idaho Temple – 7 November 2021 – American Falls Idaho Stake Center, American Falls, Idaho.

Layton Utah Temple – 16 June 2024 – Kaysville Columbia Heights, Kaysville 11th, and Spencer Wards Building, Kaysville, Utah.

Burley Idaho Temple – 11 January 2026 – Burley Idaho Central Stake Center, Burley, Idaho.

by

Deseret Peak Temple

A year ago we attended the open house for the Deseret Peak Utah Temple in Tooele, Utah. I thought I would share some pictures from that open house.

Aliza Ross, Jill Hemsley, Lillie Ross, Shanna Thompson, James Ross, Bryan Hemsley, and Hiram Ross

Deseret Peak is the same design as the Orem Utah Temple and Pocatello Idaho Temple, just different finishing work. I understand that similar designs reduce costs and expenses in the engineering and design, plus it works out the kinks of prior construction.

Deseret Peak Utah Temple
Amanda Ross, Paul Ross, Aliza Ross, Jill Hemsley, Lillie Ross, James Ross, Shanna Thompson, Bryan Hemsley, and Hiram Ross
Paul Ross, James Ross, Amanda Ross, Hiram Ross, Aliza Ross, Jill Hemsley, Lillie Ross, Bryan Hemsley, and Shanna Thompson

by

William Andra Ordinations

Working through the family history book of Golden Andra that was given to me, I opened a page to scan some photos and found a surprise. Behind that photo were some ordination certificates. These are originals. I thought I better get them scanned and preserved. I also uploaded them to FamilySearch and got them linked with the names in the documents.

I think they are valuable for family history. They are also a peek into church history. This gives us the missionaries who baptized and confirmed my Great Grandfather in Germany. I have provided some limited biographies at the end.

Also an original Notification of Birth Registration for Robert Lee Andra, son of William and Mary, who died at birth. I am not sure why the United States Department of Commerce is issuing this Notification, or the Bureau of the Census. There is some history behind this I am not aware. Last, a copy of William’s obituary.

Priest Ordination Certificate (Front)
Priest Ordination Certificate (Back)
Elder Ordination Certificate (Front)
Elder Ordination Certificate (Back)
High Priest Ordination Certificate (Front)
High Priest Ordination Certificate (Back)
Robert Andra Birth Certificate

I had to do some history on individuals listed on the certificates. Some fascinating individuals, obviously some of them local church leaders.

James Richard Bodily – born 11 February 1872 in Hyde Park, Cache, Utah – died 12 April 1967 in Preston, Franklin, Idaho

Wilford Woodruff Emery – born 16 October 1880 in Salt Lake City, Salt Lake, Utah – died 10 September 1954 in Salt Lake City.

John Edward Hanks – born 30 August 1877 in Salem, Utah, Utah – died 5 July 1970 in Salt Lake City.

William Gibson Palmer – born 16 July 1884 in Croydon, Morgan, Utah – died 15 May 1977 in Preston.

Henry Helaman Rawlings – born 8 April 1893 in Fairview, Oneida, Idaho – died 14 February 1984 in Fairview.

Adelbert Augustine Taylor – born 9 April 1883 in Springerville, Apache, Arizona – died 15 November 1948 in San Felipe de Híjar, San Sebastián del Oeste, Jalisco, Mexico.

Luther Hovey Twitchell – born 17 October 1878 in Salt Lake City – died 15 April 1962 in Bountiful, Davis, Utah.

by

Aliza and Hiram at the Temple

I am afraid the Ross household are temple tourists. Anyone who knows me knows that I have a couple of quirks. One of which, I like to drive by temples. The more distant a location, the greater likelihood I will plan visiting a temple. Even if it is just to drive past and snap a picture. Now that my children are old enough to attend the temple, my unwritten goal is to attend various temples. In visiting with Aliza and Hiram, they have not been keeping much of a record. Here I am, trying to re-create a list of temples they both have attended 2022 to present. I can cheat because we often take a picture while there.

Aliza could start attending the temple in January 2022. We did not have any goals for attendance, usually just whenever our Burley 11 Ward would go to the temple.

12 February 2022 – Twin Falls Idaho Temple
6 March 2022 – Twin Falls Idaho Temple
16 April 2022 – Pocatello Idaho Temple – Bill Teal, Mary Lou Teal, Amanda Ross, Aliza Ross, Paul Ross, Eliza Hales, Brad Hales, Aleah Hales
14 May 2022 – Logan Utah Temple – Paul and Aliza Ross with Aleah, Brad, and Eliza Hales
31 December 2022 – Brigham City Utah Temple – Paul Ross, Aleah Hales, Eliza Hales, Brad Hales, Aliza Ross, Amanda Ross
28 April 2023 – Ogden Utah Temple
27 May 2023 – Bountiful Utah Temple – Paul and Aliza Ross, Brad, Aleah, and Eliza Hales, Marianne Christensen
19 August 2023 – Twin Falls Idaho Temple – Paul Ross, Brad Hales, Aliza Ross, Aleah Hales, Eliza Hales

Hiram could start attending the temple in January 2024. That year the Burley 8 Ward (we moved houses) asked that we set a goal of attending monthly in 2024. We fulfilled that goal.

12 January 2024 – Pocatello Idaho Temple – Amanda, Aliza, Milo, Hiram, and Paul Ross

17 February 2024 – Twin Falls Temple – Burley 8 Ward Temple Trip

8 March 2024 – Bountiful Utah Temple – Bryan Hemsley, Amanda Ross, Aliza Ross, Jill Hemsley, Hiram Ross, Paul Ross
27 March 2024 – Vernal Utah Temple

5 April 2024 – Twin Falls Idaho Temple – Burley 8 Ward Temple Trip

17 May 2024 – Ogden Utah Temple
5 July 2024 – Oquirrh Mountain Utah Temple
17 August 2024 – Logan Utah Temple
23 August 2024 – Meridian Idaho Temple – Aliza only
22 September 2024 – Layton Utah Temple – Amanda Ross, Aliza Ross, Hiram Ross, Brad Hales, Aleah Hales, Elise Hales, Rachel Hales, Eliza Hales, Paul Ross

Funny story, Layton was the first time I actually took a dead person to the temple. My Great Aunt June Streeter Stout. Ask me for the story.

4 October 2024 – Boise Idaho Temple

9 November 2024 – Twin Falls Temple – Burley 8 Ward Temple Trip

28 December 2024 – Bountiful Utah Temple – Burley 8 Ward Temple Trip

The Ward did not ask us to continue the monthly attendance for 2025, but as a family we have continued the monthly attendance goal.

4 January 2025 – Meridian Idaho Temple

1 February 2025 – Twin Falls Temple

26 March 2025 – Newport Beach California Temple
19 April 2025 – Pocatello Idaho Temple – Brad Hales, Janet Hales, Eliza Hales, Aliza Ross, Aleah Hales, Elise Hales, Paul Ross, Hiram Ross
19 April 2025 – Idaho Falls Idaho Temple
16 May 2025 – Brigham City Utah Temple
17 June 2025 – Twin Falls Idaho Temple
6 July 2025 – Twin Falls Idaho Temple – Derek Hemsley, Paul Ross, Hiram Ross, Aliza Ross, Olivia Hemsley
16 August 2025 – Logan Utah Temple – Paul, Aliza, and Hiram Ross
6 September 2025 – Twin Falls Temple – Paul, Aliza, and Hiram Ross
24 October 2025 – Twin Falls Temple – Paul, Aliza, and Hiram Ross
29 November 2025 – Orem Utah Temple – Paul Ross, Hiram Ross, Derek Hemsley, Olivia Hemsley, Jill Hemsley, Aliza Ross
19 December 2025 – Syracuse Utah Temple – Paul, Aliza, and Hiram Ross

In addition to attending the temple for ordinances for 2024-2025, we also attended some temple open houses.

26 May 2023 – Saratoga Springs Utah Temple – Front (l-r): Jordan Hemsley, Hiram Ross, Jill Hemsley; Standing: Amanda Ross, Aliza Ross, Rowan Hemsley, Derek Hemsley, Olivia Hemsley, Lillian Ross, Paul Ross, James Ross, Jack Hemsley, Bryan Hemsley
6 August 2023 – Moses Lake Washington Temple
3 November 2023 – St George Utah Temple
23 March 2024 – Manti Utah Temple – Amanda, Paul, Hiram, James, Lillie, and Aliza Ross with Jill Hemsley
17 May 2024 – Layton Utah Temple – Lillian Ross, Paul Ross, Amanda Ross, Aliza Ross, Bryan Hemsley, Jill Hemsley, James Ross, Hiram Ross
18 May 2024 – Taylorsville Utah Temple – Bryan Hemsley, James Ross, Jill Hemsley, Aliza Ross, Lillian Ross, Hiram Ross, Amanda Ross, Paul Ross
11 October 2024 – Deseret Peak Utah Temple – Paul Ross, James Ross, Amanda Ross, Hiram Ross, Aliza Ross, Jill Hemsley, Lillie Ross, Bryan Hemsley, Shanna Thompson
16 May 2025 – Syracuse Utah Temple
30 August 2025 – Elko Nevada Temple – Brad and Rachel Hales Family with Ross Family with Lea Pierucci Izama (exchange student from Germany, staying with Hales family)
8 November 2025 – Burley Idaho Temple, Amanda Ross, Brad Hales, Anson Hales, Aleah Hales, James Ross (front), Lea Pierucci Izama (back), Paul Ross, Audra Hales, Aliza Ross

This was a fun visit. Some of the kids commented about where under the temple, in the foundations, might their rocks be found? We all submitted rocks with thoughts and our names on them that were placed before the foundations were poured.

14 November 2025 – Burley Idaho Temple – Hiram Ross, Amanda Ross, Lillie Ross, Rowan Hemsley (arm around), Margo Hemsley, Bryan Hemsley, Olivia Hemsley, Jill Hemsley, Jack Hemsley, James Ross, Paul Ross, Aliza Ross, Jordan Hemsley, Derek Hemsley

And other drive by shootings related to temples in 2022-2025.

4 June 2022 – Burley Idaho Temple Groundbreaking
6 August 2023 – Columbia River Washington Temple
28 August 2023 – Los Angeles California Temple
1 September 2023 – San Diego California Temple
26 March 2025 – Los Angeles California Temple
29 March 2025 – Oakland California Temple
29 November 2025 – Provo City Utah Temple – Paul, Aliza, and Hiram Ross with Jill Hemsley
23 December 2025 – Laie Hawaii Temple – Amanda and Paul Ross

This is only a record of attending the temple for Aliza and Hiram. Many know I have had my own personal goal for monthly attending the temple from September 1998 to the present.