Appendix — Whitehorn v. Murphy

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88 -6 47 OCT 18 1988

Case No. 88-8018 waar ~“qa JR.

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM 1989

IN RE:

JACK R. WHITEHORN AND

MARY RUTH WHITEHORN,

)DEBTORS,

JACK R. WHITEHORN AND

MARY RUTH WHITEHORN,

PETITIONERS,

V.

MARGARET H. MURPHY AND LAW FIRM:

SMITH, GAMBRELL & RUSSELL,

DEFENDANTS (APPELLEES).

ON APPEAL FROM THE UNITED STATES

COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

ON WRIT OF CERTIORARI TO

THE SUPREME COURT OF THE UNITED STATES

PURSUANT TO TITLE 28 U.S.C. § 1254

APPENDIX

Jack Whitehorn

Appeartng Pro se

5141 Indian River Drive, Box 377

Las Vegas, Nevada 89105-6148

(702) 367-2102

P. Steven Kretsch

Edward C. Brewer, Ii!

Attorneys at Law

Smith, Gambre!! & Russel!

2400 First Atlanta Tower

Atlanta, Georgia 30383

(404) 656-1800

Attorneys of Record for Appel! lees

Case No. 88-8018

IN THE SUPREME COURT OF THE URITED STATES

OCTOBER TERM 1989

IN RE:

JACK R- WHITEHORN AND

MARY RUTH WHITEHORN,

DEBTORS,

JACK R. WHITEHORN AND

MARY RUTH WHITEHORN,

PETITIONERS,

V.

MARGARET H. MURPHY AND LAW FIRM:

SMITH, GAMBRELL & RUSSELL,

DEFENDANTS (APPELLEES).

ON APPEAL FROM THE UNITED STATES

COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

ON WRIT OF CERTIORARI TO

THE SUPREME COURT OF THE UNITED STATES

PURSUANT TO TITLE 28 U.S.C. § 1254

APPENDIX

Jack Whitehorn

Appeartng Pro se

5141 Indian River Orive, Box 377

Las Vegas, Nevada 89105-6148

(702) 367-2102

P. Steven Kratsch

Edward C. Brewer, II!

Attorneys et Law

Smith, Gambrel! & Russel!

2400 First Atlanta Tower

Atlanta, Georgla 303585

(404) 656-1800

Attorneys of Record for Appellees

TABLE OF CONTENTS

Appendix 1

Complaint Filed by Petitioner/

Debtors-in-Possession. ... .«

Answer by Appellees. .... -

Appendix 2

Grant of Appellants' Motion

for Stay of Mandate, Entered

August 16, 1988. - © ° e e a o

Appendix 3

Petition to the United States

Court of Appeals for the

Eleventh Circuit for Rehearing

in Banc Denied, Order Entered

July 22, 1988. .~. « « « « « « e«

Appendix 4

United States Court of Appeals

for the Eleventh Circuit Order

Affirming the District Court

Order Issued May 26, 1988. . .

14

33

Ks

39

Appendix 5

United States District Court

Order Affirming the United

States Bankruptcy Court for

Northern District of Georgia,

Newnan Division Order Entered

December 23; 19867. «. « «se«e

Appendix 6

United States Bankruptcy

Court for Northern District

of Georgia, Newnan Division

Se ee ee ee

Order for Defendants

Entered July 31, 1987. ... .

Appendix 7

Transcript of Motion for Change

of Venue Adversary Proceeding

No. 860045 from Commencement

Court, United States Bankruptcy

Court, District of Nevada to

United States Bankruptcy Court,

Northern District of Georgia,

Mewnem Divigion. « « s «+ « « @

Appendix 8

SEOOGGCEIO$ «© + © tw eb ea be

Order of Judge Jones‘ Ruling

on Show Cause Hearing

Pertaining to Wording in

Order to Transfer the

Venue of Adversary

Proceeding No. 860045

Entered December 17, 1986. . .

Certificate That No

Proceeding to Lift Stay

Has Been Filed, Entered

December 2, 1986 . - «© « « « «

Appendix 9

Order Setting Out That All

Provisions of Title 1l United

States Bankruptcy Code Is

Restored Nunc Pro Tunc October

1980 to Petitioners/Debtors,

Entered May 3l, 1988 . . « « -

Appendix 10

United States Court of Appeals

for the Eleventh Circuit

Order Denying Motion of

Appellants for Enlargement

of Time for Stay of Mandate,

Entered October 4, 1988. ..- -

e « 107

Appendix 1

Complaint Filed by Petitioner/

Debtors-in-Possession and

Answer by Appellees

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF NEVADA

Adversary Proceeding No. 860045

COMPLAINT TO COMPEL TURNOVER OF PROPERTY

Entered April 3, 1986

COME NOW Jack R. Whitehorn and Mary

Ruth Whitehorn, Debtors-in-Possession in

the above captioned case and respectfully

show the Court as follows:

1. Plaintiffs are duly qualified

and Debtors-in-Possession in this case.

2- The Court has jurisdiction over

this adversary proceeding pursuant to 28

U.S.C. $1471 and 11 U.S.C. §542.

3. This adversary proceeding is

brought by the Plaintiffs, Jack R.

Whitehorn and Mary Ruth Whitehorn, as

Debtors-in-Possession, and asserts that

the Debtors-in-Possession are entitled to

have property, namely one hundred percent

(100%) of WFDR, Inc. stock turned over or

sold to Defendants named in the caption

of this proceeding. The said stock was

issued and titled to Jack Whitehorn,

Certificate No. 1 for 50 shares and

Certificate No. 2 for 5000 shares on

December 1, 1969 and has never been

transferred by Jack Whitehorn or by order

of this Court.

(A)

The said stock was’ pledged, in

addition to corporate assets to. the

Citizens State Bank, Butler, Georgia, as

additional collateral for corporate

loans, renewals and/or extensions.

(B)

On July 23, 1979, a refinancing plan

was completed by WFDR, Inc. with

Plaintiff as one hundred percent

stockholder, President and sole Director

with the Citizens State Bank, Butler,

Georgia. The said stock was pledged and

left with said bank as additional

collateral; no power of attorney for

transferring said stock was included in

the transaction.

(c)

On March 28, 1980, Plaintiff, Jack

Whitehorn, executed a stock option with

blood brother, John F. Whitehorn.

(D)

On May 8, 1980, Plaintiff, Jack

Whitehorn, disavowed said Stock Option

and asserted full and complete authority

over the corporation and its holdings as

President, sole Director and 100%

stockholder.

(EB)

On May 9, 1980, without Plaintiff,

Jack Whitehorn's knowledge or approval or

any corporate resolution, and with

Defendants' sole direction, WFDR, Inc.

was placed in a Chapter 11 proceeding in

the United States Bankruptcy Court for

the Northern District of Georgia, Newnan

Division, Bankruptcy No. 80-00136N.

(F)

The above captioned Defendants

allegedly acted as attorneys for the

Debtor-in-Possession corporation as well

as Estate Administrator.

(G)

On July 24, 1980, an adversary

proceeding was filed on behalf of

Plaintiffs in the United States Bank-

ruptcy Court, Northern District of

Georgia, Newnan Division, being Adversary

Case No. 80-0034N. The Court subse-

quently abstained from hearing~ said

proceeding.

(8)

On October 6, 1980, the Plaintiffs

filed a Chapter 11 proceeding in the

United States Bankruptcy Court, District

of Nevada, effecting the automatic stay

under 11 0.8.C. $362, Case No.

BK-LV-80-936. The said stock was, on

October 6, 1980, property of Plaintiff.

Citizens State Bank, holder of said stock

was so noticed of automatic stay, along

with WFDR, Inc. and Defendant law firm.

No Plan of Reorganization by WFDR, Inc.

had been offered and/or filed with the

United States Bankruptcy Court, Northern

District of Georgia, Newnan Division on

October 6, 1980.

(I)

On December 8, 1980, a preference

action against John F. Whitehorn was

filed by Plaintiffs in this Honorable

Court for the purpose of recovering the

one hundred percent (100%) WFDR, Inc.

stock.

(J)

Upon motion to change the venue of

the case by John F. Whitehorn to this

Court, the Honorable Judge Lloyd OD.

George, presiding, transferred only the

adversary proceeding No. 800197 filed in

Case BK-LV-80-936 to the United States

Bankruptcy Court, Northern District of

Georgia, Newnan Division and retained

jurisdiction of Plaintiffs' Chapter ll

proceeding, Case No. BK-LV~80-936.

(K)

During the period of time the

Plaintiffs' transferred adversary pro-

ceeding was being prepared by Counsel

and/or heard by Judge W. Homer Drake,

United States Bankruptcy Court, Northern

District of Georgia, Newnan Division,

Adversary Proceeding No. 81-0O039N, the

Defendants, acting under color of the

law, influenced the Citizens State Bank

to turn over or sell Plaintiff's stock to

Defendants while having full knowledge

of Plaintiffs' Chapter 1l proceedings in

this Honorable Court and the effective

automatic stay. No hearing was held

before this Court for lifting of the

automatic stay protecting Plaintiffs'

property, i-e.- the said one hundred

percent of WFDR, Inc. stock.

(L)

On or about August 18, 1981,

Defendants took possession of Plaintiff's

property, one hundred percent (100%) of

WFDR, Inc. stock issued and titled to

Jack Whitehorn. It has been disclosed

that Defendants, after taking or buying

said stock from said bank, sold,

cancelled or traded Plaintiff's stock

without Plaintiff's or this Court's

authorization, a direct contempt of this

Honorable Court.

(M)

The adversary case transferred from

this Honorable Court to United States

Bankruptcy Court, Northern District of

Georgia, Newnan Division, Case No.

81-0039N, was tried December 16, 1981 and

January 27, 1982, after the said stock

had been turned over or_ sold to

Defendants by said _ bank. An Order

entered on August 18, 1982, found the

Stock Option Agreement a voidable

preference. Said Order was appealed by

John F. Whitehorn. The United States

District Court vacated said order

remanding back to the Bankruptcy Court

for compliance with Bankruptcy Rule 752

and issues raised in Appellees $547.

Judge Drake did not respond. A final

Order was signed on the 25th day of

January, 1984 by Judge W. Homer Drake,

entered on January 26, 1984. Plaintiff

objected but did not appeal the Order.

No appeal was noticed by any other party.

The said Order by Judge Drake

states: "The preference action success-

fully brought by Jack Whitehorn against

Dr. John Whitehorn regarding the

pre-petition transfer of stock has been

remanded to this Court for additional

findings of fact. However, that

preference action has become moot under

— 2

nla aaa

the terms of the settlement by which Dr.

John Whitehorn disavows any interest in

the equity of the Debtor."

(N)

A written request was made to

Defendants, November 2, 1984, for books

and records of WFDR, Inc., including

without limitation to stock certificates.

Said communication requested a written

response.

(0)

On November 12, 1984, written

response was received from Defendants,

denying Plaintiff's property that has

been awarded pursuant to Court Order.

4. The stock is property which

Plaintiff may use, sell or lease under ll

U.S.C. $363.

5. Plaintiff has requested

delivery of said stock to him and the

Defendants have failed and refused, and

continue to fail and refuse to deliver

» i} «

the same to him.

WHEREFORE Plaintiff prays that

Defendants be ordered to surrender

possession forthwith of said stock

certificates, all assets said stock owns,

including but not limited to Accounts

Receivables, corporate books, records,

bank records, cash, records of all

transactions subsequent to May 8, 1980 to

him and that he have such other and

further relief as is just.

Dated April 3rd , 1986.

Respectfully submitted,

Jack R. Whitehorn

Debtor-in-Possession

Mary Ruth Whitehorn

Debtor-in-Possession

ow 12 «

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF NEVADA

Adversary Proceeding No. 860045

ORDER

ENTERED JULY ll, 1986

On Motion of the Plaintiffs for

Leave to Amend Pleadings as Specified on

the Original Complaint,

IT Is CONSIDERED, ORDERED AND

DECREED that said Motion be, and the same

is hereby allowed and that said Complaint

be, and the same is hereby amended as

follows:

Paragraph l

"Plaintiffs are duly qualified as

Debtors-in-Possession in this case, that

the above named Debtors on October 6,

1980 filed a voluntary petition for

relief under Chapter 11 Title ll, United

States Code and on October 6, 1980, an

Order was duly made and entered granting

relief under said Chapter 11."

- 13-

Paragraph 2

"This is an adversary proceeding

brought pursuant to Bankruptcy Rule

7001(1) to recover property belonging to

the above entitled estate, of which this

Court has jurisdiction under the

provisions of Title 28 U.S.C. §157(b)."

Dated this 25th day of June 1986.

UNITED STATES BANKRUPTCY COURT

Robert Clive Jones

Chief Bankruptcy Judge

se 8 4s

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF NEVADA

Adversary Proceeding No. 860045

ANSWER TO COMPLAINT TO COMPEL

TURNOVER OF PROPERTY

Entered on or about May 5, 1986

COMES NOW, Margaret H. Murphy and

the law firm of Smith, Gambrell &

Russell, named as defendants herein, and

answer plaintiffs' Complaint to Compel

- 14 <

ae

Turnover of Property as follows:

FIRST DEFENSE

Plaintiffs' complaint fails to state

a claim upon which relief may be granted.

SECOND DEFENSE

This Court lacks subject matter

jurisdiction.

THIRD DEFENSE

This Court lacks personal

jursidiction over Margaret H. Murphy and

the law firm of Smith, Gambrell 6&

Russell.

FOURTH DEFENSE

Plaintiffs' complaint fails to state

a claim upon which relief may be granted

in that all actions taken by attorney

Margaret H. Murphy and the law firm of

Smith, Gambrell & Russell with respect to

the WFDR, Inc. stock at issue were

pursuant to court orders issued by the

United States Bankruptcy Court for the

Northern District of Georgia, Newnan

- 15 -

Division.

FIFTH DEFENSE

Plaintiffs' claims are barred by

their failure to join necessary parties

in accordance with Fed. R. Civ. P. 19.

SIXTH DEFENSE

Plaintiffs' claims are barred by the

doctrines of res judicata.

SEVENTH DEFENSE

Plaintiffs' claims are barred by the

doctrine of collateral estoppel.

EIGHTH DEFENSE

Plaintiffs' claims are barred by the

doctrine of laches.

NINTH DEFENSE

Plaintiffs' claims are barred in

that there has been a satisfaction and

accord. Plaintiff, Jack Whitehorn was

paid $35,000 for the stock at issue

pursuant to court approved settlement of

claims.

« 16 =

cae emi

TENTH DEFENSE

Plaintiffs have waived any right to

recover by their failure to appeal the

Order entered by the Bankruptcy Court for

the Northern District of Georgia, Newnan

Division, dated January 25, 1984 wherein

the court ruled that claims, identical to

those asserted in this complaint, were

moot.

ELEVENTH DEFENSE

Plaintiffs are estopped from

bringing this action in that all issues

related and claims asserted in their

complaint were raised, argued, and

briefed and adjudicated by the Honorable

W. Homer Drake, Jr-, U.S. Bankruptcy

Judge for the Northern District of

Georgia, Newnan Division, in the Chapter

Aa proceeding of WFDR, Inc., Case

No.80-00136-N or in other adversary

proceedings before that court.

o 13 «

TWELFTH DEFENSE

Plaintiffs' claims are barred by the

provisions of ll U.S.C. §1141 by the

confirmation of the Plan of

Reorganization of WFDR, Inc., Case No.

80-00136-N, which Plan was confirmed by

the United States Bankruptcy Court for

the Northern District of Georgia, Newnan

Division.

THIRTEENTH DEFENSE

Responding to the specific numbered

paragraphs of plaintiffs' complaint,

defendants answer as follows:

l.

Defendants lack knowledge or infor-

mation sufficient to form a belief as to

the allegations of paragraph number l.

2.

Denied.

3.

Denied. By way of further response,

defendants state they do not have the

o» 6 =

stock and that said stock was’- sold

pursuant to a Chapter 11 Plan of

Reorganization to Provident Broadcasting

Corporation pursuant to octane of the

U.S. Bankruptcy Court for the Northern

District of Georgia, Newnan Division,

dated March 16, 1981, April 9. 1981 and

June 29, 1981.

A.

Defendants lack knowledge or

information sufficient to form a belief

as to the allegations of paragraph A in

that they are unaware of the specific

transaction for which the stock was

pledged. Defendants admit that the stock

at issue was pledged to Citizens State

Bank, Butler, Georgia. Except as

expressly admitted, paragraph A is

denied.

B.

Defendants lack knowledge or

information sufficient to form a belief

“— oe

as to the allegations of paragraph B.

C.

Defendants lack knowledge or

information sufficient to form a belief

as to the allegations of paragraph C. By

way of further response, Defendants state

that plaintiff's brother, Dr. John

Whitehorn, had a proxy to vote all of the

shares of WFDR, Inc. and, by an

appropriate corporate resolution, WFDR,

Inc. filed a Chapter 11 #£=Bankruptcy

Petiticn.

D.

Defendants lack knowledge or

information sufficient to form a belief

as to the allegations of paragraph D.

E.

Denied. By way of further response

to paragraph E, defendants state that

Margaret H. Murphy and the law firm of

Smith, Gambrell & Russell acted as

attorneys for WFDR, Inc. and that WFDR,

— in

Inc. filed a Chapter 11 # proceeding

pursuant to an appropriate corporate

resolution authorizing same.

F.

Defendants admit that they acted as

attorneys for the debtor-in-possession

corporation and as Estate Administrators

pursuant to orders issued by the

Bankruptcy Court for the Northern

District of Georgia, Newnan Division,

dated May 15, 1980 and May 29, 1980.

Except as expressly admitted, paragraph F

is denied.

Ge

Admitted.

He

Defendants lack knowledge or

information sufficient to form a belief

as to the plaintiffs' filing of a Chapter

11 proceeding in the United States

Bankruptcy Court, District of Nevada and

as to the ownership of the stock on

~ 23 «

October 6, 1980. Defendants admit that,

as of October 6, 1980, no Plan of

Reorganization by WFDR, Inc. had been

filed with the United States Bankruptcy

Court, Northern District of Georgia,

Newnan Division. Except as expressly

admitted, paragraph H is denied.

I.

Defendants lack knowledge or

information sufficient to form a belief

as to the allegations of paragraph I. By

way of further response to paragraph I,

defendants state that the records of this

Court speak for themselves.

Je

Defendants lack knowledge or

information sufficient to form a belief

as to the allegations of paragraph J

except that defendants admit that

plaintiffs' adversary proceeding No.

80-0197 against Dr. John Whitehorn was

transferred to the U.S. Bankruptcy Court,

» 22 =

Northern District of Georgia, Newnan

Division. By way of further response to

paragraph J. defendants state that the

records of this Court speak for

themselves.

K.

Denied. By way of further response

to paragraph K, defendants state that all

actions taken by them with respect to the

stock at issue were pursuant to orders

entered by the U.S. Bankruptcy Court for

the Northern District of Georgia, Newnan

Division.

Le

Denied. By way of further response

to paragraph L, defendants state that, in

a simultaneous closing transaction for

the sale of WFDR, Inc. stock pursuant to

its confirmed Plan of Reorganization, a

portion of the proceeds from the sale of

the stock were paid over to satisfy the

indebtedness of the primary secured

- 23-

lender for WFDR, Inc., Citizens State

Bank, Butler, Georgia. Said lender then

released the stock certificates which,

pursuant to the Plan of Reorganization,

were cancelled and reissued to Provident

Broadcasting Corporation, the purchaser

of said shares.

M.

Defendants lack knowledge or

information sufficient to form a belief

as to the allegations of paragraph M with

respect to the dates of trial. The

orders and court records of the United

States District Court for the Northern

District of Georgia speak for themselves;

however, defendants admit that plaintiffs

did not appeal the final order of the

Honorable Judge W. Homer Drake, Jr.

entered on January 26, 1984 and that sa.d

order became a final order. Except as

expressly admitted, paragraph M is

denied.

» 36 «

N.

Defendants admit receipt of a letter

dated November 2, 1984; admit that a

request was made for the books and

records of WFDR, Inc. and admit a written

response was requested. By way of

further response to paragraph N,

defendants state that the “cancelled

stock certificate" was requested. Except

as expressly admitted, paragraph N is

denied.

O.

Defendants admit that they responded

to plaintiffs' letter dated November 2,

1984. By way of further response,

defendants state that the letter speaks

for itself as to its terms, conditions

and effects. By way of further response,

defendants state that Jack Whitehorn was

advised that the books and records were

transferred to the stock purchaser,

Provident Broadcasting Corporation.

«“ 2 =

Except as expressly admitted, paragraph O

is denied.

Denied.

5.

Defendants admit that Jack R.

Whitehorn has requested delivery of the

stock to him and admit that the stock has

not been delivered to him. By way of

further response, defendants state that

the stock was disposed of pursuant to the

court-approved Plan of Reorganization of

WFDR, Inc. and that, as part of that

Plan, his interest, represented by two

"Certificates of Interest" which were

distributed to him following the closing

of the stock sale, were satisfied

pursuant to the order of the Court

entered on January 26, 1984. The

Bankruptcy Court for the Northern

District of Georgia, Newnan Division,

approved a settlement that granted

—"

plaintiff Jack R. Whitehorn the sum of

$35,000, which payment satisfied in full

any claim he might have had as a

shareholder in the WFDR, Inc. bankruptcy

proceeding. Except as expressly

admitted, paragraph 5 is denied.

NHEREFORE, having fully responded to

plaintiffs' complaint, defendants pray

that this action be dismissed with

prejudice, and that all costs be cast

upon the plaintiffs.

Dated this 5 day of May, 1986.

LIONEL SAWYER & COLLINS

By Linda Riegle

Attorneys for Defendants

SMITH, GAMBRELL & RUSSELL

By Linda Riegle

for Joyce B. Klemmer

« 2 =

Appendix 2

Grant of Appellants'

Motion for Stay of Mandate

Entered August 16, 1988

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

Case No. 88-8018

GRANT OF APPELANTS' MOTION

POR STAY OF MANDATE

ENTERED AUGUST 16, 1988

The motion of appellants for stay of

the issuance of the mandate pending

petition for writ of certiorari is

GRANTED to and including Sept. 20, 1988,

the stay to continue in force until the

final disposition of the case by the

Supreme Court, provided that within the

period above mentioned there shall be

filed with the Clerk of this Court the

certificate of the Clerk of the Supreme

Court that the certiorari petition has

been filed. The Clerk shall issue the

mandate upon the filing of a copy of an

order of the Supreme Court denying the

writ, or upon expiration of the stay

granted herein, unless the above

a a

ee aarraaeie

mentioned certificate shall be filed with

the Clerk of this Court within that time.

Phyllis Kravitch

United States Circuit Judge

x kek

A Motion for Enlargement of Time for Stay

of Mandate, Entered Sept. 16, 1988;

Appellees' Objection to Said Motion Filed

on or about Sept. 19, 1988; Petitioners/

Appellants Motion to Strike Appellees'

Pleadings, Filed on or about Sept. 22,

1988. See Order entered at Appendix 10.

a 29 «

PUBLISHER'S NOTE :

The following pages are unavailable

for filming:

o 33 thru 46

stock was cancelled and newly issued

stock sold to Provident Broadcasting

Company (Provident), the successor to

Lake George Corporation.

One month after this sale, on

September 18, 1981, this court dismissed

as moot Whitehorns' appeals of the March

16, and April 8, 1981, orders approving

the sale of assets since the sale of

stock in lieu of the sale of assets had

been approved and consummated. This

court noted that the order approving the

sale of the stock had not been appealed

and that no stay of the sale was sought

or obtained. The Eleventh Circuit

affirmed this court's dismissal of the

appeals as moot.

In the adversary proceeding between

Whitehorns and Dr. John Whitehorn, the

bankruptcy court entered an order in this

matter on August 18, 1982, finding that

the transfer to Dr. John Whitehorn was a

o-@7 «

voidable preference. This court vacated

that order and remanded for _ further

findings. The bankruptcy court treated

these proceedings as moot after it

approved settlement agreement described

below.

On July 14, 1983, the defendants, as

Estate Administrators, and the Creditors'

Committee of WFDR filed a joint applica-

tion to settle claims which provided,

among other things, that upon partial

payment of certain administrative and

unsecured claims of Dr. John Whitehorn,

Dr- John Whitehorn would relinquish his

claim to ownership of the shares in WFDR,

which would then be deemed to be held

free and clear by Jack Whitehorn. The

application of settlement further

proposed that, pursuant to Jack White-

horn's ownership interest, payment of

$35,000 would be made from the remaining

funds held by the WFDR Estate

- 48 «

Administrator to Jack Whitehorn's

attorneys.

On January 26, 1984, the bankruptcy

court entered two orders approving the

proposed settlement including the payment

to Jack Whitehorn's attorneys. The

payment to Jack Whitehorn's attorneys

from the WFDR proceeding was specifically

authorized by an order from the District

of Nevada where Whitehorn's' personal

bankrutpcy proceeding is pending. The

$35,000 payment was made to Jack

Whitehorn's attorneys after the filing of

an application to pay administrative

expenses. On November 15, 1984, a final

decree was entered closing the estate of

WFDR.

Whitehorns initiated the present

proceeding by filing a “Complaint to

Compel Turnover" on April 3, 1986 in the

United States Bankruptcy Court for the

District of Nevada, where plaintiffs'

~ £9 «=

Chapter 11 case is pending. In their

complaint, Whitehorns seek to require

defendants to "surrender possession" of

the stock to WFDR and "all assets said

stock owns, including but not limited to

Accounts Receivables, corporate books,

records...[etc.]." Whitehorns initiated

this proceeding pro se and continue to

proceed pro se.

On cross motions for summary

judgment, the bankruptcy court granted

the defendants' motion and denied the

plaintiffs' motion. The bankruptcy court

identified two alternate grounds for the

grant of defendants' motion. First, the

court found that Whitehorns' claim is

barred by the doctrine of res judicata.

Second, the court below granted defen-

dants' motion to amend their answer by

adding the statute of limitations as an

affirmative defense and then held that

Whitehorns' claim is time barred "to any

« 86 «

extent that it...seeks to avoid a post-

petition transfer, because the action was

not commenced within two years of the

transaction sought to be avoided."

Res Judicata

Whitehorns, proceeding pro se in

this appeal, describe twelve "Points Upon

Which The Appeal is Predicated.”"

(Appellants' Brief at 5-9). Within these

twelve points, it appears that

appellants’ only argument concerning the

bankruptcy court's finding that their

claim for turnover is barred by the

doctrine of res judicata is that the

bankruptcy court did not have

jurisdiction to issue the prior orders

permitting the cancellation and sale of

the stock of WFDR. Appellants assert

that the bankruptcy court did not have

jurisdiction because the stock was

appellants‘ property and could not be

disposed of or otherwise impaired without

« 8) «

lifting the automatic stay in effect in

appellants' personal bankruptcy case

pending in Nevada.

The primary issue on this appeal is

whether the court had jurisdiction to

issue the order approving the sale of

assets to WFDR and the order approving

the amended reorganization plan pursuant

to which the stock of WFDR was cancelled.

Appellants argue that the bankruptcy

court's order affirming the settlement of

claims resolving the dispute between John

and Jack Whitehorn over the ownership of

the WFDR stock clearly determined that

the stock was the property of Jack

Whitehorn. Since the stock was the

property of Jack Whitehorn, plaintiffs

contend that it could not have been

cancelled and new stock sold to Provident

without lifting the stay in the

Whitehorns' personal bankruptcy case.

As the bankruptcy court noted, the

«a 22 «

Whitehorns' ownership in the stock gave

them only a certain bundle of rights and

these rights were not affected by the

cancellation of the stock and the

issuance of the certificates of interest

in the proceeds of the sale to Provident.

Whitehorns' personal bankruptcy proceed-

ing could not stay the ministerial act of

cancellation of shares by the corporated

debtor-in-possession any more than any

individual shareholder's bankruptcy could

stay the fluctuation of the market price

of such individual's shares. Thus the

bankruptcy court did not err in conclud-

ing that it had jurisdiction to enter the

orders approving the sale of new stock

which was sold to Provident with the for-

mer shareholders receiving certificates

of interest in the proceeds of the sale.

The appellants have not contested

the bankruptcy court's findings with

regard to the other elements required for

a 42

res judicata. See Kemp v. Birmingham

News Co., 608 F.2d 1049, 1052 (5th Cir.

1979) ("For a prior judgment to bar an

action on the basis of res judicata, the

parties must be identical in both suits,

the prior judgment must-have been

rendered Py a court of competent juris-

diction, there must have been a final

judgment on the merits and the same cause

of action must be involved in both

cases.") The bankruptcy court did not

err in finding that Whitehorns' claim is

barred by the doctrine of res judicata.

See Southmark Properties v. Charles House

Corporation, 742 F.2d 862 (5th Cir. 1984)

(upheld the application of the doctrine

of res judicata to a case with facts

similar to those in the case at bar).

It is not necessary for the court to

address the statute of limitations issue

- the alternate ground on which the

« $4 «

bankruptcy court granted defendants'

motion for summary judgment.

For the reasons stated herein, the

court affirms the order of the bankruptcy

court granting appellees‘ motion for

summary judgment and denying appellants'

motion for summary judgment.

SO ORDERED, this 21 day of December,

1987.

G. Ernest Tidwell

Judge, United States District Court

— oo

Appendix 6

United States Bankruptcy Court

for Northern District of Georgia

Newnan Division

Judgment and Order

Entered December 23, 1987

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF GEORGIA

NEWNAN DIVISION

Case Number BK-LV-80-00936

Adversary Number 87-002N

JUDGMENT

Judgment is hereby entered for the

defendants in the above-styled adversary

proceeding in accordance with the Order

of the Court entered the 31 day of July,

1987.

At Newnan, Georgia, this 31 day of

July, 1987.

W. H.- Drake, Jr.

United States Bankruptcy Judge

- 59 -

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF GEORGIA

NEWNAN DIVISION

Case Number BK-LV-80-00936

Adversary Number 87-002N

ORDER

This adversary proceeding is before

the Court on cross-motions for summary

judgment. Plaintiffs, Jack R. Whitehorn

and Mary Ruth Whitehorn ("Whitehorn"),

initiated this proceeding by filing a

"Complaint to Compel Turnover" on April

3, 1986, in the United States Bankruptcy

Court for the District of Nevada, where

the plaintiffs' Chapter 11 case is

pending. On December 17, 1986, that

Court entered an Order which granted the

defendants' motion to transfer the

adversary proceeding, but not the Chapter

ll case, to this district. |

The complaint filed by Whitehorn

seeks the turnover under 1l U.S.C. $542

«a Gb &

of one hundred percent (100%) of the

stock of WFDR, Inc., which is in the form

of Certificate No. 1 for 50 shares and

Certificate No. 2 for 5,000 shares, as

well as “all assets said stock owns."

WFDR, Inc. ("WFDR") was the owner of

WFDR-AM and WFDR-FM radio stations in

Manchester, Georgia, and a debtor in this

Gistrict as a result of the filing of a

petition under Chapter 11 on May 9, 1980

(Case No. 80-00136N). Defendant,

Margaret H. Murphy, and the law firm of

Smith, Cohen, Ringel, Kohler & Martin

acted as attorneys for the corporate

debtor-in-possession, WFDR, and as Estate

Administrators in WFDR's Chapter 1l case.

Smith, Cohen, Ringel, Kohler & Martin is

the predecessor law firm to defendant,

Smith, Gambrell & Russell.

The defendants seek summary jugment

on the grounds that the plaintiffs'

Claims are barred by the doctrine of res

~ 61 «

judicata as a result of orders entered in

the: Chantae ll case of WFDR. Plaintiffs'

motion for summary jugment asserts that

this Court had no authority to dispose of

the stock belonging to plaintiff Jack R.

Whitehorn unless the stay was lifted in

plaintiffs' individual Chapter 1l

proceeding, which has been pending in the

United States Bankruptcy Court for the

District of Nevada since October 6, 1980.

The material facts of this case as to

which there is no genuine dispute are as

follows.

Jack Whitehorn was the original sole

shareholder of WFDR. On March 28, 1980,

Jack Whitehorn executed a Stock Option

Agreement which contained a proxy giving

voting authority over the stock together

with an option to acquire all of the

outstanding stock to his brother, Dr.

John Whitehorn. On May 9, 1980, WFDR,

under management elcted through an

« €2 «

exercise of the proxy filed its Chapter

il petition which commenced its

bankruptcy case in this Court. Jack

Whitehorn and Mary Ruth Whitehorn filed

their own individual Chapter 11 case in

Nevada on October 6, 1980.

On November 5, 1980, in Nevada and

on July 22, 1980, in this district,

Whitehorn initiated adversary proceedings

against Dr. John Whitehorn, which

proceedings contested ownership of the

stock and control of the corporation.

On January 30, 1981, the Nevada

court transferred the Nevada adversary

proceeding to this district.

Also on January 30, 1981, WFDR, as

Gebtor-in-possession, filed an applica-

tion to sell its assets. Whitehorn

objected to the application both as

creditor of WFDR and as a claimant that

he was the sole and rightful owner of all

of the shares of WFDR. Following a

e €3 «

hearing, this court entered an Order, on

March 16, 1981, approving the sale of

assets for $790,000.00 to Lake George

Corporation, predecessor in interest to

Provident Broadcasting Company ("Provi-

dent"). On April 8, 1981, this Court

denied Whitehorn's motion for a new

trial, for alteration or amendment of

judgment, or for additional findings of

fact. Whitehorn timely noticed an appeal

from the Orders of March 16 and April 8,

1981 (hereinafter "Orders approving the

Sale of assets") but did not seek a stay

of the sale.

Before the appeal was heard by the

United States District court for the

Northern District of Georgia, WFDR filed,

on May 27, 1981, an "Amended Plan of

Reorganization" which proposed in

Articles IV and V to implement the Orders

approving the sale of assets by

structuring the transaction in such a way

= 64 «

that the outstanding stock of WFDR would

be cancelled, with prior holders of such

stock receiving certificates of interest

in the proceeds of the sale of newly

issued stock to Provident.

Whitehorn filed objections to the

disclosure statement and to confirmation

of the amended plan on grounds, inter

alia, that the management of WFDR which

had authorized the filing of the Chapter

ll petition had no power to do so. On

June 29, 1981, this Court entered an

Order confirming the amended plan. In

the confirmation order, the Court

acknowledged that there was a pending

adversary proceeding between Jack and

John Whitehorn regarding the _ equity

ownership of WFDR but stated that even if

"Jack Whitehorn is proven to be the owner

of all the stock of WFDR, Inc., despite

his objection to the plan of

reorganization, the plan should be

—

confirmed pursuant to 1l U.S.C.

§1129(b)(2)(C)." There was no appeal

filed from the Order confirming the

amended plan.

Following approval of the Federal

Communications Commission of the transfer

of control of WFDR and the filing of an

application by the defendants which

sought approval of the date of August 18,

1981 as the effective date of the plan,

the Court entered an Order setting such

date and stating that the defendants

would act as Estate Administrator for the

plan. The transaction with Provident in

accordance with the plan was closed on

August 18, 1981.

In an Order dated Setember 18, 1981,

the United States District Court for the

Northern District of Georgia dismissed

Whitehorn's appeal for the Orders

approving the sale of assets as moot "in

that the amended plan providing for the

- 66 -

sale of the stock in lieu of a sale of

the assets has been approved and

consummated." The District Court also

noted that the order approving the sale

of stock had not been appealed from and

that no stay of said sale had been

obtained. On appeal, the United States

Court of Appeals for the Eleventh Circuit

affirmed the District Court's Order

Gismissing Whitehorn's appeal as moot

because the order confirming the plan was

not appealed and the sale authorized by

the plan was not stayed.

On August 18, 1982, this Court

entered an Order in an adversary

proceeding between Jack Whitehorn and Dr.

John Whitehorn which held that’ the

execution by Jack Whitehorn of the stock

option agreement to John Whitehorn was a

preferential transfer and therefore

1

voidable under 11 U.8.C. $547. On

appeal, the District Court on May 27,

« £423 «

———————

1983, vacated the order finding the stock

option to be a preference and remanded

the proceeding to this Court for further

findings.

On July 14, 1983, the defendants, as

Estate Administrator, and the Creditors'

Committee of WFDR filed a joint

application to settle claims which

provided, inter alia, that upon partial

payment of certain administrative and

unsecured claims of Dr. John Whitehorn,

Dr. John Whitehorn would relinquish his

Claim to ownership of the shares in WFDR,

which would then be deemed to be held

free and clear by Jack Whitehorn. The

application further proposed that

pursuant to Jack Whitehorn's ownership

interest, which would then be undisputed,

payment of $35,000.00 wouldf be made from

the remaining funds held by the Estate

Adminstrator to Jack Whitehorn's

attorneys. On January 26, 1984, this

- 68 -

Court entered two Orders approving the

proposed settlement, which Orders

included statements approving the payment

to Jack Whitehorn's attorneys in recogni-

tion of his equity interest. Such a

payment to Jack Whitehorn's attorneys

from the WFDR proceeding for the benefit

of Jack Whitehorn's individual estate had

been specifically authorized by Order

dated May 6, 1983, entered in the

District of Nevada where Whitehorn's

personal bankruptcy case is pending. The

$35,000.00 payment to Whitehorn's

attorneys was in fact made following the

filing of an application to pay

administrative expenses, and, on November

15, 1984, a final decree was entered

which closed the estate of WFDR.

It is clear that the claims raised

by Whitehorn in the adversary proceeding

at bar have been previously addressed by

this Court in the WFDR' case. The

«a @«

Bankruptcy Code provides:

[T]he provisions of a confirmed

plan bind the debtor, any

entity issuing securities under

the plan, any entity acquiring

property under the plan, and

any creditor, equity security

holder; or general partner in

the debtor, whether or not the

claim or interest of = such

creditor, equity security

holder, or general partner is

impaired under the plan and

whether or not such creditor,

equity security holder, or

general partner has accepted

the plan.

ll U.S.C. §1141l(a). Under this

provision, questions which could have

been raised pertaining to confirmed plan

are res judicata. See Collier on

Bankruptcy 91141.01[{1] (15th ed. 1987).

For a prior judgment to bar a subsequent

action under the doctrine of res

judicata, the parties must be the same in

both suits, the prior jdugment must have

been entered by a court of competent

jurisidiction, there must have been a

final judgment on the merits, and the

» 70 «

Same cause of action must be involved in

both cases. See., Cogs, Southmark

Properties v. Charles House Corporation,

742 F.2d 862, 869 (5th Cir. 1984).

Here, Jack Whitehorn, as a creditor

and disputed shareholder of WFDR and by

his active participation in WFDR's

reorganization, was clearly a party-in-

interest to the orders entered in WFDR's

Chapter 11 case. The Orders approving

the sale of assets, which Orders were

appealed, and the confirmation order,

which was not appealed, constitute final

judgments on the claims’ raised by

Whitehorn in the WFDR reorganization and,

if the claims now raised by Whitehorn are

the same and if this Court had jurisdic-

tion to enter those orders, then

Whitehorn is precluded from raising the

same claims again.

Whitehorn's complaint seeks a

turnover of the WFDR stock certificates

—:

and "all assets said stock owns." In the

Orders approving the sale of assets, this

Court approved the sale of the assets of

WFDR free and clear of all claims and

interests and also authorized WFDR and

the purchaser to restructure the trans-

action as a stock acquisition or merger.

Such a restructuring of the deal was

proposed by the amended plan which was

confirmed on June 29, 1981, and which

provided for cancellation of existing

stock while new stock was issued to

Provident, as purchaser. Whitehorn's

claims challenging the sale of assets or

the cancellation of his stock (including

his claim that reissuance of = stock

pursuant to the plan violated securities

laws) are therefore barred by~ res

judicata if this Court had jurisdiction

to enter those orders.

This appears to be the key to

Whitehorn's argument in this proceeding:

« 38 «

that this Court had no power to enter

orders affecting Jack Whitehorn's

property because his property was under

the exclusive jurisdiction of the United

States Bankruptcy Court for the District

of Nevada and was’ protected by the

automatic stay pursuant to 1l U.S.C. $362

when he filed his own Chapter 11 case in

that district. Assuming that WFDR

property had its bankruptcy case before

this court“ and even if it was undisputed

from the beginning that Jack Whitehorn

was the sole shareholder of WFDR, this

Court entered no Orders and the

defendants took no action which would

require that the stay be lifted in

Whitehorn's individual case in Nevada.

As a shareholder, Jack Whitehorn had

certain rights in the corporation's

bankruptcy case, including the right to

receive a distribution of the residual

value of the corporation after all claims

« 2 =

against the company were satisfied. The

cancellation of the existing WFDR stock

Gid not affect such right because Jack

Whitehorn received in its place certifi-

cates of interest in the proceeds of the

Sale of WFDR, and a distribution of such

proceeds was in fact made on Jack

Whitehorn's behalf to his attorneys. it

is true, as Whitehorn argues, that the

question of ownership of stock was

ultimately decided in Jack Whitehorn's

favor. Jack Whitehorn benefited from his

ownership interest when his attorneys

were paid from the proceeds of the sale

of the newly issued stock of WFDR. His

ownership entitled him to such a

distribution, but his own bankruptcy

filing did not give him any greater

rights to challenge the sale than he

already possessed as a party-in-interest

in WFDR's case. It thus appears that the

orders in the WFDR case did not affect

= Sw

Jack Whitehorn's property rights but only

affected the pieces of paper representing

such rights -- i.e. the stock certifi-

cates which were cancelled and replaced

by certificates of interest in the sale

of the proceeds.

Whitehorn's own bankruptcy could not

stay the ministerial act of cancellation

of shares by the corporate debtor-in-

possession any more than any indvidual

shareholder's bankruptcy could stay the

fluctuation of the market prices of such

individual's shares. Although the

automatic stay protects a debtor from

certain acts against his property: it

does not enhance his rights held pursuant

to contracts, leases, or stock certifi-

cates. In short, this court’ had

jurisdiction as a result of WFDR'S filing

to issue Orders approving the sale of

assets or the cancellation of stock even

if an individual stockholder's own

—

bankruptcy case was pending in another

jurisdiction.° Therefore, Whitehorn's

claims are barred as res judicata.

Furthermore, following the approved

sale of assets or cancellation of stock,

the actual WFDR certificates were of

inconsequential value and are therefore

not subject to turnover under 11 U.S.C.

§542.

Finally, the Court notes that the

defendants have filed a motion to amend

their answer to assert the affirmative

Gefense of the statute of limitations to

the extent that the complaint seeks to

avoid a post-petition transfer pursuant

to ll U.S.C. §549. The plaintiffs have

responded that they do not oppose the

amendment but deny that the statute of

limitation is applicable because their

complaint does not raise §549. The Court

will therefore grant the motion to amend,

but holds, as a further ground for

~ Ta

granting defendants" summary judgment

motion, that the clear language of 11

U.S.C. §549(d)(1) would bar Whitehorn's

action to any extent that it does seek to

avoid a post-petition transfer, because

the action was not commenced within two

—_— of the transaction sought to be

avoided.

Accordingly, it is ORDERED:

(1) that the defendants' motion for

leave to amend answer is GRANTED:

(2) that the plaintiffs' motion for

summary judgment is DENIED; and

(3) that the defendants' motion for

summary judgment is GRANTED, and this

proceeding is therefore DISMISSED.

At Newnan, Georgia, this 31 day of

July, 1987.

W. H. Drake, Jr.

United States Bankruptcy Judge

a 2e =

FOOTNOTES

To any extent that Jack Whitehorn is

now asserting that the Order finding

a preferential transfer shows that

WFDR had no right to file its Chapter

ll case without his authorization,

this assertion would be beyond the

holding of that Order. Finding the

stock option agreement to be a

preference does not mean that the

Court found the agreement was void

from its inception, or that the

transfer, in effect, never took

place. Rather, the Order finding a

preference holds that the transfer of

stock ownership which did occur is

voidable and could therefore be

reversed by Jack Whitehorn. This

Court has never found the transfer to

be void and has, in fact, in the

March 16, 1981 Order approving the

sale of assets, explicitly rejected

—

Whitehorn's assertion that the

management elected through the

exercise of the proxy contained in

the stock option agreement lacked the

authority to commence WFDR's Chapter

ll case.

Any claim to the contrary would be

barred by res judicata since this

Court rejected Whitehorn's claim that

the management which authorized the

filing of the petition lacked the

power to do so.

Statutory authority for this

conclusion can be found at 11 U.S.C.

§1141(d)(1)(B) which provides that a

confirmed plan terminates all rights

and interests of equity security

holders provided for by the plan,

unless the plan states otherwise.

« % -

Appendix 7

Transcript of Motion for

Change of Venue

Adversary Proceeding No. 860045

from Commencement Court

United States Bankruptcy Court

District of Nevada to

United States Bankruptcy Court

Northern District of Georgia

Newnan Division

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF NEVADA

Adversary Proceeding No. 860045

TRANSCRIPT OF MOTION

BEFORE THE HONORABLE ROBERT CLIVE JONES

THE COURT: All right. The matter

is submitted.

First as to jurisdiction, I don't

see any issue on jurisdiction. This is

an issue for change of venue. there is

nationwide service and personal jurisdic-

tion under the Statute and under the

Rules over the current parties. The

issue really is convenience, however.

While this Court has some

reservation about the sale of the stock

without lifting the stay -- and I do have

those reservations -- this Court would

have undoubtedly lifted the stay if it

had been asked so that a _ complete

proceeding could resolve not only assets

but stock of a corporation which holds a

= 63 «

broadcasting license.

But while I have real reservations

about disposition of that stock without

first asking for lifting of stay in this

estate, if that Court or upon appeals any

higher Court made mistakes or errors, I

think in all fairness it's up to that

Court to correct it. Ze*s net fair to

collaterally attack the result of those

orders here. I have to have as much

faith in the selection process and the

appointment of Judges in Georgia as I do

in the ones in Nevada. Having that faith

justice will either be done there or

Appellate Courts will appropriately rule.

But looking simply to the issue of

convenience and the parties involved and

who the parties likely are to be

involved, witnesses and the fact that

substantial prior proceedings relating to

the assets, if not assets and _ stock,

certainly arguments relating to assets

= $4 «

and stock have been heard by that Court.

It makes every sense to me to transfer

just the adversary and the adversary

alone there.

I'm not lifting the stay, of course,

with respect to any of Mr. Whitehorn's

assets. That has to be -— I'm not

lifting the stay. I'm just simply

transferring venue of the case, the

adversary proceeding.

But on that basis, the Rules

applicable to change of venue, I have to

grant the motion. So, that will be the

order of the adversary only.

MS. RIEGLE: Thank you. a |

prepare the order and send a copy to Mr.

Whitehorn.

ee

CERT IPICATIONRN

I certify that the foregoing is a

correct transcript from the record of

proceedings in the above-entitled matter.

BY: SHEILA KLIWINSKI

J & J COURT TRANSCRIBERS

DATE: August 13, 1986

» £6 <

Appendix 8

Transcript and Order of Judge Jones'

Ruling on Show Cause Hearing

Pertaining to Wording in Order to

Transfer Venue of

Adversary Proceeding No. 860045

Entered December 17, 1986

Certificate That No Proceeding

to Lift Stay Has Been Filed

Entered December 2, 1986

UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEVADA

LAS VEGAS, NEVADA

Case No. BK-S-80-00936

Adv No. ADV-S860045

Portion of Hearing/Judge's Ruling

Motion to Show Cause

Before the Honorable Rohert Clive Jones,

Bankruptcy Judge

Transcript ordered by: Jack Whitehorn

PROCEEDINGS IN PROGRESS

THE COURT: Well, what I meant, of

course, on page 3 is that I'm not lifting

the stay to allow you to take any count-

erclaims with respect to any of his

assets or to ask for -- for example,

sanctions. You'd have to ask this Court

for relief.

MS. RIEGLE: Yeah, but I -- I don't

disagree, but there was no such motion

on, and I'm just concerned if we start

putting surplusage into a motion/

- 66 -

THE COURT: Well, I don't/

MS. RIEGLE: /to transfer venue.

THE COURT: /I don't like Mr.

Whitehorn's language, but I -- I agree

that there should be an additional

statement. And it should be -- it is

further ordered that this Court is not

lifting the stay, with respect to any of

Mr. Whitehorn's assets, period.

MS. RIEGLE: But there was no motion

on.

THE COURT: I'm not ruling on,

whether or not -- and I don't want any

language in the order on, whether or not,

I lifted the stay or Judge George lifted

the stay previously. That's -- the

record will disclose that or not disclose

that and I'm not ruling on that in here.

But I do want it clear that I'm not

lifting the stay presently, with respect

to Mr. Whitehorn. I can certainly see

why the Court would feel at Liberty -- I

- 90 -

st i

would feel at liberty to take the entire

thing with respect to Mr. Whitehorn and

allow -- allow amendments to the answer,

for example, to allege damages against

him and that may well be appropriate. It

may well be that sanctions are appropri-

ate, but I want the stay lifted here

first, before you can do that.

So that's why I think it is appro-

priate to tell that Court in all

fairness, that I'm not lifting the stay/

MS. RIEGLE: Okay.

THE COURT: /that you do need to

come back for that.

MS. RIEGLE: I have no problem,

except there was no motion on, and I

think it just -- when you add surplusage

like that.

THE COURT: All right, let's amend

the order and put the additional

sentence: "It is further ordered that

this Court is not lifting the stay with

=- §i «

respect to many --- of any of Mr.

Whitehorn's assets, period."

MS. RIEGLE: Let's add, and I

apologize, I don't want anybody, you

know, -- if we have another Judge

tomorrow, I don't want somebody to think

that I've raised a motion and you denied

my motion.

THE COURT: Raised what motion?

MS. RIEGLE: The order. If it read

that way, a Judge will come into

tomorrow, if I move to lift stay, let's

assume to seek damages, quite frankly,

I've thought about it. And they say you

denied it.

THE COURT: But you can say, is not

presently lifting.

MS. RIEGLE: Okay, but there was no

motion to rule on. Do you see my

problem? If a Judge comes in tomorrow,

some --- heaven forbid something happens

to Your Honor, we have an order that

a 09 «

says, you haven't/

THE COURT: I could happen, there's

some threat out there. (laughter)

MS. RIEGLE: Of course, you might

drown in the rain out there.

THE COURT: So -- and so how would

there be any/

MS. RIEGLE: The Court would come in

and say, this Court has ruled that I'm

not going to lift the stay.

THE COURT: No.

MS. RIEGLE: Then I'd have to lift

the stay and it's without prejudice.

THE COURT: I don't think so. Let's

put it in there, "That this Court is not

presently lifting the stay, with respect

to any of Mr. Whitehorn's assets."

MR. WHITEHORN: Thank you, Your

Honor.

THE COURT: That's without prejudice

to any further motion to lift the stay.

MS. RIEGLE: Then I don't say, I'm

» @ «

without prejudice to a motion to lift

stay. Let's make that expressed.

THE COURT: I -- let's make it this

way, “It is further ordered that this

Court is not presently lifting the stay,

with respect to any of Mr. Whitehorn's

assets, period."

MR. WHITEHORN: Thank you, again,

Your Honor.

MS. RIEGLE: But again, I'm sorry,

without prejudice to the bringing of such

a motion.

THE COURT: No, I think that's

sufficient, to state it. --- It is

further ordered that this Court is not

presently lifting the stay with respect

to any of Mr. Whitehorn's assets. Okay?

MR. WHITEHORN: Ms. Riegle will

prepare the order, please -- submit it?

MS. RIEGLE: Yeah,I/

MR. WHITEHORN: Thank you, very

much.

- 94 +

i_om_u—uuiii—e-innss

MS. RIEGLE: /I'm just confused the

Court is going to get confused there

about, whether or not we can defend even

-- the turnover.

THE COURT: Here, I'll make it clear

on the record/

MS. RIEGLE: Without seeking/

THE COURT: /you're at liberty to

defend the turnover.

MS. RIEGLE: To pore ae Yeah.

THE COURT: You're -- the venue of

that case was transferred there.

MR. WHITEHORN: Thank you, again,

sir.

THE COURT: This is your transcript,

Ms. Riegle.

MS. RIEGLE: Oh, I'm sorry.

THE COURT: Thank you.

PROCEEDINGS CONCLUDED

CERTIFICATION

I (WE) CERTIFY THAT THE FOREGOING IS A

CORRECT TRANSCRIPT FROM THE RECORD OF

=

PROCEEDINGS IN THE ABOVE -' ENTITLED

MATTER.

NORTHWEST TRANSCRIPTION SERVICE

P. O-. BOX 890

NAMPA, IDAHO 83653

(208) 466-2743

Gayle M. Lutz

SIGNATURE OF COURT REPORTER/TRANSCRIBER

11/25/86

DATE

= 96 -

UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEVADA

LAS VEGAS, NEVADA

Case No. BK-S-80-00936

Adv No. ADV-S860045

AMENDED ORDER

Entered December 17, 1986

The motion of defendants Margaret H.

Murphy and the law firm of Smith,

Gambrell and Russell (collectively

referred to as "Murphy") having come on

regularly for hearing on June 24, 1986,

defendants appearing by and through their

attorney Linda Riegle of Lionel Sawyer &

Collins, plaintiffs/debtors appearing in

proper person through Jack Whitehorn,

this Court having read and considered the

papers and pleadings on file herein,

having heard and considered the arguments

presented and having found that the

interest of justice and the convenience

of the parties would best be served by a

o OF «

——EE7E

change of venue;

IT IS HEREBY ORDERED that the motion

of defendants to transfer the venue of

adversary proceeding No. 86-0045 filed in

BK-S-80-936 is granted; and

IT IS FURTHER ORDERED that’ such

proceedings be transferred to the

Northern District of Georgia, Newnan

Division and that all pleadings’ and

papers on file in such proceedings be

transferred to that district; and

IT IS FURTHER ORDERED that this

Court is not presently lifting the stay

with respect to any of Mr. Whitehorn's

assets; and

IT IS FURTHER ORDERED that the May

9, 1986 order of this Court setting,

among other things, trial of the

adversary proceeding set for December 10,

1986 at 9:00 a.m. is hereby eacened.

DATED this 16 day of December, 1986.

Robert Clive Jones/BANKRUPTCY JUDGE

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UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEVADA

LAS V&8GAS, NEVADA

Case No. BK-S-80-00936

Adv No. ADV-S860045

CERTIFICATE

This is to certify that relief was

ordered and entered in the above styled

case, October 6, 1980, pursuant’ to

Debtors' petition, attached hereto and

incorporated herein.

This is to further certify that as

of this date, no proceeding has been

filed or entered in the above styled case

for the lifting of automatic stay on

WFDR, Inc. stock shown in Debtors'

Statement of Affairs as set forth in

Schedule B-2(T) and B-3, attached hereto

and incorporated herein.

This 2nd day of December, 1986

Patricia Gray-Edwards, Clerk |

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inl

Schedule B-2(T)

Whitehorn Co., Inc. (Ga. Corp.) 100%

stock (insolvent)* -0-

- See schedule B-3

Vegas Unlimited Inc. (Nevada Corp.)

500.00

WFDR, Inc. (Ga. Corp.) 100% Stock.

Presently in litigation over ownership

- See Schedule B-3*. 1,500,000.00

Schedule B-3

WFDR, Inc. Stock and Whitehorn Company

stock and debts:

There is litigation currently pend-

ing in Atlanta, Georgia and Dallas, Texas

over the ownership of the WFDR, Inc.

stock. Debtor Jack Whitehorn acquired

same approximately ten years ago. WFDR,

Inc. owns two radio stations in

Manchester, Georgia. At issue is a

purported "Stock Option Agreement" dated

March 28, 1980 between Debtor Jack

Whitehorn and Debtor Jack Whitehorn's

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brother, John Whitehorn of Dallas, Texas

and the purported exercise of an option

by John Whitehorn to acquire the WFDR,

Ince. stock on May 22, 1980. John

Whitehorn caused WFDR, Inc. to file a

Chapter XI proceeding in the Northern

District of Georgia, Newnan Division, on

May 9, 1980. Jack Whitehorn has chal-

lenged the validity of this Agreement and

action before the Federal Communications

Commission and has initiated an adver-

sarial proceeding in the Georgia Chapter

XI proceeding. John Whitehorn has

brought an action in Dallas, Texas,

Debtor Jack Whitehorn states that _ he

believed the document he signed tas to

create a trust for the benefit of him and

his family. Under the purported Stock

Option Agreement he states he _ would

receive no payment for his stock and that

he has received no payment for same. He

is challenging the validity of the

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Agreement and the exercise of the option

on a number of grounds. A qualified

broker has valued the FM station assets

and license alone at $1.5 million.

Debtor Jack Whitehorn states that he

believes that a conservative estimate for

the value of both stations would be $1.5

million ($2 million for the stations less

approximately $500,000.00 in liabili-

ties). UNKNOWN

Debtor believes that this

transaction relating to the Stock Option

Agreement is also voidable as a

preference to an insider. |

Because of the above litigation and

records which are not in the Debtor's

possession or control, all reference to

debts and values involving an interrela-

tionship among Debtor, Whitehorn Company

and WFDR, Inc. are approximate and are

subject to further determination and the

results of the pending litigation as are

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claims by Doctor Jack Whitehorn against

John Whitehorn and the management

installed by John Whitehorn. ll U.S.C.

§522(d)

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Appendix 9

Order Setting Out

That All Provisions of

Title 11 United States Bankruptcy Code

Are Restored Nunc Pro Tunc

October 6, 1980 to Petitioners/Debtors

Entered May 31, 1988

UNITED STATES BANKRUPTCY COURT

POR THE DISTRICT OF NEVADA

Case No. BK-S-80-936RCJ

Entered May 31, 1988

ORDER

The motion of Debtors-in-Possession,

Jack R. Whitehorn and Mary Ruth White-

horn, for action to vacate the order of

dismissal of above said case entered

October 7, 1987, having come on regularly

for hearing on May 10, 1988, Objectors,

Cherry Lane Music Company et al, Margaret

H. Murphy and Law Firm, Smith, Gambrell &

Russell, appearing by and through their

attorney Carol White of Lionel Sawyer &

Collins, Movants/Debtors-in-Possession

appearing in proper person through Jack

Whitehorn, this Court having read and

considered the papers and pleadings on

file herein, having heard and considered

the arguments presented and having found

that the Movants/Debtors-in-Possession

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were not properly notified of the show

cause hearing pursuant to the

Movants/Debtors-in-Possession's mailing

address on file at time oa said notice as

set out in the Court Clerk's official

calendar.

IT IS HEREBY ORDERED that the motion

of Debtors-in-Possession, Jack R. White-

horn and Mary Ruth Whitehorn to vacate

the order of this court entered October

7, 1987, is granted; and

IT IS FURTHER ORDERED that all

provisions of Title ll United States

Bankruptcy Code is restored nunc pro tunc

the commencement date of October 6, 1980,

to said Debtors.

DATED this 3lst day of May, 1988.

Robert Clive Jones

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Appendix 10

United States Court of Appeals

for the Eleventh Circuit

Order Denying Motion of Appellants

for Enlargement of Time

for Stay of Mandate

Entere@ October 4, 1988

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

CASE NO. 88-8018

Appeal from the United States

District Court for the

Northern District of Georgia

ORDER

IT IS ORDERED that the motion of

appellants for a further stay of the

issuance of the mandate is DENIED.

/s/ PHYLLIS A KRAVITCH

UNITED STATES CIRCUIT JUDGE

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