Court Opinion

ID: 2757052
Source: CourtListenerOpinion
Date Created: 2014-12-03 19:08:10.400939+00
Date Added: 2024-06-11T10:50:03.214341
License: Public Domain

FILED
                                                            OCT 29 2013
                                                        SUSAN M. SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL
                                                          OF THE NINTH CIRCUIT
 1
 2
 3                   UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                             OF THE NINTH CIRCUIT
 5   In re:                           )      BAP No. WW-12-1083-DTaKu
                                      )
 6   DOUGLAS HUNTINGTON,              )      Bk. No.   10-48947-BDL
                                      )
 7                       Debtor.      )      Adv. Proc. No. 11-4015-BDL
     ________________________________ )
 8                                    )
     LAURA HUNTINGTON,                )
 9                                    )
                         Appellant,   )
10                                    )
     v.                               )      M E M O R A N D U M1
11                                    )
     DOUGLAS HUNTINGTON;              )
12   VIKING COMMUNITY BANK,           )
                                      )
13                       Appellees.   )
     ________________________________ )
14
                     Argued and Submitted on October 17, 2013
15                            at Seattle, Washington
16                           Filed - October 29, 2013
17                Appeal from the United States Bankruptcy Court
                      for the Western District of Washington
18
               Honorable Brian D. Lynch, Bankruptcy Judge, Presiding
19
20   Appearances:     Robert A. Beattey of Spencer Law Firm, LLC argued for
                      appellant Laura Huntington; Gary Krohn argued for
21                    appellee Viking Community Bank.
22
     Before:    DUNN, TAYLOR and KURTZ, Bankruptcy Judges.
23
24        1
               This disposition is not appropriate for publication.
25   Although it may be cited for whatever persuasive value it may have
     (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
26   Cir. BAP Rule 8013-1.

                                         1
 1        Through what only can be described as novel theories based on
 2   faulty premises, the spouse of a chapter 72 debtor invoked the
 3   jurisdiction of the bankruptcy court in attempts (1) to subordinate
 4   the lien of the holder of the second deed of trust on community
 5   property that was her residence to the subsequent lien filed by the
 6   Internal Revenue Service (“IRS”), and (2) to seek an award of
 7   damages against the second lien creditor.    After trial, the
 8   bankruptcy court dismissed all claims with prejudice because the
 9   spouse failed to meet her burden of proof.   We AFFIRM.
10                                  I.   FACTS
11   A. Background Facts
12        Douglas Huntington (“Doug”) and Scott Huntington (“Scott”) are
13   brothers.   Doug and Scott participated in numerous real estate-
14   related business ventures together, including Horizon Mortgage &
15   Investment Company (“Horizon”),3 Huntington Properties I, LLC
16   (“HP I”), and Huntington Properties III, LLC (“HP III”).   HP I and
17   HP III owned real property in Tacoma, Washington, identified as the
18   Skyline Apartments.   Doug and his wife, Laura, and Scott and his
19   wife, Rochelle, jointly owned real property in University Place,
20   Washington, known as the Normandy Park Apartments.
21        Between 2005 and 2007, Horizon incurred approximately
22   $1.1 million in unpaid payroll tax liabilities.   The IRS threatened
23
24        2
               Unless otherwise indicated, all chapter and section
25   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
          3
26               Doug owns 60% of the equity in Horizon; Scott owns 40%.

                                         2
 1   to issue a levy against Horizon and to assess a 100% penalty against
 2   Doug personally as responsible party liability pursuant to 26 U.S.C.
 3   § 6672.
 4        Doug and Scott attempted to sell the Skyline Apartments and the
 5   Normandy Park Apartments (collectively, “Apartments”) to generate
 6   proceeds to pay Horizon’s payroll tax liabilities.   When closing
 7   dates on pending sales of the Apartments were delayed, Doug
 8   requested a loan (“Loan 6640") from Viking Community Bank (“Bank”)
 9   to pay Horizon’s payroll tax liabilities, with proceeds from the
10   sales of the Apartments (“Sale Proceeds”) to be used to repay
11   Loan 6640.
12        Loan 6640 was made to Doug and Laura personally in the amount
13   of $700,000 on November 21, 2007, and it had a maturity date of
14   May 5, 2008.   In conjunction with Loan 6640, Doug and Laura signed a
15   promissory note (“Note”) and a Business Loan Agreement (“Loan
16   Agreement”).   To secure Loan 6640, Doug and Laura granted the Bank a
17   second deed of trust (“Trust Deed”) on their residence in Lakewood,
18   Washington (“Residence”).
19        As additional security for Loan 6640, the Bank required an
20   irrevocable assignment (“Assignment”) of the Sale Proceeds.   The
21   Assignment was signed by Doug, Laura, Scott, Rochelle, HP I and
22   HP III (collectively “Grantors”), and it provided for the
23   application of the Sale Proceeds in the following order: (a) to
24   reduce or pay off Loan 6640, (b) to reduce or pay off Loan 3910
25   (a consumer loan Doug owed to the Bank), and (c) to reduce or pay
26   off other debts or obligations any of the Grantors owed to the Bank.

                                       3
 1   The Loan Agreement also stated that the assigned Sale Proceeds were
 2   to be “first applied to pay off the $700,000 loan to be granted
 3   herein.”
 4        To place the Bank in second position on the Residence,
 5   $99,024.04 of the funds from Loan 6640 (“Loan Funds”) were paid to
 6   satisfy the existing second position lien creditor, Sound Bank.
 7   After paying Sound Bank and the fees associated with Loan 6640,
 8   $595,194.90 of Loan Funds remained, and were disbursed in the form
 9   of a check made payable to the IRS.   That check was issued
10   December 10, 2007, and was given to Doug in an envelope together
11   with a letter from the Bank’s Vice President Donn Davy (“Mr. Davy”)
12   directed to Revenue Officer Charles Washington.   Doug had been in
13   contact with the IRS “many, many, many times” in 2007, and his
14   primary contact had been Mr. Washington.   The letter read as
15   follows:
16       Enclosed with this letter is a Bank Check payable to the
         Internal Revenue Service in the amount of $595,194.90 to
17       apply to the tax liability of Horizon Mortgage &
         Investment Co. for Federal Withholding, Social Security
18       and Medicare taxes. It is our understanding that the
         Internal Revenue Service has agreed to provide a
19       satisfaction of all tax liens against Horizon Mortgage and
         Investment with this payment, but that the remainder of
20       monies owing to the Internal Revenue Service by this
         taxpayer in the amount of $49,972.56 remains unpaid and
21       will be paid upon the closing of the sale of commercial
         real estate properties now under contract with closing
22       expected to occur within the next 30 days.
23       If there is any misunderstanding on our part, please
         contact the undersigned prior to functioning the enclosed
24       check.
25   Emphasis added.
26        Doug purportedly hand-delivered the check and the letter to the

                                      4
 1   IRS office in Tacoma, leaving them on the counter rather than
 2   personally giving them to any IRS employee.4   Prior to doing so, he
 3   opened the envelope and made a copy of both the check and the letter
 4   for his own records.
 5        When the Apartments had not sold within the term of Loan 6640,
 6   Doug, Laura and the Bank entered into a Payment Extension Agreement
 7   on May 5, 2008.   The Payment Extension Agreement recited that the
 8   payment extension was requested by Doug and Laura and set a new
 9   maturity date of June 5, 2009 for Loan 6640.
10        On June 20, 2008, approximately six weeks after the Payment
11   Extension Agreement was executed, sales of the Apartments closed.
12   Net Sale Proceeds totaled $649,538.42.   The settlement statement for
13   the Skyline Apartments reflects that $200,000 of the proceeds from
14   the sale were held back, $50,000 was paid to “sellers,” identified
15   as HP I and HP III, and $132,948.40 was paid to the Bank.   The
16   settlement statement for the Normandy Park Apartments reflects that
17   $266,450.02 was paid to the Bank.5
18        Notwithstanding the terms of the Loan Agreement and the
19   Assignment, on June 24, 2013, the Bank applied the Sale Proceeds as
20   follows:
21        •     $136,684.28 to pay off Loan 3902 owed by Scott
          •     $134,435.23 to pay off Loan 3910 owed by Doug
22
23        4
               The Bank contends that Doug removed the letter from the
24   envelope and delivered only the check to the IRS. The bankruptcy
     court found otherwise.
25        5
               The wire transfer Advice of Credit reflects that the
26   actual amount was $266,590.02.

                                       5
 1        •    $ 60,000.00 applied to default charges
          •    $23,903.59 to pay the June payment on Loan 1625 owed
 2             by HP III
          •    $40,122.24 as a principal payment on Loan 4181 owed
 3             by HP III
          •    $1,709.75 to bring interest current to June 23 on
 4             Loan 4181 owed by HP III
          •    $2,683.33 to bring interest current to June 23 on
 5             Loan 6640 owed by Doug and Laura
 6   On June 30, 2008, Doug, Laura, Scott, HP III and the Bank entered
 7   into an agreement (“Distribution Agreement”) that authorized the
 8   foregoing application of the Sale Proceeds, extended the maturity
 9   dates for Loan 6640 and Loan 4181, and required the Huntington
10   parties to provide the Bank with additional collateral.
11         Thereafter, Doug and Laura made the monthly payments required
12   by Loan 6640 almost entirely without dispute.6   Ultimately, however,
13   they failed to repay Loan 6640 at its extended maturity date, and
14   the Bank commenced foreclosure proceedings on the Residence.
15         On October 28, 2010, the day before the scheduled foreclosure
16   sale, Doug filed a chapter 11 petition.   His case was converted to
17   chapter 7 on June 23, 2011.
18         The Bank filed a motion for relief from the automatic stay on
19   December 27, 2010.   On the deadline for filing a response, Doug and
20   Laura filed an adversary proceeding against the Bank.
21   B.   The Adversary Proceeding
22         In their amended adversary complaint (“Complaint”), Doug and
23   Laura asserted four claims for relief against the Bank.   The first
24
25         6
               Laura apparently made one payment with a check on which
26   she wrote “Under Protest.”

                                       6
 1   claim (“First Claim”) sought a determination that the Bank had
 2   breached the Assignment when it failed to apply the Sale Proceeds
 3   first to Loan 6640.    The second claim (“Second Claim”) sought a
 4   declaration of the balance due on Loan 6640 with the Sale Proceeds
 5   deemed to have been applied to Loan 6640.    The third claim (“Third
 6   Claim”) sought a determination that the Bank had breached the Loan
 7   Agreement by failing to obtain from the IRS a full satisfaction of
 8   Horizon’s payroll tax obligations outstanding at the time the Loan
 9   Funds were paid to the IRS.    The fourth claim (“Fourth Claim”)
10   sought equitable subordination of the Bank’s secured position in the
11   Residence to the IRS lien filed subsequently, because the IRS lien
12   arose as a consequence of the Bank’s breach of the Loan Agreement,
13   as set forth in the Third Claim.
14           The bankruptcy court entered its Scheduling Order and Notice of
15   Trial on June 8, 2011, setting trial of the issues for December 7,
16   2011.
17           The First Claim was the subject of partial summary judgment
18   proceedings (“Summary Judgment Motion”).    The Bank asserted that the
19   application of the Sale Proceeds did not breach the Assignment,
20   because all parties to the Assignment had executed the Distribution
21   Agreement, thereby ratifying the actual distributions.    Doug and
22   Laura opposed the Summary Judgment Motion on the basis that the
23   Distribution Agreement was unenforceable because it was not
24   supported by consideration.    They pointed to the fact that the
25   Payment Extension Agreement already had extended the maturity date
26   for Loan 6640 from May 8, 2008, to June 5, 2009, and they asserted

                                         7
 1   that the Distribution Agreement gave nothing more, at least as to
 2   Laura, who owed no other obligations to the Bank.      They further
 3   asserted that the Assignment was explicitly denominated
 4   “irrevocable,” such that the Distribution Agreement was inoperative
 5   to alter the distribution terms set forth in the Assignment.
 6   Finally, they asserted that they had signed the Distribution
 7   Agreement under duress.
 8           Following argument on the Summary Judgment Motion on
 9   September 14, 2011, the bankruptcy court ruled that no issue of fact
10   existed and that the Distribution Agreement was supported by
11   consideration as a matter of law.       The bankruptcy court reasoned
12   that the consideration did not need to flow to Laura for it to be
13   valid and enforceable; the consideration could go to a third party.
14   Under the Distribution Agreement, Doug, Scott, and HP III all
15   received benefits, either by payment of an outstanding obligation,
16   by cure of an existing default, or by the extension of a maturity
17   date, and because $50,000 in funds were released to “Huntington,
18   whatever that exactly is.”    The bankruptcy court also determined
19   that Laura received an indirect benefit without articulating what
20   that might have been.    The order granting the Summary Judgment
21   Motion on the issue of legal consideration was entered September 23,
22   2011.
23           On November 14, 2011, having participated fully in pretrial
24   proceedings, including proceedings on the Summary Judgment Motion,
25   Laura moved for dismissal (“Dismissal Motion”) of the adversary
26   proceeding, without prejudice, asserting that in its then recent

                                         8
 1   decision in Stern v. Marshall, ___ U.S. ___, 131 S.Ct. 2594 (2011),
 2   the Supreme Court had made clear that the bankruptcy court lacked
 3   subject matter jurisdiction to hear the claims for relief pled in
 4   the Complaint.   The bankruptcy court heard the Dismissal Motion on
 5   December 7, 2011.   During colloquy with counsel, the bankruptcy
 6   court explained why Stern did not deprive it of subject matter
 7   jurisdiction over the claims for relief alleged in the Complaint.
 8   The bankruptcy court observed that Doug and Laura could have filed
 9   the Complaint in state court, but chose instead to file it in the
10   bankruptcy court.   The Complaint itself
11       . . . asserted not only that the Court had jurisdiction,
         but that this was a core matter under 28 U.S.C. § 157.
12       They proceeded in this case through discovery and a
         summary judgment motion, and on the eve of trial, filed
13       this motion.
14       Assuming this Court has subject matter jurisdiction, the
         Court concludes that the plaintiffs demonstrated the
15       necessary affirmative consent to the Court rendering a
         final judgment in this case.
16
17   Tr. of Dec. 7, 2011 H’ring at 22:21-23:4.
18        The bankruptcy court ruled that core subject matter
19   jurisdiction existed pursuant to § 157(b)(2)(K) where the Fourth
20   Claim sought a determination of the validity, extent and priority of
21   the lien of the Bank in and to an estate asset: the Residence.
22   Although the Second Claim for declaratory relief and the First and
23   Third Claims for damages based upon the Bank’s alleged breach of
24   contract were not core matters, the bankruptcy court had “related
25   to” jurisdiction.   Doug and Laura had explicitly consented to the
26   bankruptcy court entering final judgment on those claims.

                                       9
 1        The bankruptcy court denied the Dismissal Motion and reset the
 2   trial to December 29, 2011.
 3        Doug and Laura were the only witnesses at trial.     In their
 4   testimony, they argued that the Bank should be held accountable for
 5   the IRS lien that had been filed against the Residence.    In their
 6   view, the Loan Agreement required the Bank to negotiate with the IRS
 7   and to achieve a reduction in the $1.1 million payroll tax liability
 8   such that the Loan Proceeds would have been sufficient to satisfy
 9   all obligations in connection with Horizon’s payroll tax
10   liabilities.
11        In support of their theory, Doug strenuously maintained that
12   the Bank intended Loan 6640 to relieve Horizon of the threat of IRS
13   action to allow Horizon to continue operations and thereby to
14   generate funds to facilitate Doug, Scott, and their various
15   entities’ repayment of outstanding loans to the Bank in the
16   approximate aggregate amount of $4 million.   As evidence, Doug and
17   Laura presented a September 21, 2007 email communication in which
18   Mr. Davy proposed a loan to Doug in the amount of $1.5 million,
19   stating,
20       You may notice that not only the amount of the loan is
         more, but the purposes are a bit different as well. The
21       bank is firm that the IRS will be paid in full, as that is
         the only way we can take the pressure off you and assure
22       that Horizon will not have problems going forward. There
         will also be loan covenants regarding future IRS payments
23       being kept current.
24   Doug contends this language is proof of the Bank’s knowledge that
25   the payroll tax liabilities were greater than the amount funded
26   through Loan 6640.   However, a more accurate reading of this

                                       10
 1   communication reveals that the proposal was to finance $625,000 to
 2   pay off Horizon’s payroll tax liabilities owed to the IRS and to
 3   refinance several outstanding obligations of Doug, Scott, and
 4   various entities affiliated with them.
 5        Doug also pointed to language in the Loan Agreement which in
 6   his opinion demonstrated that the Bank had reached, or was obligated
 7   to reach, a settlement with the IRS and was to obtain complete
 8   releases of liability on behalf of Horizon and therefore on behalf
 9   of Doug.   That language states:
10       1. Borrower agrees with Lender that loan proceeds will be
         utilized as follows:
11       . . .
         (b) Pay off the IRS levy against Horizon Mortgage in the
12       anticipated amount of $625,000 or less. A Lender
         Cashier’s Check will be issued to make this payment and we
13       will [sic] provided a copy of the Settlement Agreement
         with IRS indicating that the lien is paid in full.
14
15   In Doug’s view, this language was meant to read that the Bank “will
16   provide” a copy of the Settlement Agreement; however, another view
17   is that the intended language was that the Bank “will be provided” a
18   copy of the Settlement Agreement.    In light of the placement of the
19   foregoing language under the heading “Affirmative Covenants,” which
20   thereafter recited various covenants of the borrower, the latter
21   reading is more likely.
22        At trial, despite the repeated questions on the subject, Doug
23   was unable to explain why he believed the IRS would accept $625,000
24   in satisfaction of the tax debt or even to explain the source of the
25   $625,000 figure.   The actual amount of the tax liability was $1.1
26   million.   During the relevant period, Doug was in constant contact

                                         11
 1   with IRS revenue officer Charles Washington.   However, there is no
 2   evidence that Doug ever communicated the true amount of the IRS
 3   liability to the Bank.   To the contrary, the aforementioned
 4   communication from Mr. Davy stated, “I am proceeding on the
 5   assumption that the IRS issue will require $625,000, including
 6   interest and penalties, which hopefully will be more than ample –
 7   better to have too much rather than too little available . . . .”
 8   Imbedded in his response to that email, Doug replied, “The 625k is
 9   correct.”
10        Laura and Doug asserted that the Bank’s failure to obtain a
11   settlement with the IRS on behalf of Horizon harmed them, such that
12   it was equitable to subordinate the Bank’s lien position to that of
13   the IRS.    They asserted further that the failure of the Bank to
14   obtain a settlement with the IRS injured them by leaving Doug
15   subject to personal liability in the approximate amount of $400,000,
16   for which they were entitled to judgment.   Neither Doug nor Laura
17   could explain how they believed the Bank could negotiate with the
18   IRS on behalf of Doug and/or Horizon where there was no evidence
19   that the Bank could present the IRS with any authorization to do so.
20   To the contrary, Doug acknowledged on cross-examination that he had
21   not provided the Bank with a power of attorney or any letter of
22   authorization that would have empowered the Bank to negotiate a
23   settlement of Horizon’s payroll tax liability with the IRS.
24        With respect to their challenge to the validity of the
25   Distribution Agreement, Doug and Laura testified that they believed
26   that the Bank had misrepresented to them that Loan 6640 was in

                                        12
 1   default.      They did not sign the Distribution Agreement until the
 2   Bank threatened to foreclose on the Residence.         When forced to
 3   acknowledge that the Note contained a cross-default provision, Doug
 4   and Laura shifted their characterization of the Bank’s “threats” to
 5   foreclose from misrepresentations to an improper use of duress in
 6   obtaining their signatures on the Distribution Agreement.
 7           After trial, the bankruptcy court took the matter under
 8   submission.      Its oral ruling was read into the record on January 12,
 9   2012.       The bankruptcy court concluded that all of Doug and Laura’s
10   arguments were “without merit and that their claims against [the
11   Bank] should be dismissed. . . .”7         The bankruptcy court expressly
12   found that the Bank was under no duty to negotiate with the IRS on
13   behalf of Horizon or Doug; that Doug and Laura had not satisfied
14   their burden to prove that the Bank had breached any contract with
15   them; that the Distribution Agreement was supported by consideration
16   and in signing it, Doug and Laura had ratified the changed
17   distribution of the Sale Proceeds; that Doug and Laura had not
18   proven that the Distribution Agreement was signed under duress so as
19   to render it void, or that the Bank had misrepresented to Doug and
20   Laura that Loan 6640 was in default based on the existence of the
21
22
23
             7
               The phrase “without prejudice” is appended to this
24
     sentence. However, having had the opportunity to present their
25   claims at trial, the dismissal should have been “with prejudice.”
     In fact, the judgment actually entered reflects dismissal “with
26   prejudice.”

                                           13
 1   cross-default provision.8
 2        The bankruptcy court entered its judgment of dismissal on
 3   January 30, 2012.    Laura timely filed her notice of appeal of the
 4   judgment on February 13, 2013.
 5                                  II.   JURISDICTION
 6        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
 7   and 157(b)(2)(B) and (K).       We have jurisdiction under 28 U.S.C.
 8   § 158.
 9                                    III.   ISSUES
10        Whether the bankruptcy court had “related to” jurisdiction over
11   the First, Second and Third Claims asserted in the Complaint.
12        Whether the bankruptcy court erred when it concluded that the
13   Distribution Agreement was supported by consideration.
14        Whether the bankruptcy court erred when it determined that
15   Laura had failed to meet her burden of proof as to all claims
16   asserted in the Complaint.
17                            IV.    STANDARDS OF REVIEW
18            Jurisdictional issues in bankruptcy are reviewed de novo.     See
19   In re McGhan, 288 F.3d 1172, 1178 (9th Cir. 2002).       De novo review
20   requires that we consider a matter afresh, as if no decision had
21   been rendered previously.       United States v. Silverman, 861 F.2d 571,
22   576 (9th Cir. 1988); B-Real, LLC v. Chaussee (In re Chaussee),
23
24        8
               The bankruptcy court also found that the Bank “was
25   entitled to declare Loan 6640 in default because Doug breached the
     terms of Loan 6640 by failing to keep the Horizon payroll tax
26   current . . . .” Judgment, at 15:23-25.

                                             14
 1   399 B.R. 225, 229 (9th Cir. BAP 2008).
 2         We review determinations of questions of fact for clear error.
 3   Rule 8013; Wall St. Plaza, LLC v. JSJF Corp. (In re JSJF Corp.),
 4   344 B.R. 94, 99 (9th Cir. BAP 2006).     We must affirm the bankruptcy
 5   court's fact findings unless we conclude that they are
 6   “(1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support in
 7   inferences that may be drawn from the facts in the record.’”    United
 8   States v. Hinkson, 585 F.3d 1247, 1262 & n.20 (9th Cir. 2009)
 9   (en banc).   “Under the ‘clear error’ standard, we accept findings of
10   fact unless the findings leave ‘the definite and firm conviction
11   that a mistake has been committed by the trial judge.’”    Wolkowitz
12   v. Beverly (In re Beverly), 374 B.R. 221, 230, aff’d in part &
13   dismissed in part, 551 F.3d 1092 (9th Cir. 2008), citing Latman v.
14   Burdette, 366 F.3d 774, 781 (9th Cir. 2004).     We review de novo the
15   bankruptcy court's conclusions of law and its interpretation of
16   statutes and rules.    Clear Channel Outdoor, Inc. v. Knupfer
17   (In re PW, LLC), 391 B.R. 25, 32 (9th Cir. BAP 2008).
18                                V.   DISCUSSION
19   A.   The Bankruptcy Court Did Not Err in Exercising Jurisdiction
20         In her opening brief, Laura concedes that the bankruptcy court
21   had core jurisdiction pursuant to 28 U.S.C. § 157(b)(2)(K) to hear
22   and determine the Fourth Claim, which sought a subordination of the
23   Bank’s lien on the Residence to the IRS lien.    Laura also concedes
24   that she consented to the bankruptcy court’s jurisdiction when she
25   filed the Complaint.   Laura then asserts that the only issue
26   regarding jurisdiction on appeal is whether the bankruptcy court had

                                         15
 1   “related to” jurisdiction on the remaining claims for relief.
 2         Laura did not challenge the bankruptcy court’s jurisdiction
 3   until after it had heard and decided in summary judgment proceedings
 4   a central issue concerning her state law claims against the Bank,
 5   i.e., that the Distribution Agreement was supported by
 6   consideration.    We view the Dismissal Motion as nothing more than
 7   thinly disguised forum shopping.    Laura invoked the bankruptcy
 8   court’s jurisdiction in the first instance; she cannot now complain
 9   that the bankruptcy court exercised that jurisdiction.
10   B.   The Disbursement Agreement Was Supported By Consideration
11         Consideration is broadly defined under Washington law to be
12   “any act, forbearance, creation, modification or destruction of a
13   legal relationship, or return promise given in exchange.” Labriola
14   v. Pollard Group, Inc., 100 P.3d 791, 793 (Wash. 2004)(citation
15   omitted).
16         1.    The cross-default provision of the Note
17         Laura, in effect, assented to the use of the Residence to help
18   Doug extricate himself from his impending personal tax liabilities
19   which arose as a consequence of his failure to ensure that Horizon’s
20   payroll tax obligations were met.    In her testimony, she echoed
21   statements by Doug that the Bank wanted to ensure Horizon’s IRS
22   obligations were resolved so that Horizon and other Huntington-
23   related entities could operate to generate funds to pay outstanding
24   loans owed to the Bank of approximately $4 million.   Understanding
25   that Loan 6640 was part of an effort to facilitate the health and
26   survival of Doug’s ongoing business interests, she signed the Note.

                                         16
 1         The Note included a cross-default provision.     Despite the
 2   presence of the cross-default provision in the Note, Laura
 3   steadfastly ignores both its existence and its implications in the
 4   context of the Distribution Agreement.
 5         Because Loan 4181, an obligation of HP III, was in default, the
 6   Bank had the right to declare Loan 6640 in default based on the
 7   cross-default provision in the Note.      By signing the Distribution
 8   Agreement, Laura obtained a direct benefit: the default under
 9   Loan 4181 which would have allowed the Bank to declare Loan 6640 in
10   default was cured, and Laura thereby preserved her ability to
11   maintain the extension of the term of Loan 6640 previously agreed
12   to.   Had Laura not signed the Distribution Agreement, the Bank could
13   have declared Loan 6640 in default as early as June 2008.
14         2.   The “irrevocable” Assignment
15         Laura accedes that parties to a contract can reform that
16   contract and that mutual releases of prior rights and obligations
17   can be sufficient consideration for the reformed contract.     To get
18   around this general principle of contract law and the effect of the
19   cross-default provision in the Note, Laura stretches credulity by
20   asserting that the Distribution Agreement could not, as a matter of
21   law, change the terms of distribution set forth in the Assignment,
22   because the Assignment was “irrevocable.”     She asserts that under
23   Washington law, “irrevocable means irrevocable” when it comes to
24   assignments.   The cases upon which Laura relies to support this
25   bright line rule are distinguishable from the facts at issue before
26   this Panel.    Both Pacific Coast v. Anderson, 107 F. 971 (9th Cir.

                                        17
 1   1901), and Timeline, Inc. v. Proclarity Corp., 2007 WL 1574069 (W.D.
 2   Wa. 2007), relate to attempts by one party to revoke an irrevocable
 3   assignment.   The Distribution Agreement does not in any way
 4   represent a unilateral effort to revoke the “irrevocable”
 5   Assignment.   The Distribution Agreement was signed by each and every
 6   Grantor of the Assignment.   As such, each Grantor, including Laura,
 7   effectively waived the right to assert that the Assignment could not
 8   be revoked.
 9   C.   The Bankruptcy Court Properly Entered a Judgment of Dismissal
10         Laura did not establish any obligation either was undertaken by
11   the Bank or imposed upon the Bank through the Loan Agreement to
12   negotiate a settlement with the IRS on behalf of Horizon.   Doug’s
13   uncontradicted testimony confirmed that he never provided the Bank
14   with authorization to negotiate a resolution of claims directly with
15   the IRS.   This alleged obligation was the essential underpinning of
16   the relief sought by the Huntingtons under the Third and Fourth
17   Claims in the Complaint.
18         Because the Distribution Agreement, which was supported by
19   adequate consideration, legally altered the distribution of the Sale
20   Proceeds, Laura cannot establish a claim against the Bank based upon
21   its distribution of the Sale Proceeds in accordance with the
22   Distribution Agreement.    As such, Laura could not prevail on the
23   First and Second Claims of the Complaint.
24         The record confirms beyond question that Laura did not meet her
25   burden of proof on any of her claims for relief against the Bank.
26   The bankruptcy court did not err when it entered the judgment

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 1   dismissing all claims with prejudice.
 2                               VI.   CONCLUSION
 3        The sum and substance of this appeal is nothing more than
 4   Laura’s effort to avoid the effects of her own choices.      She invoked
 5   the jurisdiction of the bankruptcy court to determine her disputes
 6   against the Bank.   When the foundation of her claims, i.e., that the
 7   Distribution Agreement was not supported by consideration, was
 8   decided against her, she sought to escape the jurisdiction of the
 9   bankruptcy court by asserting that it lacked (1) the jurisdiction
10   she had invoked, and (2) the power, to which she had consented, to
11   enter judgment on matters within the bankruptcy court’s “related to”
12   jurisdiction.    Having been unsuccessful in her efforts to extricate
13   herself from an unfavorable finding and the continuing jurisdiction
14   of the bankruptcy court, Laura then asserted, in effect, that the
15   bankruptcy court should have protected her from her own action in
16   “revoking” the Assignment, because her revocation was invalid as a
17   matter of law.
18        There is no evidence in the record that the Bank undertook an
19   obligation, contractual or otherwise, to solve Doug and Horizon’s
20   payroll tax problems with the IRS.       The Bank simply loaned money in
21   the expectation, based on Doug’s representation(s), that the Loan
22   Funds would satisfy the IRS debt.
23        We AFFIRM.
24
25
26

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