Opinion
NOT FOR PUBLICATION
Argued and Submitted at Seattle, Washington: March 24, 2006
Appeal from the United States Bankruptcy Court for the Western District of Washington. Bk. No. 04-23705. Honorable Thomas T. Glover, Bankruptcy Judge, Presiding.
Before: Russell, Smith and Kirscher, Bankruptcy Judges.
Hon. Barry Russell, Chief Bankruptcy Judge for the Central District of California, sitting by designation.
Hon. Ralph B. Kirscher, Chief Bankruptcy Judge for the District of Montana, sitting by designation.
MEMORANDUM
INTRODUCTION
The bankruptcy court confirmed the debtor's chapter 13 plan over certain creditors' objections that she was ineligible due to excessive unsecured debt, viz, their claims of over $600,000. The creditors moved for reconsideration, asserting that their claims should have been calculated for eligibility purposes. However, the bankruptcy court refused to reconsider the plan confirmation.
Unless otherwise indicated, all " Code, " " chapter" and " section" references are to the Bankruptcy Code, 11 U.S.C. § § 101-1330 prior to its amendment by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119 Stat. 23 (2005). " Rule" references are to the Federal Rules of Bankruptcy Procedure, which make applicable certain Federal Rules of Civil Procedure (" FRCP"). " RCW" references are to the Revised Code of Washington.
In a separate claim objection proceeding, the court then disallowed the creditors' claims on either lack of standing or res judicata grounds, i.e., that the claims were subsumed in a federal receivership action against the debtor, which had been settled postpetition.
The creditors have appealed both plan confirmation and claims disallowance. While we agree with the bankruptcy court's conclusion that Debtor was eligible for chapter 13 relief and affirm its plan confirmation and reconsideration orders, we hold that the disallowance was erroneous, and reverse and remand that order.
FACTS
Sharyn Kay Meenderinck (" Debtor"), is an insurance agent who, between 1999 and 2002, became involved in the sale of securities through Resource Development International, LLC (" RDI"). RDI was a Washington investment company whose owners offered fraudulent investment opportunities known as the " RDI Trading Program."
Prepetition Events
In 2002, RDI and others (but not Debtor) were sued by the United States Securities and Exchange Commission (" SEC") in the Northern District of Texas (" SEC Action") for violations of federal securities laws in connection with an alleged $98 million fraudulent prime bank scheme, which included the RDI Trading Program. The complaint alleged that approximately 1300 investors nationwide were misled into believing that their money would be used in Europe to trade financial instruments with top banks, generating 48 to 120 percent interest with complete safety of principal. In reality the prime bank program did not exist, and the investor funds were misappropriated for personal and unauthorized uses, including making Ponzi payments. See Complaint, SEC v. RDI et al., Civil Action No. 3: 02-CV-0605-H, U.S. Dist. Ct., N.D. Tex., Dallas Div.
The District Court appointed Lawrence S. Warfield as the receiver (the " Receiver") in the SEC Action to collect, preserve and maintain the defendants' assets (the " Receivership Assets"). The Receiver also established a claims procedure for defrauded investors who wanted to participate in the distribution of the Receivership Assets.
In 2002, the Receiver filed a lawsuit against Debtor and others whom he alleged had acted as " facilitators" by soliciting new investors in the RDI Trading Program, and who both profited from commissions therefrom and possessed investment monies belonging to RDI. See Third Amended Complaint, Warfield v. Byron, et al., Case No. 3: 02-CV-1371-R, Dist. Ct., N.D. Tex., Dallas Div. In May, 2004, a final judgment (the " Receiver's Judgment") was entered against Debtor in the amount of $213,561.50 plus post-judgment interest. The Receiver's Judgment was then registered in Washington's Whatcom County.
We take judicial notice of Plaintiff's Third Amended Complaint in the Receiver's Action as evidence of the causes of action asserted therein, but otherwise do not " take as conclusively established [any] extrajudicial facts that are mentioned" in the complaint. Wetherbee v. Willow Lane, Inc. (In re Bestway Prods., Inc.), 151 B.R. 530, 540-41 & n.33 (Bankr. E.D. Cal. 1993), aff'd, 165 B.R. 339 (9th Cir. BAP 1994).
On another front, 21 investors, nine of whom are the appellants herein (" Appellants"), filed a lawsuit against Debtor and other defendants in the Whatcom County Superior Court (" Creditors' Action"). Their Fourth Amended Complaint, filed in July, 2004, asserted counts for: securities fraud pursuant to the Washington State Securities Act; negligence; common law fraud; breach of fiduciary duty; constructive trust; and negligent misrepresentation. Collectively, they sought $840,000 in damages representing their lost investments.
Events in Bankruptcy
Facing execution of the Receiver's Judgment upon her home, Debtor filed a voluntary chapter 13 petition on October 22, 2004. The Creditors' Action was thereby stayed.
At the time Debtor filed her bankruptcy petition, only individual debtors with noncontingent and liquidated unsecured debt of less than $307,675 were eligible for chapter 13 relief. See § 109(e). On her bankruptcy schedule of unsecured debt, Debtor included the $213,561.50 Receiver's Judgment and indicated that her total noncontingent and liquidated unsecured debt was $224,748.84, thereby coming within the limit. She further indicated, on her schedules, that she had no secured debt, nor any known priority unsecured debt.
The IRS later filed a proof of claim for $8,506.36, which included $3,674.24 in general unsecured, $2,523.61 in priority unsecured, and $2,308.51 in secured debt. However, the total unsecured debt amount was insufficient to affect the outcome of this appeal.
Although Debtor identified the pending Creditors' Action in her statement of financial affairs, she neither listed their claims nor gave them notice of her bankruptcy. Debtor later stated that she believed Appellants' claims were part of the Receivership Action. See Answer to Complaint (Dec. 21, 2004), p. 2, ¶ 9. Debtor's good faith was not challenged in these proceedings.
Debtor filed a chapter 13 plan which proposed to pay $100 a month for 36 months. According to the plan, Debtor intended to use the equity in her home to retain legal counsel in an attempt to reopen and defend against the Receiver's Action. In actuality, postpetition, Debtor refinanced her home and reached an approved settlement with the Receiver whereby she paid him $100,000 in satisfaction of the Receiver's Judgment. See Satisfaction of Judgment (June 17, 2005).
Then, Appellants, upon learning of the bankruptcy, filed proofs of claim against Debtor's estate totaling $642,881.66.
The proofs of claim were as follows:
A proof of claim for securities fraud filed by Glen and Karen Blankers for $79,429.34 is also in the Excerpts of Record. However, the Blankers are not named defendants in either the Creditors' Action or the § 523 Complaint. Nor are they appellants in this case.
Lloyd & Sandra Martindale
$313,562.37
Jeffrey & Carolyn Kimbrough
159, 580.94
Jeanne Kimbrough
30, 686.55
10, 000.00 Dan & Terri Noteboom
40, 772.94 Dan & Terri Noteboom
Robert & Charlene French
88, 278.86
$642.881.66
Debtor has incorrectly argued, therefore, that the total amount of Appellants' claims was $765,297.34. See Appellee's Brief at 6. Besides the Blankers' claim, she has included in her total Claim No. 9, which was an unrelated duplicate claim, and incorrectly listed the Jeanne Kimbrough claim as $39,685.55, which was the amount then disallowed by the court. See Objection to Proofs of Claim (July 20, 2005), at 17 and Order on Objection to Certain Claims (Oct. 26, 2005).
Appellants also filed a § 523 adversary proceeding contending that their debt was nondischargeable due to Debtor's alleged fraud (§ 523(a)(2)) and violation of securities laws (§ 523(a)(19)). Debtor's Answer generally denied the allegations. She also explained that the outcome of the Receiver's Action would have been different if she had retained counsel.
This trial is pending. However, since debts of a kind specified in § § 523(a)(2) and (a)(19) are dischargeable in a chapter 13 case, Appellants' counsel explained, at oral argument, that their goal is to convert the case to chapter 7.
Appellants' claims prompted the chapter 13 trustee to file an " Objection to Confirmation of Plan and Motion to Dismiss Case." The trustee stated that the filed unsecured proofs of claim exceeded the limits of § 109(e), and therefore Debtor was ineligible for chapter 13 relief.
Appellants filed a brief in support of the trustee's motion, arguing that their claims were both " noncontingent" and " liquidated, " and therefore should be figured into the § 109(e) calculation.
Debtor responded that Appellants' claims were " contingent" and " unliquidated" and therefore did not apply against the Code's debt limits. She stated that the upcoming trial in the § 523 adversary proceeding would liquidate the collective claim.
Debtor also filed a formal objection to Appellants' claims. For all such claims she asserted that they were lacking in supporting documentation and, therefore, she challenged their validity and amount. To further discredit the claims, Debtor noted that another investor/plaintiff from the Creditors' Action had already settled for $400,000, yet Appellants' proofs of claim still added up to nearly the full amount demanded in the Creditors' Action ($840,000). She also denied her liability for the damages, noting that any liability would be determined at the future trial.
Even using the corrected claim total of $642,881.66 (see n. 7 supra), that sum exceeds $440,000, which is the difference in $840,000 minus $400,000.
The bankruptcy court heard oral argument on the trustee's objection/motion to dismiss on July 27, 2005, and at that time, overruled the trustee's objection. (A transcript of this hearing has not provided as part of the Excerpts of Record.)
See Bk. Dkt. for 7/25/2005 (Notice of Intent to Argue) and 7/27/2005 (Minutes of Hearing stating " Objection overruled.").
Next, the bankruptcy court addressed the matter of plan confirmation on August 1, 2005. (A transcript of this hearing has not been provided as part of the Excerpts of Record.) An " Order Confirming Chapter 13 Plan" was entered on August 5, 2005. The confirmation order was thus a final order denying the trustee's motion to dismiss Debtor's case for ineligibility as well as determining that Debtor's chapter 13 plan met the requirements of the Code.
Appellants filed a timely motion to reconsider the confirmation order, which tolled the appeal time and preserved the eligibility issue for appeal. See Fed.R.Bankr.P. 8002(b). The bankruptcy court denied the motion in an order entered on August 22, 2005. Appellants filed a timely notice of appeal.
Although the notice of appeal named only the order denying the motion for reconsideration, the issues on appeal concern matters that were first addressed in the underlying plan confirmation and dismissal hearings. We have jurisdiction to consider the merits of the plan confirmation order, and do so.
Next, on September 28, 2005, the bankruptcy court heard Debtor's claim objections. The court stated that Appellants would not be allowed to collaterally attack the confirmed plan, and noted that the eligibility issue was on appeal. The court also questioned whether the claims came under the auspices of the Receiver's Action. It concluded:
I'm going to disallow the claims because I think you're subsuming the receivership; that's what I think. I'll disallow the claims on that basis.
Tr. of Proceedings (Sept. 28, 2005), p. 10:3-6.
The bankruptcy court's order sustaining Debtor's claim objections and disallowing Appellants' claims was entered on October 26, 2005, and was timely appealed by Appellants. Both the plan confirmation/reconsideration appeal and the disallowance appeal have been consolidated for oral argument.
ISSUES
1. Whether the bankruptcy court erred in determining that Debtor met the § 109(e) eligibility requirements for chapter 13 relief.
2. Whether the bankruptcy court erred in disallowing Appellants' claims on lack of standing or res judicata grounds, i.e., that the claims were subsumed in the Receiver's Action.
STANDARD OF REVIEW
The bankruptcy court's findings of fact are reviewed for clear error and its conclusions of law are reviewed de novo. Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 980 (9th Cir. 2001).
The determination of the amount of liquidated debt for purposes of § 109(e) is a factual question. See Ho v. Dowell (In re Ho), 274 B.R. 867, 875 n.9 (9th Cir. BAP 2002) (citing Scovis, 249 F.3d at 982).
An order confirming a chapter 13 plan is reviewed for an abuse of discretion, see Bank of Am. Nat'l Trust & Sav. Ass'n v. Slade (In re Slade), 15 B.R. 910, 913 (9th Cir. BAP 1981), as is an order denying a motion for reconsideration. Hale v. U.S.T. (In re Basham), 208 B.R. 926, 930 (9th Cir. BAP 1997), aff'd sub nom. Hale v. U.S.T. (In re Byrne), 152 F.3d 924 (9th Cir. 1998) (table). A bankruptcy court necessarily abuses its discretion if it bases its decision on an erroneous view of the law or on clearly erroneous factual findings. Warrick v. Birdsell (In re Warrick), 278 B.R. 182, 184 (9th Cir. BAP 2002).
Standing is legal question that we review de novo, see Hillis Motors, Inc. v. Haw. Auto. Dealers' Ass'n, 997 F.2d 581, 584 (9th Cir. 1993), as is the availability of res judicata, or claim preclusion. See Khaligh v. Hadaegh (In Re Khaligh), 338 B.R. 817, 823, 2006 WL 456424 at *9 (9th Cir. BAP 2006) (citing Robi v. Five Platters, Inc., 838 F.2d 318, 321 (9th Cir. 1988)). We also review de novo a bankruptcy court's interpretation and application of state or federal law. Conestoga Servs. Corp. v. Executive Risk Indem., Inc., 312 F.3d 976, 981 (9th Cir. 2002).
DISCUSSION
A. Chapter 13 Eligibility: § 109(e)
Appellants, together with the chapter 13 trustee, objected to Debtor's chapter 13 plan and moved to dismiss her case on the grounds that she was ineligible for such relief under the debt limits of that chapter. Essentially, the eligibility question was litigated at the time of plan confirmation.
Debtor had the burden of proof on all essential elements for confirmation, including that " the plan complies with the provisions of this chapter [13] and with the other applicable provisions of this title [11]" and whether " the plan has been proposed in good faith and not by any means forbidden by law." 11 U.S.C. § § 1325(a)(1) & (a)(3).
Appellants maintain that the bankruptcy court erred in overruling their objection based on ineligibility under § 109(e). They contend that their claims, which were not listed on Debtor's schedules, were nonetheless noncontingent and liquidated, at the petition date, and therefore that the bankruptcy court should have including them in the § 109(e) calculation.
Section 109(e) provides, in pertinent part:
Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $307,675 and noncontingent, liquidated, secured debts of less than $922,975 . . . may be a debtor under chapter 13 of this title.
Only contingent or unliquidated debts are excluded from the § 109(e) eligibility computation; disputed debts are not excluded solely on that basis. See Sylvester v. Dow Jones & Co., Inc. (In re Sylvester), 19 B.R. 671, 673 (9th Cir. BAP 1982).
The determination of the amount of liquidated claims for purposes of § 109(e) is a factual question, but determining whether a claim is contingent or liquidated is a legal question. See Ho, 274 B.R. at 875 n.9.
The Ninth Circuit Court of Appeals has announced a clear-cut and simple procedure for establishing eligibility in a case such as ours--where the amount of debt is set forth in the schedules and Debtor's good faith has not been challenged:
We now simply and explicitly state the rule for determining Chapter 13 eligibility under § 109(e) to be that eligibility should normally be determined by the debtor's originally filed schedules, checking only to see if the schedules were made in good faith.
Scovis, 249 F.3d at 982.
The Ninth Circuit explained that this rule was grounded in both the plain terms of § 109(e) and Congressional intent to make the eligibility determination " similar in nature to the subject matter jurisdiction context for purposes of determining diversity jurisdiction." Id. (citing Comprehensive Accounting Corp. v. Pearson (Matter of Pearson), 773 F.2d 751, 757 (6th Cir. 1985)). Generally, only if there are allegations of bad faith does Ninth Circuit law allow the court to look past the schedules to other evidence in evaluating the claims amount. Scovis, 249 F.3d at 981 (citing Quintana v. IRS (In re Quintana), 107 B.R. 234, 239 n.6 (9th Cir. BAP 1989), aff'd, 915 F.2d 513 (9th Cir. 1990)).
Debtor's schedules listed $224,748.84 in noncontingent and liquidated unsecured debt. This amount was less than the allowed limit of $307,675. There were no allegations made by anyone, including the chapter 13 trustee and Appellants, that Debtor had filed her petition or plan in bad faith. Nor was there any evidence in the record of bad faith on Debtor's part, since she asserted that she believed Appellants' claims were included in the Receiver's Action and Judgment.
Moreover, Appellants' counsel conceded, at oral argument, that the issue of bad faith was not raised in these proceedings.
The inquiry into Debtor's eligibility ends here. We conclude that the bankruptcy court's finding that Debtor met the eligibility requirements for chapter 13 relief was not clearly erroneous. As ineligibility was the only objection raised to plan confirmation, the bankruptcy court did not abuse its discretion in confirming Debtor's plan.
Nor did the bankruptcy court abuse its discretion in denying Appellants' motion for reconsideration based on the same issue. Rule 9023 makes FRCP 59(e) applicable to motions for reconsideration in bankruptcy cases. " Reconsideration is appropriate only if one of the following three grounds are present: (1) manifest error of fact; (2) manifest error of law, or (3) newly discovered evidence." Basham, 208 B.R. at 934. We conclude that the bankruptcy court did not err in fact or law.
B. Claims Disallowance
The second part of this appeal involves the bankruptcy court's order sustaining Debtor's objections to Appellants' claims and disallowing those claims.
A duly filed proof of claim is presumptively valid and deemed allowed, unless a party in interest objects. See Garner v. Shier (In re Garner), 246 B.R. 617, 620 (9th Cir. BAP 2000); Fed.R.Bankr.P. 3001(f), 3007; 11 U.S.C. § 502(a). The filing of an objection to a proof of claim " creates a dispute which is a contested matter" within the meaning of Rule 9014 and must be resolved after notice and opportunity for hearing. See Adv. Comm. Notes to Fed.R.Bankr.P. 9014; Jorgenson v. State Line Hotel, Inc. (In re State Line Hotel, Inc.), 323 B.R. 703, 710 (9th Cir. BAP 2005).
The party objecting to the proof of claim must produce sufficient evidence to " show facts tending to defeat the claim by probative force equal to that of [its] allegations . . . ." Lundell v. Anchor Constr. Specialists, Inc. (In re Lundell), 223 F.3d 1035, 1039 (9th Cir. 2000) (alteration added) (quoting Wright v. Holm (In re Holm), 931 F.2d 620, 623 (9th Cir. 1991)); see also Ashford v. Consol. Pioneer Mortgage (In re Consol. Pioneer Mortgage), 178 B.R. 222, 226 (9th Cir. BAP 1995), aff'd sub nom. Ashford v. Naimco, Inc. (In re Consol. Pioneer Mortgage Entities), 91 F.3d 151 (9th Cir. 1996) (table). If the objector produces sufficient evidence to negate the claim's validity, the burden of persuasion shifts back to the claimant, who then has the ultimate burden to demonstrate that the claim deserves to share in the distribution of the debtor's assets. See Spencer v. Pugh (In re Pugh), 157 B.R. 898, 901 (9th Cir. BAP 1993).
Debtor objected to the claims on the grounds, inter alia, that they lacked proper documentation and, therefore, the claims' validity was put into dispute. However, the bankruptcy court disallowed the claims on lack of standing or res judicata grounds, i.e., concluding that Appellants were " subsuming" the Receiver's duties, or, as a corollary, that their claims were " subsumed" in the Receiver's Action against Debtor.
A " claim" in bankruptcy means
right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured . . . .
Appellants filed proofs of claim based on allegations that Debtor's prepetition conduct constituted actual fraud under Washington common law or securities fraud which is actionable under the Washington Securities Act.
Specifically, RCW 21.20.430 provides statutory damages for a victim of fraud or misrepresentation in the sale of securities:
Debtor now contends that Appellants' claims were barred because the District Court had exclusive jurisdiction over the Receivership Assets, an injunction was in place, and Appellants would first have to obtain permission from District Court to proceed with their state law or bankruptcy action. She reasons, because Appellants' remedy under RCW 21.20.430 requires the tender of their securities to the defendants, that their action would be enjoined by the Receiver's Action. The injunction states:
5. All persons, including Defendants and Relief Defendants, and their officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, are enjoined from in any way interfering with the operation of the Receivership or in any way disturbing the Receivership Assets and from filing or prosecuting any actions or proceedings which involve the Receiver or which affect the Receivership Assets, specifically including any proceeding initiated pursuant to the United States Bankruptcy Code, except with the prior permission of this Court. Any actions so authorized to determine disputes relating to Receivership Assets shall be filed in this Court.
Order Appointing Temporary Receiver (Mar. 25, 2002), pp. 4-5.
Appellants counter, and we agree, that their securities are not part of the Receivership Assets. The Washington statute provides, in pertinent part, that any owner of a security which was sold to them in violation of the law may
recover the consideration paid for the security, together with interest at eight percent per annum from the date of payment, costs, and reasonable attorneys' fees, less the amount of any income received on the security, upon the tender of the security, or for damages if he or she no longer owns the security.
RCW 21.20.430, supra (emphasis added).
Appellants own the securities, not RDI or Debtor. There is no evidence in the record that the Receiver attempted to recover the securities directly from Appellants. In fact, as investors, they were able to make claims directly to the Receiver. Therefore, the tender of their securities would not be enjoined as involving Receivership Assets. Nor would Appellants' action interfere in the Receiver's Action. To the contrary, Appellants' tender of their securities would aid the Receiver in his recovery of the Receivership Assets, once the securities have passed to Debtor.
Furthermore, the order appointing the Receiver only expressly prohibited the prosecution of any civil action against the defendants in the SEC Action, wherein Debtor was not a defendant. See Order Appointing Temporary Receiver, supra, p. 7, ¶ 9. No party has contended that Debtor's personal assets could not be subject to a lawsuit. We conclude that Appellants had standing to assert their state law claims.
In addition, their claims were not barred by claim preclusion. Under federal law, res judicata or claim preclusion bars a party from bringing a claim where: (1) a court of competent jurisdiction (2) has rendered a final judgment on the merits (3) on the same cause of action in (4) a previous action involving the same parties or their privies. Siegel v. Fed. Home Loan Mortgage Corp., 143 F.3d 525, 528 (9th Cir. 1998). Claim preclusion bars not only all grounds for recovery that were previously asserted, but it also bars all grounds for recovery that could have been asserted in the prior action. Id. at 528-29; Robertson v. Isomedix, Inc. (In re Int'l Nutronics, Inc.), 28 F.3d 965, 969 (9th Cir. 1994).
The Receiver was not appointed to represent the investors, but rather stood in the shoes of RDI and the other defendants in the District Court Action. The Receiver asserted claims belonging to the Receiver's estate, i.e., RDI and its affiliates, against their fellow perpetrators of the fraudulent securities. Thus, the claims asserted by the Receiver against Debtor included: (1) fraudulent transfer; (2) conversion; (3) unjust enrichment; (4) civil conspiracy; (5) breach of fiduciary duty; (6) fraud; (7) negligent misrepresentation; and (8) violations of the federal securities laws. See Third Amended Complaint, supra.
Appellants, on the other hand, asserted claims based on violations of Washington state's securities laws and common law causes of action, such as fraud, which they hold against Debtor. Appellants' claims were beyond the scope of the District Court's injunction, and they were not part of the Receiver's Action. See Herman Family Revocable Trust v. Teddy Bear, 254 F.3d 802, 805 (9th Cir. 2001) (stating that a federal court cannot exercise supplemental jurisdiction over state law claims if it lacks original jurisdiction in the case). Therefore, the necessary requirements for claim preclusion were not met and it was not available.
In summary, we agree with Appellants that the bankruptcy court's order disallowing the claims was not supported by the record evidence or the law. Debtor did not carry her burden to negate Appellants' standing to assert their claims. We do not decide whether or not there may be other grounds to disallow Appellants' claims. Therefore, we reverse the bankruptcy court's order and remand for further proceedings in this matter.
Both the hearing transcript and the argument on appeal suggest that the bankruptcy court may have been searching for a basis upon which to grant the objection and over which it would have jurisdiction, considering that the plan confirmation order was on appeal. See Tr. of Proceedings (Sept. 28, 2005), pp. 8-10.
CONCLUSION
Debtor's eligibility for chapter 13 relief was correctly determined from her schedules, which indicated that her total noncontingent and liquidated unsecured debt did not exceed the limits of § 109(e). Debtor also met the Code's requirements for plan confirmation. There were no grounds to reconsider the bankruptcy court's order confirming her plan. Therefore, the plan confirmation order and order denying Appellants' motion for reconsideration are AFFIRMED.
Postconfirmation, the bankruptcy court's disallowance of Appellants' claims, on the ground that Appellants lacked standing or were precluded from bringing their claims because they were either subsumed, or were subsumed by, the Receiver's Action, was erroneous. We therefore REVERSE the claim objection order, AND REMAND for the bankruptcy court's further consideration of this matter.
(1) Any person, who offers or sells a security in violation of any provisions of RCW 21.20.010, 21.20.140 (1) or (2), or 21.20.180 through 21.20.230, is liable to the person buying the security from him or her, who may sue either at law or in equity to recover the consideration paid for the security, together with interest at eight percent per annum from the date of payment, costs, and reasonable attorneys' fees, less the amount of any income received on the security, upon the tender of the security, or for damages if he or she no longer owns the security. Damages are the amount that would be recoverable upon a tender less (a) the value of the security when the buyer disposed of it and (b) interest at eight percent per annum from the date of disposition.
RCW 21.20.430 (Thompson/West, Westlaw through Feb. 15, 2006 legislation).