Bobby N. Harmon, CPCU, ARM
2920 Ala Ilima Street, #1103 Tel No. (808) 839-0654
Honolulu, Hawaii 96818
May 1, 2001
Steve Guttman, Esq.
Attorney at Law
1132 Bishop St., Ste 1404
Honolulu, HI 96813
RE: Harmon Ch. 7 Bankruptcy Case No. 99-04339 - Settlement as Wage Income
Dear Mr. Guttman:
This acknowledges receipt of your letter dated April 27, 2001.
You state in your letter, “I will reiterate the fact that the Trustee had no obligation to send to you a 1099. The only reason it was sent was because you requested it. The amount set forth on the 1099 was the amount you received as your exemption claim. Because the Trustee was only the conduit for your receipt of your exempt funds, there is no legal requirement for the issuance of the 1099 to you. Your receipt of the 1099 was done as a courtesy to you based upon your specific request.”
In response to this I must, first of all, question the “reiterate the fact” portion of your statement. This is the first time that I have been advised that the Trustee was not required to issue any report of income to the IRS. As I am not an attorney or a tax accountant, I am not in a position to dispute the accuracy of your statement that Trustees are not required to report income to the IRS, but I do wish to state for the record that I was not advised of this until one year after I signed the Settlement Agreement. Also, I should point out that I was requesting an IRS Form W-2 from Kamehameha Schools and not a Form 1099 from the Trustee.
You continue, “The statement in the second paragraph of your April 18 letter is not true. No one agreed in entering into the settlement that any amount ‘was to be treated as wage income.’” I completely disagree with your statement and maintain that my April 18th letter is truthful.
First, when you say that NO ONE agreed that the amount was to be treated as wage income, I must point out that my wife and I signed the Settlement Agreement with the understanding of the oral representation made during the settlement conferences that the payment would be “categorized” (Mr. Tamm’s word, not mine) as wage income. Are my wife and I considered to be NO ONE in this case?
As this now appears to be a “you said, he said, she said” situation, I would like to ask if you have obtained letters or affidavits from all parties (including my then-attorneys, Bradley R. Tamm, Arnold T. Phillips II, and Roy F. Hughes) stating that the agreement reached at the settlement conferences was that the entire amount was NOT to be characterized as wage income. If so, may I please be furnished copies of these documents.
You further state, “The settlement agreement does not reference the payment being for wages. The presentations to Magistrate Kurren and Judge King did not catagorize the settlement as resolution of a wage claim.” I am well aware that the final written Settlement Agreement does not contain any mention of how the payment was to be categorized. However, I must point out that the Agreement was drafted by Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington, which is the firm I have previously questioned as having multiple conflicts of interests in this case.
As the drafters of the Agreement, Torkildson Katz had the opportunity, if not the obligation, to state in plain, definitive terms how the settlement would be characterized. As was discussed among the various attorneys involved and myself, there were several options that we considered: portions of the settlement could be allocated as payment for medical bills incurred by my wife and I; as damages for pain and suffering; as lost business opportunity, etc. Although I personally would have preferred to have the settlement reasonably apportioned to cover the various damages incurred by me and my wife in our four-year ordeal, in the end we agreed to accept the recommendations of my then-attorneys, Bradley Tamm and Arnold Phillips, to accept the payment categorized as wage income.
If the final Agreement had contained a statement that the settlement was to be categorized as wage income or any other damages, my wife and I would still have signed the agreement. Had we known at the time, however, that everyone else (including our attorneys) might disavow the verbal agreement made in the settlement negotiations, then I would have insisted on having this spelled out in the written Agreement before signing.
Therefore, I do not believe that your undisputed statement, “the settlement agreement does not reference the payment being for wages”, is a valid argument or that this omission can be construed to mean that the settlement was NOT for wage income.
Furthermore, if someone erred in omitting the “categorization” of the settlement, then I believe that someone was Torkildson, Katz, the drafters of the Agreement.
You continue, “As I have noted in prior correspondence to you, your letter is having a detrimental effect as to your creditors and the closing of the estate. Further, your sending correspondence to individuals who are not parties to the settlement raises the question of whether you are violating the confidentiality provision of the settlement agreement. I renew the request that you allow the case to be closed and you not continue with presenting what I think are spurious arguments.”
Here you raise the question of whether I am violating the confidentiality provision of the settlement agreement. In my opinion, as a layperson, I am not violating the “Section J” confidentiality provision of the agreement by questioning why the settlement amount was not reported to the IRS on Form W-2. As the categorization of the settlement ultimately effects my tax liabilities, Social Security and Pension Plan benefits, I believe it is legal and proper for me to make Kamehameha Schools, the IRS and the U.S. Department of Labor aware of these disputed issues.
As you point out, the Agreement itself does not reference the payment being for wages. How, then, would I be breaching the confidentiality clause by questioning something not contained in the Agreement?
Although I am not an attorney, I must take exception with what you think are “spurious arguments.” In my letter to you dated April 2, 2001, I stated: “As you know, prior to Mr. Bradley R. Tamm withdrawing as my attorney, I had posed a number of questions regarding possible misrepresentation and/or fraud having occurred during the settlement proceedings. Some of these questions were not completely answered before Mr. Tamm’s withdrawal. As I am now acting pro se in this matter, I would like to continue this questioning with your office.”
To date, I have not been provided satisfactory answers to the vast majority of questions that I have posed to you and to my previous attorneys over the past year. Although I would certainly like to see this case closed, I still believe I have the legal right to question if misrepresentations and/or fraudulent statements were made in the course of the bankruptcy proceedings.
If I do not have this legal right, then I would appreciate your advising me of any legal statutes or precedents which may apply to this case.
Very truly yours,
Bobby N. Harmon
cc: Mary Lou Woo
Interim Trustee
91-590 Farrington Hwy, #210 Unit 303
Kapolei, HI 96707
Gayle Lau, Esq.
Curtis Ching, Esq.
Office of the U.S. Trustee
1132 Bishop St., Ste 602
Honolulu, HI 96813
Mr. Matt A. Tsukazaki
Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington
700 Bishop Street, 15th Floor
Honolulu, HI 96813-4187
Dr. Hamilton McCubbin
Chief Executive Officer
Kamehameha Schools
567 South King Street, Suite 200
Honolulu, Hawaii 96813
Employee Benefits Department
Kamehameha Schools
1887 Makuakane Street
Honolulu, HI 96817-1887
Janet S. Hughes, Mgr.
Employee Plans & Exempt Organizations
Internal Revenue Service
1244 Speer Blvd., Ste 442
Denver, CO 80204-3583
Mr. Billy Beaver
U.S. Department of Labor
PWBA Los Angeles Regional Office
790 E. Colorado Blvd, Ste 514
Pasadena, CA 91101