               United States Court of Appeals
                         For the Eighth Circuit
                     ___________________________

                             No. 13-1086
                     ___________________________

                          In re: Racing Services, Inc.

                             lllllllllllllllllllllDebtor

                           ------------------------------

        Kip M. Kaler, as Bankruptcy Trustee for Racing Services, Inc.

                            lllllllllllllllllllllAppellee

                                         v.

                                   Susan Bala

                           lllllllllllllllllllllAppellant
                                  ____________

                 Appeal from the United States Bankruptcy
                   Appellate Panel for the Eighth Circuit
                              ____________

                         Submitted: November 19, 2013
                            Filed: February 27, 2014
                                 ____________

Before RILEY, Chief Judge, MELLOY and KELLY, Circuit Judges.
                              ____________

MELLOY, Circuit Judge.
       Susan Bala appeals a Bankruptcy Appellate Panel's judgment holding the
bankruptcy estate of her former employer is entitled to the liquidation proceeds of a
cash-value life insurance policy the employer purchased for her. Because the terms
of an agreement between Bala and her employer grant the employer only the limited
right to receive a repayment of policy premiums from the cash value upon surrender
of the policy by Bala, we reverse. Bala at no time surrendered the policy, and
therefore, the estate did not possess a right to control the policy or receive its
liquidation proceeds.1

I.    Background

       Susan Bala was an employee and the founder of Racing Services, Inc. ("Racing
Services"), a simulcast racing and parimutuel gambling company in North Dakota.
Pursuant to a split-dollar/collateral-assignment agreement ("Split-Dollar
Agreement"), she owned a cash-value whole-life insurance policy that Racing
Services purchased on her behalf. Racing Services was entitled to recoup the
premiums it paid for the policy from the policy's accumulated cash value under
certain circumstances as defined by the Split-Dollar Agreement. The policy,
however, permitted Bala to access the policy's "loan value" which was essentially the
policy's paid-up cash value less any existing loans.2 No party has identified any terms
in the Split-Dollar Agreement or in the policy that would have permitted Racing
Services to prevent Bala from unilaterally accessing all of the policy's loan value
while the policy was in effect.

      1
       The policy also granted to the employer a right to reimbursement from the
policy proceeds upon Bala's death or from any distributions at policy maturation. No
party alleges these provisions apply in the present circumstances.
      2
        The policy defined the loan value as "the cash value on the date to which all
due premiums are paid; the cash value of any dividend additions; and the value of any
dividends left at interest; less: any outstanding loans and loan interest; [and less]
interest on the loan to the end of the current policy year."

                                         -2-
       In 2003, Bala and Racing Services were charged in a federal criminal
indictment alleging gaming and money laundering violations. In 2004, Racing
Services filed for bankruptcy. In July 2004, Kaler, the Trustee for the bankruptcy
estate, caused Racing Services to stop making premium payments on Bala's life
insurance policy. Premium payments continued, however, pursuant to an "Automatic
Premium Loan Provision" in the policy that utilized loans against the accumulated
cash value in the policy to pay premiums.

      In February 2005, Bala and Racing Services were convicted of the federal
criminal charges. Bala was sentenced to 27 months' imprisonment, ordered to forfeit
over $19 million, and held jointly and severally liable for a forfeiture order against
Racing Services of over $99 million. Bala and Racing Services filed timely appeals
from the criminal convictions. While the appeals were pending, the following events
took place.

       First, in September 2006, the United States Attorney for the District of North
Dakota (the "DOJ") filed a motion in Bala's criminal case to forfeit substitute assets
identifying the life insurance policy as an asset to be substituted for forfeiture. In
October 2006, the district court granted the motion and entered a preliminary order
to substitute the policy for forfeiture. The October 2006 order substituting the policy
was not a final order, and the earlier criminal judgment itself had not identified the
policy as an asset to be forfeited.

       At that time, the Trustee claimed an interest in the policy based on the Split-
Dollar Agreement. The parties, however, do not allege that the Trustee filed any type
of claim or objection in the district court to contest the DOJ's motion to substitute the
policy as a forfeiture asset. Later, on January 26, 2007, the Trustee and the DOJ
entered into an agreement ("Asset-Division Agreement") that the Trustee and the DOJ
indicated was to be subject to the approval of the bankruptcy court. Pursuant to the
Asset-Division Agreement, the Trustee and the DOJ were to obtain the

                                          -3-
"cancellation/liquidation" of the policy and share on a 50/50 basis the "proceeds
recovered from cancellation/liquidation of the policy." The DOJ's share was to be
held by the district court pending resolution of the criminal appeal. In Paragraph 3
of the Asset-Division Agreement, the Trustee and the DOJ agreed that:

       The bankruptcy estate is unable to involuntarily cancel the policy or
       withdraw its value. Inasmuch as Susan Bala is the owner of the policy,
       it would necessarily require her approval for cancellation of the policy
       or withdrawal of its cash value. Susan Bala has refused to cancel the
       policy or withdraw its cash value to pay the balance due the
       Debtor/bankruptcy estate.

(Emphasis added). The bankruptcy court at no time approved the Asset-Division
Agreement.

       On January 27, 2007, the insurance company sent a letter and a $64,000 check
to the DOJ (presumably in response to a DOJ demand since the bankruptcy court had
not approved the Asset-Division Agreement and the district court had not entered a
final order of forfeiture). The insurer also sent a letter to Bala advising that the policy
had been "surrendered" and giving instructions as to what Bala should do if she
wished to reinstate the policy.

       On February 23, 2007, after the insurer had already sent the policy's liquidated
funds to the DOJ, the district court entered an order noting that Bala might not have
received proper notice of the government's September 2006 motion to substitute the
insurance policy as a forfeiture asset. The district court's order directed the parties
to cease attempts to terminate/surrender the policy and to hold any proceeds already
received from the insurer pending resolution of the criminal appeals. No party
attempted to reinstate the policy.




                                           -4-
       On March 6, 2007, the Eighth Circuit Court of Appeals reversed the
convictions and the underlying forfeiture order. United States v. Bala, 489 F.3d 334
(8th Cir. 2007). In July 2007, the DOJ returned the $64,000 to the insurer. The
insurer then notified Bala that she could reinstate the policy with proof of insurability
and repayment of about $6,000 in overdue premiums. The insurer informed Bala that
she could pay the overdue premiums using the policy's cash value, but Bala now
asserts that the Trustee informed her that he would prevent any such use of the cash
value. Bala did not respond to the insurer's notice.3

      In January 2009, the insurer sought to interplead the cash value of the policy
in the bankruptcy case, deliver the funds to the bankruptcy court, and limit its
involvement or future liability. Bala resisted, and the bankruptcy court permitted
deposit of the funds. In January 2011, the Trustee filed an adversary proceeding to
determine if the deposited funds from the insurer were property of the estate.

       In the adversary proceeding, Bala and the Trustee filed cross motions for
summary judgment. Arguments concerning the parties' respective rights to the funds
relied in large part on the terms of the Split-Dollar Agreement, which provides as
follows:

      1.     The undersigned (herein called "Assignor" [Bala]) hereby assigns,
             transfers and sets over to Racing Services, Inc. of Fargo, ND
             (hereinafter called "Assignee") to the extent of the total of any
             and all amounts heretofore or hereafter advanced by the Assignee
             to the Assignor [Bala] for the payment of premiums or a portion

      3
       Regarding proof of insurability, there is no evidence of Bala's health condition
in 2007, but she subsequently was diagnosed with cancer and claims to have suffered
various stress-related medical issues prior to receiving her cancer diagnosis. Further,
when Bala received the insurer's notice that she could reinstate the policy with proof
of insurability and payment of overdue premiums, she had only recently obtained the
reversal of her conviction.

                                          -5-
             of the premiums (herein called "Assignee's Interest") thereon,
             Policy No # 3909537 issued by The Company indicated above
             (herein called "Insurer") and any supplementary contracts issued
             in connection therewith (said policy and contracts being called
             herein the "Policy") upon the life of Susan Bala subject to all the
             terms and conditions of the Policy and to all superior liens, if any,
             which the insurer may have against the Policy. The Assignor
             [Bala] by this instrument agrees and the Assignee by acceptance
             of the assignment agrees to the conditions and provisions herein
             set forth.

      2.     It is expressly agreed that only the following specific rights are
             included in this assignment and pass by virtue hereof to the
             Assignee and may be exercised solely by the Assignee:
             a.      The right to obtain, upon surrender of the policy by the
                     Assignor [Bala], an amount of the cash surrender proceeds
                     up to the amount of the Assignee's interest in the policy.
             b.      The right to collect the net proceeds of the policy when it
                     becomes a claim by death or maturity up to the amount of
                     the Assignee's Interest.
      ...

      8.     If the agreement is terminated, the Assignee shall transfer its
             interest in the Policy to the Assignor [Bala] in exchange for an
             amount equal to the Assignee's interest, obtained by the Assignee
             upon the security of the policy.

(Interpretive Brackets Added). Paragraphs 3–7 of the Split-Dollar Agreement, not
reproduced above, were ministerial in nature and did not expand the assignment of
rights to Racing Services in any manner.4


      4
       Paragraph 3 imposed on Racing Services the duty to pay premiums; Paragraph
4 indicated that Racing Services would not enjoy an increased interest in the policy
if the insurer were to waive premiums; Paragraph 5 authorized the insurer to
recognize Racing Services interest; Paragraph 6 represented that Bala was not subject
to pending bankruptcy proceedings; and Paragraph 7 provided that premium notices

                                          -6-
       The fighting issues in the adversary proceeding below were (1) whether the
limited assignment of rights related to surrender by Bala as set forth in Paragraph 2.a
controlled (or whether a purported "surrender" of the policy by other persons or
termination of the policy by other means could suffice to trigger the Paragraph 2.a
rights for Racing Services); and (2) whether Paragraph 8 granted to Racing Services
an independent right to force Bala to accept and pay for a return assignment of Racing
Services's interest upon termination of the Split-Dollar Agreement (or whether
Paragraph 8 merely imposed upon Racing Services a duty to reassign its interest to
Bala if she elected to demand such a transfer).

       The bankruptcy court found that the Split-Dollar Agreement was unambiguous
and that the Trustee held the superior claim. In reaching this conclusion, the court
acknowledged that Bala had argued that she had not surrendered the policy and that
the Trustee had conceded that Bala had not surrendered the policy. Second, the court
noted that both parties argued the insurer rather than Bala had surrendered the policy.
Third, the court determined that Racing Services's right to obtain repayment of
premiums from the policy's cash value under Paragraph 2.a could only arise if Bala
surrendered the policy, and that because she did not surrender the policy, Racing
Services and the Trustee did not have rights to the policy via Paragraph 2.a.

       The bankruptcy court concluded, however, that Paragraph 8 created an
independent right for Racing Services to receive a repayment of premiums and that,
regardless of the inapplicability of Paragraph 2.a, Racing Services was entitled to
repayment. The bankruptcy court found that an earlier bankruptcy order had effected
the termination of the Split-Dollar Agreement, thus triggering Paragraph 8. The
bankruptcy court reasoned that a failure to read Paragraph 8 as creating an
independent right to repayment for Racing Services would render Paragraph 8 a
nullity.


were to be sent to Racing Services.

                                         -7-
       Bala appealed to the BAP, and the BAP affirmed. The BAP held that the
Split-Dollar Agreement's reference in Paragraph 2.a to the concept of surrender by
Bala need not be read narrowly. The BAP stated, "We believe that [the insurer's]
treatment of the policy as surrendered due to the forfeiture of Bala's rights in the order
obtained by the United States is substantively the same as a surrender by Bala
herself." In so holding, the BAP described the October 2006 preliminary order to
substitute the policy as an asset for forfeiture as a final order of forfeiture and
indicated that Bala's rights in the policy transferred to and vested with the DOJ at an
earlier time, upon her commission of the offense. According to the BAP, because the
DOJ held all of Bala's rights in the policy, its actions served as a qualifying surrender
by Bala.

      In the alternative, the BAP held that Racing Services held an independent right,
rooted in Paragraph 8, to receive a repayment of its premiums. This alternative
holding is essentially the same holding as set forth by the bankruptcy court. In
reaching this conclusion, the BAP characterized the Split-Dollar Agreement's
assignment of rights to Racing Services as a broad assignment of the policy.

      Bala appeals.

II.   Discussion

         "Contract interpretation, including whether a contract as written is ambiguous,
is a matter of law, which we review de novo." Anderson v. Hess Corp., 649 F.3d 891,
896 (8th Cir. 2011). The parties agree that North Dakota law governs our contract
interpretation in this case. "North Dakota statutes governing contract interpretation
. . . provide: (1) the language of a contract governs its interpretation if the language
is clear and unambiguous, see N.D. Cent. Code Ann. § 9–07–02; (2) courts are to
interpret the contract as a whole to give effect to all of its provisions, see N.D. Cent.
Code Ann. § 9–07–06; and (3) the words of a contract are to be given their ordinary

                                           -8-
meaning, absent the parties' use of the words in a technical sense, see N.D. Cent.
Code Ann. § 9–07–09." Id. at 897. And, "[w]hen a contract is reduced to writing, the
intention of the parties is to be ascertained from the writing alone if possible, subject,
however, to the other provisions of this chapter." N.D. Cent. Code Ann. § 9-07-04.

       As explained below, we conclude the plain language of the Split-Dollar
Agreement limits Racing Services's rights in a manner that is dispositive in this case
and that Bala, rather than the Trustee, holds the superior claim to the policy's cash
value proceeds. In reaching this conclusion, we find it unnecessary to look beyond
the written agreement to determine the parties' intent. We note this fact because Bala
and the Trustee argued below and on appeal that various external sources of evidence
demonstrated the parties' true intentions and were necessary to aid in our
interpretation of the contract.

        For example, Bala argued that the entire purpose of the Split-Dollar Agreement
was to provide a bare minimum of rights to Racing Services merely to comply with
then-extant IRS regulations or guidelines as necessary to ensure tax-favored treatment
for Racing Services and Bala. Bala also argued that, at the time of contract formation,
she was the sole employee of Racing Services, personally stood on both sides of the
transaction, and necessarily intended that all terms be interpreted in her favor. Racing
Services, on the other hand, argued that the parties to the contract had intended to
grant to Racing Services a broad guarantee or entitlement to a full repayment of
premiums. We need not assess the extrinsic evidence or these general arguments
because, as already stated, we view the policy as unambiguous. Oxy USA, Inc. v.
Hartford Ins. Grp., 58 F.3d 380, 381 (8th Cir. 1995) ("[A] contract is unambiguous
[if] the parties' intentions can be ascertained from the writing alone.").

       Paragraph 1 of the Split-Dollar Agreement defines in part Racing Services's
interest in the insurance policy as being limited to the dollar amount of premiums
paid by Racing Services. It also makes an assignment of the policy to Racing

                                           -9-
Services "subject to all of the terms and conditions of the policy" and subject "to the
conditions and provisions" of the Split-Dollar Agreement.

       Paragraph 2 expressly and with quite strong language restricts the scope of the
assignment to Racing Services set forth in Paragraph 1. The introductory portion of
Paragraph 2 states, "It is expressly agreed that only the following specific rights are
included in this assignment and pass by virtue hereof to the Assignee [Racing
Services] and may be exercised solely by the Assignee." (Emphasis added). By
expressly limiting the assignment to Racing Services to include only a set of
specifically enumerated rights, the introductory portion of Paragraph 2 sets the stage
for our interpretation of the Split-Dollar Agreement. Consequently, we may not begin
our analysis with a presumption that the parties intended to grant to Racing Services
more rights than the parties elected to set forth expressly. We also do not begin our
analysis with an assumption that the parties may have intended a guarantee of
repayment to Racing Services or any sort of broad assignment of rights or broad
entitlement to repayment apart from what is enumerated. Such an assumption would
ignore the introductory language of Paragraph 2 and, instead, rely only upon the
assignment language of Paragraph 1. The assignment language of Paragraph 1,
however, cannot be read in isolation.

       Beneath the introductory language, Paragraph 2 has only two sub-parts, sub-
parts a and b, setting forth the enumerated "specific rights." These two sub-parts
confer separate and distinct rights upon Racing Services. Paragraph 2.a confers "[t]he
right to obtain, upon surrender of the policy by the Assignor [Bala], an amount of the
cash surrender proceeds up to the amount of the Assignee's interest in the policy."
(Emphasis added). Paragraph 2.b confers "[t]he right to collect the net proceeds of
the policy when it becomes a claim by death or maturity up to the amount of the
Assignee's interest."5


      5
          It is undisputed that sub-part b does not apply to the present facts.

                                           -10-
       By specifically providing for rights only in the event of a surrender by Bala,
and not for a surrender generally or for some other type of triggering event (such as
termination by a court, the DOJ, the insurer, or the Trustee for the employer), the
most natural reading of Paragraph 2.a makes an act of surrender by Bala a necessary
trigger for Racing Services to realize the right assigned in Paragraph 2.a. This is
consistent with North Dakota's requirements that we interpret the language of the
contract according to its natural meaning, give meaning to all the terms of a contract,
and interpret the individual terms of the contract in light of the contract as a whole.
Anderson, 649 F.3d at 896–97. For example, we know that in Paragraph 8 of the
Split-Dollar Agreement, the parties chose to reference the act of termination without
specifying an actor. This demonstrates that where the parties sought to reference
termination as contrasted with surrender, they did so expressly. This also means that
where the parties sought to reference a triggering action generally and without
reference to a specific actor, they demonstrated the ability to do so. Given this
contra-example in the same short document—the Split-Dollar Agreement contains
only eight paragraphs and is one page long—we reject the argument that we may read
the phrase "surrender by the Assignor" as broadly encompassing the acts of others
such as the DOJ, the Trustee, or the insurer or as generically referencing events other
than a "surrender" of the policy.6

       The question remains, however, whether Paragraph 8 serves as an independent
grant of rights to Racing Services. Paragraph 8 provides, "If the agreement [the Split-
Dollar Agreement] is terminated, the Assignee [Racing Services] shall transfer its
interest in the Policy to the Assignor [Bala] in exchange for an amount equal to the
Assignee's interest . . . ." Standing alone and read in isolation, Paragraph 8 arguably
could be subject to two possible interpretations. First, Paragraph 8 could be

      6
        Although we do not decide the present case on a theory of waiver, we note that
this interpretation is also consistent with the fact that the bankruptcy court found
Paragraph 2.a did not apply because Bala and the Trustee had agreed that she did not
surrender the policy.

                                         -11-
interpreted as imposing upon Bala no actual duty to transfer funds to Racing Services
and as granting to Racing Services no actual right to force a transfer. Under this first
interpretation, the word "shall" in Paragraph 8 applies only to Racing Services and
imposes upon Racing Services a duty to assign its interest back to Bala in exchange
for a repayment of premiums if the Split-Dollar Agreement is terminated and if Bala
elects to demand such an assignment. Second, Paragraph 8 could be interpreted as
using the word "shall" to apply to Bala as well as Racing Services such that Paragraph
8 creates reciprocal rights and imposes reciprocal duties that either party may enforce.

       To determine which interpretation is correct, and to determine whether an
actual ambiguity exists, we read Paragraph 8 in the context of the entire agreement,
using "[e]ach clause . . . to help interpret the others." N.D. Cent. Code Ann. § 9-07-
06. See also Spagnolia v. Monasky, 660 N.W.2d 223, 228 (N.D. 2003) ("'The
intention of the parties to a contract must be gathered from the entire instrument and
not from isolated clauses.'" (quoting Vanderhoof v. Gravel Prods., Inc., 404 N.W.2d
485, 491 (N.D.1987))). Placing Paragraph 8 in context, it becomes apparent that
Paragraph 8 should not be read as a grant of rights to Racing Services. The parties
elected to place the limited set of specifically enumerated rights assigned to Racing
Services within Paragraph 2 itself and to fashion Paragraphs 3–8 as fully contained,
separate statements apart from the introductory language of Paragraph 2. Read
otherwise, it would be necessary to extend the introductory phrase of Paragraph 2,
"only the following specific rights are included in this assignment," to cover the
entirety of Paragraphs 3–8.

       Such a construction simply would not make sense. Paragraphs 2.a and 2.b
clearly and unequivocally grant rights to Racing Services. Paragraphs 3–7 do not.
In fact Paragraph 3 imposes on Racing Services the duty to pay premiums, and
Paragraph 4 specifically identifies rights that Racing Services does not possess. The
introductory language of Paragraph 2 therefore, would make no sense as applied to
Paragraphs 3–7. To believe that the drafters intended the introductory language of

                                         -12-
Paragraph 2 to apply not only to Paragraph 2.a and 2.b, but also to Paragraph 8, we
would have to believe that the drafters intended an unnatural construction in which
the introductory language of Paragraph 2 hopscotched Paragraphs 3–7 to reach
Paragraph 8.

        We find no principled support for such an interpretation. Importantly, because
one of the two possible constructions of Paragraph 8 avoids the issue, we adopt that
construction: the word "shall" in Paragraph 8 applies only to Racing Services and not
to Bala. Only this interpretation accords actual meaning to the limiting, introductory
language of Paragraph 2 and cabins the grant of rights to Paragraph 2. We therefore
conclude that Paragraph 8 is not a source of rights for Racing Services, but rather,
that it imposes upon Racing Services a duty that arises at Bala's option.

       The Trustee argues that such an interpretation renders Paragraph 8 a nullity
because Bala would have no incentive to force such an exchange. We disagree.
Suffice it say, no party alleges that the contract drafters envisioned the bizarre course
of events that led to the liquidation of Bala's policy and, eventually, to this appeal.
In the ordinary course of events, as likely envisioned by the drafters, the Split-Dollar
Agreement could have been terminated by breach or by Bala's departure from
employment with Racing Services. In the event of a termination through breach, the
Trustee's proposed interpretation would serve to reward Racing Services for its
breach by granting access to policy funds it otherwise could not reach. We find
nothing in the Split-Dollar Agreement viewed in its entirety to suggest the parties
intended to vest such power with Racing Services or otherwise reward Racing
Services for a potential breach. In the event of a termination due to Bala's departure
from employment with Racing Services, it is easy to envision situations when she
would choose to buy out the Assignee's interest and situations when she would not.

     For example, upon ending employment in the normal course of events, Bala
would enjoy the ability to remain insured by paying premiums through the automatic

                                          -13-
loan provisions, or through any other means. If Bala were otherwise not able to
procure other insurance (if at the time of such a departure, her health were poor or she
was otherwise uninsurable) she might have a strong incentive to keep her policy in
place. If on the other hand, she did not face any difficulties in procuring additional
insurance or if she obtained employment with an entity somehow adverse to Racing
Services, she might wish to sever entirely her connection to the company, and
termination of the Split-Dollar Agreement could achieve that. Further, the Split-
Dollar Agreement was formed at policy inception and the relative values of the death
benefit, the accrued cash value, and the total premiums paid by Racing Services might
make the likelihood of Bala exercising her various rights wax and wane over time.
In other words, we cannot presume that the values of the various interests as they
existed at the time of policy liquidation are helpful interpretive tools for
understanding Paragraph 8.

        Further, we view the underlying argument that Paragraph 8 would be a nullity
if not interpreted in the Trustee's preferred fashion is, at its heart, an assertion that the
contrary interpretation would lead to absurd results. Namely, because the Trustee
believes Racing Services obtained a broad assignment of rights akin to a guarantee
of repayment, the Trustee believes it would be absurd to allow Bala to enjoy the value
of the policy without Racing Services first receiving full repayment. The policy
itself, however, clearly permits such a possibility. Under the general loan provision
as well as under the automatic premium payment loan provision, Bala could have
allowed the cash value to dwindle to zero. Although the Trustee insisted at oral
argument that Bala could not borrow from the policy, the policy plainly provides for
such loans, and the Trustee has identified nothing in the Split-Dollar Agreement or
in the policy that would have empowered Racing Services to interfere had Bala
elected to take policy loans and leave nothing for Racing Services (other than the
Paragraph 2.b claim to proceeds upon her death). Given the presence of the loan
provisions in the policy (which is incorporated into the Split-Dollar Agreement), we



                                            -14-
simply cannot adopt an interpretation that is premised on the purported extra-textual
intent to grant broad rights or guarantees to Racing Services.

       Because Paragraph 8 does not grant any rights to Racing Services to demand
that Bala buy out its interest, the Trustee cannot claim that Paragraph 8 entitles it to
retain the policy's liquidation proceeds.

       Finally, to the extent the Trustee urges us to examine the "equities" of this case
and treat Bala's failure to reinstate the policy as an act of surrender, we note two
particularly clear points. First, the October 2006 order to substitute the policy for
forfeiture was not akin to a forfeiture provision in an original criminal judgment.
Rather, the order granted the DOJ authority to "seize the . . . property and maintain
custody and control of the property and inspect and appraise the property pending the
entry of a Final Order of Forfeiture." The October 2006 Order also required the DOJ
to follow notice requirements and to avoid disposition of the property until expiration
of the notice period or until resolution of competing claims. The DOJ could not
obtain title to the property until expiration of such period or resolution of such claims.
See, e.g., Fed. R. Crim. Pro. 32.2(b)(3) (listing the limited authority granted to the
DOJ through a preliminary order). In short, the DOJ did not step into Bala's shoes
and obtain full rights to the policy when the district court entered the October 2006
order.

       Second, even before her criminal conviction was overturned, the district court
raised the issue of an absence of notice, calling into doubt the validity of that order
and clearly suspending any claims the DOJ might have been making to ownership
over the Policy. We note this fact because, although the equities of the entire history
of this matter may not be clear, it is clear to our court that the policy was terminated
in an inequitable manner without court approval at the apparent behest of the DOJ
which, at the time, had the duty to preserve the policy but not the right to cancel it.
Notwithstanding Bala's presently recognized right to obtain the policy's liquidation

                                          -15-
proceeds, the actions of the terminating party deprived her of her insurance death
benefit.

       For this reason, and because the Trustee has presented no evidence
demonstrating that Bala could have demonstrated insurability, we reject the argument
that the purported "equities" of this case require that we deem Bala's failure to
reinstate the policy as an act of surrender.

III.   Conclusion

      We reverse the judgment of the BAP and remand for further proceedings
consistent with this opinion.

RILEY, Chief Judge, concurring in the judgment.

      This is an unusual case with unusual facts. A flawed forfeiture prosecution by
the U.S. Attorney for the District of North Dakota erroneously altered the relationship
between Bala and Racing Services’s bankruptcy estate regarding Bala’s life insurance
policy. Though not faultless, neither Bala nor the bankruptcy trustee are truly to
blame for this predicament. The trustee, as he should, seeks to maximize the
bankruptcy estate. Bala understandably seeks to return to the position nearest the one
she held before the forfeiture proceedings.

      The difficult question at this point is: Who has a superior claim to the cash
proceeds of Bala’s insurance policy under the unusual circumstances of this case?
Whose position will improve at the expense of the other? For slightly different
reasons, the bankruptcy court and the Bankruptcy Appellate Panel decided the
bankruptcy estate should recover the cash proceeds to reimburse the premiums
Racing Services paid. Although their rationales are not without merit, I am unable
to agree with their conclusions. As the majority explains, the plain language of

                                         -16-
paragraph 2.a of the collateral assignment agreement gave Racing Services limited
rights in the “cash surrender proceeds” of the policy only “upon surrender of the
policy by the Assignor [Bala].” (Emphasis added). Because that condition was not
satisfied on the unusual facts of this case under North Dakota law, the bankruptcy
estate never obtained rights to the policy proceeds, and Bala has the superior claim
to the liquidated cash value of her policy. Based on the plain language of the
assignment agreement, I concur in the decision to reverse the grant of summary
judgment to the trustee.
                       ______________________________




                                       -17-
