The following are summaries of the October opinions posted on the Massachusetts Bankruptcy Court’s website.
In re Garrepy, Bankr. No. 12-44304-MSH (October 6, 2014).
In this case, the Chapter 13 trustee moved for sanctions to be imposed upon the debtors’ attorney, arising out of an amended Chapter 13 plan and amended means test statement in which the debtors took a deduction for a car payment that they no longer were obligated to make because they no longer owned the car. In response, it was argued that the debtors intend to purchase a new car when their finances improve, resulting in approximately the same obligation as the prior car payment. The court ruled that Supreme Court cases, in particular Ransom v. FIA Card Services, N.A., 562 U.S. 61 (2011), rejected this “emergency cushion for car owners” approach. As a result, the court ruled that there was no basis for the amended plan and amended means test, found that the attorney violated Rule 9011(b)(2) and, as a sanction, ordered the attorney to pay $500 to the Chapter 13 trustee and not to charge the debtors for any legal fees or costs in connection with the amended means test, amended plan or the trustee’s motion for sanctions.
Grossman v. Garabedian, Bankr. No. 11-13548-JNF, Adv. P. No. 12-1173-JNF (October 7, 2014).
Throughout the case and after six 341 hearings, it was discovered that Debtor inaccurately scheduled his income, debts and expenses; failed to accurately list his creditors; failed to account for approximately $200,000 in loans; failed to identify his interest in nine business ventures; failed to provide accurate business or personal records (or in some cases, any records at all); and had inconsistent testimonies under verbal and written oath. Trustee sought denial of Debtor’s discharge pursuant to several sections under 11 U.S.C. § 727. After a lengthy analysis of the case law regarding 727 discharge denials, the Court found that Debtor made multiple materially false statements with fraudulent intent, and denied his discharge.
DeGiacomo v. Tobin & Associates, P.C. et al., Bankr. No. 10-11010, Adv. P. No. 12-1091-JNF (October 17, 2014).
The Chapter 7 Trustee initiated an adversary proceeding against Tobin & Associates, P.C. (“T&A”) and obtained a judgment avoiding preferential transfers the Debtor made to T&A. The Trustee then moved for a trustee process attachment to attach funds held in a bank account in the name of Tobin & Gonsalves, P.C. (“T&G”), on the theory that he would be reasonably likely to show that T&G was a mere continuation of T&A so as to render T&G liable for the judgment against T&A. The Court found that, although there was continuity with respect to the clients and employees of T&A and T&G, there were significant changes to the corporate structure and the day-to-day management of the two enterprises. The assets transferred to T&G were of inconsequential value and did not include T&A’s accounts receivable. The Court therefore held that the Trustee had failed to satisfy his burden of proof and denied the Trustee’s motion for a trustee process attachment.
In re Thomas A. Zine, Bankr. No. 08-16984-WCH (October 22, 2014).
The matter before the court was Debtor’s Motion for Sanctions alleging that Bayview Loan Servicing, LLC (“Bayview”), as servicer of Debtor’s mortgage loan, violated the discharge injunction and M.G.L. c. 93A by continuing collection efforts post-discharge. Debtor argued that Bayview repeatedly violated the discharge injunction by reporting the mortgage loan as due and owing to the three credit reporting bureaus, repeatedly calling him seeking to collect the mortgage loan, and sending mortgage statements. The court granted the motion as to the liability of Bayview and scheduled the matter for an evidentiary hearing on damages. Additionally, the court held that Debtor’s claim under c. 93A was improper for two reasons: (1) such a claim must be brought as an adversary proceeding, and (2) “given the Debtor’s discharge and the closure of the bankruptcy estate, the Debtor’s claim was not related to a case under title 11,” therefore, the court lacked jurisdiction to hear it.
Abramov v. Movshovich (In re Movshovich), Bankr. No. 12-13772-FJB, Adv. P. No. 12-01193-FJB (October 23, 2014).
A creditor brought an adversary proceeding seeking a non-dischargeability determination for a debt stemming from an investment in the Debtor’s business. The Debtor was found to have deliberately withheld information that would have shown he was pulling substantial amounts of cash out of the business for personal expenses (and under-reporting corporate sales and income to the taxing authorities). Even after discovering the fraud, the Plaintiff had advanced an additional $50,000 in the hopes that this would facilitate the Debtor’s sale of the business and the repayment of the original investment. The court found sufficient indicia that the Debtor never intended to repay the money advanced and held that the debt (including the late-advanced $50,000) was non-dischargeable under section 523(a)(2)(A). The court also held all but the last $50,000 of the debt was non-dischargeable under section 523(a)(2)(B). Finally, the court found that there was no fiduciary relationship between the parties, and thus refused to hold that any part of the debt was non-dischargeable under section 523(a)(4).
In re Freeman, Bankr. No. 12-10050-JNF (October 27, 2014).
In this Chapter 7 bankruptcy case (converted from Chapter 13), the Debtor sought to avoid two judicial liens because they impaired his homestead exemption. At issue was a deed from the Debtor’s father in which he granted the property to the Debtor “subject to a reserved life estate for the benefit” of the grantor’s daughter. The lien holder argued that the Debtor’s homestead was not valid because he was a remainderman and not an “owner” entitled to claim a homestead pursuant to Mass. Gen. Laws ch. 188, §§ 1, 3. At the conclusion of briefing by the parties and trial, the court concluded that 1) the deed was ambiguous, 2) extrinsic evidence demonstrated the grantor’s intent to grant the property to his son not merely as a remainderman, and 3) the Debtor was entitled to claim a homestead exemption as an “owner” of the property.
Oasis v. Fiorillo, Bankr. No. 10-44179-MSH, Adv. P. No. 11-04001-MSH (October 31, 2014).
Three plaintiffs moved for summary judgment in an action to exclude debt owed to the plaintiffs from the Debtor’s bankruptcy discharge. The debt arose from fees and costs that a state court had previously awarded to the plaintiffs based on its finding that the Debtor had proffered false testimony during trial. Although the Bankruptcy Court acknowledged that a liability like the Debtor’s “would seem to be a good candidate for non-dischargeability,” it determined that a court-ordered sanction like the one that the state court had imposed on the Debtor “simply does not fit” into any of the categories of nondischargeable debt set forth in Bankruptcy Code § 523(a). Accordingly, the Bankruptcy Court (i) denied the plaintiffs’ motion for summary judgment and (ii) set a deadline for the parties to file submissions as to why summary judgment should not enter in favor of the Debtor.
John Joy, Boston College Law School
Devon MacWilliam, Partridge Snow & Hahn
Michael K. O’Neil, Murphy & King
Nathan Soucy, Soucy Law Office
Aaron S. Todrin, Sassoon & Cymrot
Gina Barbieri O’Neil, Mirick, O’Connell, DeMallie & Lougee
Christopher M. Candon, Sheehan Phinney Bass + Green