Case Summaries — The September Bankruptcy Court Opinions

The following are summaries of the September opinions posted on the Massachusetts Bankruptcy Court’s website.

DeGiacomo v. Tashmoo Cove Realty, Inc. (In re Northwood Properties, LLC), Adv. P. No. 10-1314, Bankr. No. 05-18880-FJB (September 3, 2014).

The Chapter 7 Trustee sought damages against Tashmoo Cove Realty, Inc. (“Tashmoo”), an owner of the Debtor and a proponent of the Debtor’s confirmed, but subsequently failed, Chapter 11 plan, for breach of plan funding obligations. All of the counts in the Trustee’s complaint were predicated on Tashmoo having made some sort of promise to pay administrative claims, including professional fee claims. After a trial, however, the bankruptcy court found that no factual support existed for the Trustee’s contention that there existed on the date of the confirmation hearing or otherwise any agreement that Tashmoo would fund administrative claims. Instead, the court found that “every reference to professional fee claims, no matter by whom made, carried with it an indication that there was no expectation of effective date payment and no then-existing agreement that Tashmoo would fund those claims.” Accordingly, the bankruptcy court entered judgment for Tashmoo.

Agin v. PNC Mortgage (In re Spodris), Adv. P. No. 11-305, Bankr. No. 11-15925-WCH (September 4, 2014).

Prepetition, the Debtor and a non-debtor third party granted a mortgage on property they owned as joint tenants to the defendant.  The Chapter 7 Trustee avoided the Debtor’s transfer of the mortgage as preferential and then sought a monetary judgment for the value of the mortgage the Debtor transferred.  The issue was whether avoidance of the mortgage and its preservation for the estate pursuant to § 551 was sufficient to place the estate in a position it would have been prior to the transfer, or if a monetary judgment  under § 550 was necessary to do so.  The Court denied the Trustee’s request for a monetary judgment, holding that preservation of the lien for the estate was sufficient, and the difficulty in administering the interest was not a special circumstance warranting a monetary judgment in this case.

In re Kevin Spring, Bankr. No. 14-12205-JNF (September 4, 2014).

A pro se Debtor filed a chapter 7 bankruptcy case on the eve of a civil trial where his sister asserted twenty-two counts against him for myriad misdeeds.  Debtor failed to file any statements or schedules pursuant to 11 U.S.C § 521, and he failed to comply with credit counseling requirements pursuant to 11 U.S.C. § 109.  Further, amongst other things, he missed hearings, other Court imposed deadlines, and the 341 meeting.  The court provided an analysis on the minimum requirements needed for a Debtor to show cause to dismiss his own case.  In light of the lack of creditors filing notices of appearance, the lack of oppositions to his motion to dismiss, and despite Debtor’s failure to timely file statutorily required documents and attend Court established hearings, the case was dismissed.

Mbazira v. OCWEN Loan Serv., LLC (In re Mbazira), Adv. P. No. 14-1055, Bankr. No. 13-16586-WCH (September 11, 2014).

In this adversary proceeding, the Debtor sought to avoid a first mortgage arguing that the acknowledgment was materially defective.  The issue of first impression tackled by Judge Hillman was “[w]hether a mortgage encumbering registered land, whose certificate of acknowledgment mistakenly omits the mortgagor’s name, but which mortgage was accepted by the Land Court for registration and is noted on the certificate of title of such registered land, provides constructive notice.”  The Court analyzed the statutory text governing registered land and concluded, just like two decisions concerning unregistered land, that a mortgage with a materially defective acknowledgment does not provide constructive notice and therefore can be avoided in the context of 11 U.S.C. § 544(a)(3).  Because the Court resolved the motion to dismiss issue based on statutory text, there was no need to certify the question to the Massachusetts Supreme Judicial Court.

In re C.R. Stone Concrete Contractors, Inc., Bankr. No. 05-11119-WCH (September 15, 2014).

The Bankruptcy Court approved the Chapter 7 Trustee’s unopposed 9019 settlement motion and recommended that the District Court approve any stipulations of dismissal filed in connection with the underlying consolidated civil action (which had been previously transferred to the District Court after a withdrawal of the reference).  Because the reference for the main case had never been withdrawn, the District Court had directed the Trustee to file the settlement motion with the Bankruptcy Court.  The Bankruptcy Court reviewed the settlement and concluded that the Trustee had properly exercised his business judgment in reaching a fair and reasonable result.

Taatjes v. Maggio (In re Maggio), Adv. P. No. 14-1025, Bankr. No. 13-16257-JNF (September 22, 2014).

The matters before the court were cross-motions for summary judgment filed by the Plaintiffs and the Defendant, Debtor, in connection with alleged fraud committed by the Debtor that resulted in losses sustained by the Plaintiffs.  In denying Plaintiffs’ motion, the court held that in the absence of a fiduciary relationship between the Plaintiffs and the Debtor, Plaintiffs could not use collateral estoppel to establish that debts owed to them by the Debtor as a result of a state court judgment were nondischargeable under Section 523(a)(4) of the bankruptcy code. As for the Debtor, the court held that the evidence in support of her motion contradicted factual findings of the state court, as well as medical records submitted by the Plaintiffs, and therefore Debtor was not entitled to summary judgment.

Orumwense-Lawrence v. Osula (In re Osula), Adv. P. No. 10-1174, Bankr. No. 09-19922-JNF (September 30, 2014).

In this adversary proceeding, the Plaintiff sought a determination that the debt owed to him for the Debtor’s alleged misrepresentations, fraud, or defalcation while acting in a fiduciary capacity and embezzlement in connection with his use of Plaintiff’s property while the Plaintiff was detained by the United States Immigration and Naturalization Service is excepted from discharge pursuant to 11 U.S.C. § 523(a)(2)(A) and (4).  After a trial, the Bankruptcy Court ruled that, with the exception of a $62,200 embezzlement claim, the Plaintiff failed to establish that the Debtor owed any part of the $600,000 debt asserted to exist, let alone a nondischargeable debt under 11 U.S.C. § 523(a)(2)(A) or (4).  The embezzlement claim was found to be nondischargeable pursuant to 11 U.S.C. § 523(a)(4).


Contributions by:

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

Absolute Priority is now the Disclosure Statement

Absolute Priority is now the Disclosure Statement, continue to expect the same great coverage of the issues important to the bankruptcy bar. If you subscribed to Absolute Priority you will continue to receive notifications without interruption.

B.A.P. To Hold Oral Argument on October 20, 2014 in Boston

On Monday, October 20, 2014, the U.S. Bankruptcy Appellate Panel for the First Circuit (Chief Judge Hillman, Judge Godoy, and Judge Harwood) will hear oral argument. The hearings will be conducted in Courtroom 1 of the U.S. Bankruptcy Court for the District of Massachusetts. The court is located in the McCormack Post Office and Court House, 5 Post Office Sq., 12th Floor, Boston, MA. The hearings commence at 9:30 a.m. and are open to the public. Please be courteous to the Panel and those appearing before the Panel and arrive early. To see the Scheduling Order, please go to the BAP’s website at The cases and issues on appeal are as follows:

The Panel will hear oral argument in the following cases commencing at 9:30 a.m.

RI 14-034 Mary Witkowski v. Kevin Knight (In re: Mary Witkowski)

Issue: Whether the bankruptcy court erred in denying appellant’s request for imposition of sanctions for alleged violations of automatic stay.

RI 14-040 Mary Witkowski v. John Boyajian (In re: Mary Witkowski)

Issue: Whether bankruptcy court erred in denying appellants’s motion to reconsider order dismissing Chapter 13 case.

The Panel will hear oral argument in the following case commencing at 10:30 a.m.:

EB 14-033 Wheeling & Lake Erie Railway Company v. Robert J. Keach, Chapter 11 Trustee of the Montreal, Maine & Atlantic Railway, Ltd. (In Re: Montreal, Maine & Atlantic Railway, Ltd.)

Issue: Whether the bankruptcy court erred in ruling that appellant does not have a valid enforceable and perfected security interest in the cash proceeds of a commercial property insurance policy.


Request for Public Comment on Proposed Amendments to BAP Rules

The U.S. Bankruptcy Appellate Panel for the First Circuit (“BAP”) has provided notice that it is seeking public comment on its amendments to the First Circuit BAP Local Rules. The proposed amendments were drafted in response to the amended Part VIII rules of the Federal Rules of Bankruptcy Procedure which will take effect on December 1, 2014. 

Please click on the link below for the official notice from the BAP:

Notice of Request for Comment on Proposed Amendments to the First Circuit BAP Local Rules


What’s in a Name?

In yet another decision addressing a potentially defective mortgage recorded in Massachusetts, Judge Boroff ruled that where a Debtor regularly used two last names spelled differently, either was legally sufficient. Therefore, a mortgage recorded under either spelling provided constructive notice to a Chapter 7 Trustee and the mortgage could not be avoided.   The decision is Steven Weiss, Trustee vs. JPMorgan Chase Bank, N.A., Adversary Proceeding Number 14-3001 issued on September 29, 2014.

The Debtor, Yvette Thibault filed a Chapter 7 bankruptcy proceeding on October 30, 2013. The Petition indicated that the Debtor was also known as Yvette Thibeault. The Debtor and her husband acquired their principal residence in 1964. The deed recited their last names as Thibeault. Thereafter the Debtor and her husband entered into a series of 6 mortgages (5 of the mortgages had been discharged prior to case commencement), 5 under the name Thibeault and 1 under the name Thibault. The sole remaining mortgage on the property at case commencement used the name Thibeault and this was the mortgage that the Trustee sought to avoid. The Debtor and her husband also recorded a “Certificate of Correction in Name of Owner of Real Estate” stating “our present name is ‘George and Yvette Thibault.’”  The Debtor’s drivers’ license listed the Debtor’s last name as Thibault.

The Trustee urged the Court to find that the mortgage was defective because the mortgage was not recorded using the “legally correct” spelling of the Debtor’s last name, which in the Trustee’s view was Thibault – the name that appeared on the Bankruptcy Petition, on the Debtor’s drivers’ license and in the Certificate of Correction. The Court disagreed, finding that under Massachusetts common law, “unless adopted for a fraudulent or nefarious purpose”, a person may be known by more than one name.  Because the Debtor regularly spelled her name with, and without, an “e”, both names were legally valid. The Court cites a long line of Massachusetts cases for the proposition that “recording under any name by which a person is known constitutes constructive knowledge of the instrument” and, therefore, the mortgage in question, containing a correct spelling of one of the Debtor’s two last names, could not be avoided by the Trustee.

My sense is that a key fact in the case was that the surnames on the challenged mortgage matched the surnames on the Deed. Indeed, in footnote 7 of the decision, the Court notes that its decision should not lead to “mischief” (e.g. debtor’s claiming multiple names) because M.G.L. ch. 184, Section 25 provides that “an instrument is ‘recorded in due course’ only if ‘so recorded in the registry of deeds . . . as to be indexed in the grantor index under the name of the owner of record.’” The lesson for counsel is clear – carefully review source documents to be sure spellings are accurate and for any hint that a party may be known by more than one name.

Contributed by:

Donald R. Lassman

Law Office of Donald R. Lassman
[email protected]

Restructuring Bankruptcy through Mediation: Why in Bankruptcy, Imitation is the Sincerest Form of Learning

Bankruptcy mediation is the solution to reducing the skyrocketing costs of bankruptcy litigation.  John L. Joy, a 3L at Boston College Law School, and regular contributor to this blog, explores the use of bankruptcy mediation as a successful alternative to litigation.  Mr. Joy examines the mediation process used in Enron, Lehman Brothers, and Dewey & LeBoeuf and, as such, concludes that judges, attorneys and interested parties are well advised to look to the prior implementation of successful bankruptcy mediation procedures and protocol.

To read the full article please click this link:  RESTRUCTURING BANKRUPTCY THROUGH MEDIATION ARTICLE


On August 6, 2014, Judge William Hillman issued a decision in In re Marybeth Bauer Williams, 14-10559-WCH, addressing an issue of great importance to consumer bankruptcy lawyers. Judge HIllman was presented with an issue of first impression in Massachusetts that required him to interpret Section 11 of the Massachusetts Homestead Law which provides protection for proceeds generated by the sale of homestead property. That Section provides in relevant part that if a home is sold, the proceeds received on account of the sale are entitled to the protection of the Homestead statue “for a period ending on the date on which the person benefited by the homestead either acquires another home the person intends to occupy as a principal residence or 1 year after the date on which the sale or taking occurred, whichever first occurs.” In Williams, the Chapter 7 Trustee asserted that the protection afforded homestead proceeds terminated because the proceeds were not reinvested within one year and Judge Hillman agreed with the Trustee.

The Facts – The Debtor owned a home with her spouse. The parties separated and agreed to sell their home and split the proceeds, which they did on March 29, 2013, each receiving $31,640.49. The Debtor filed Chapter 7 on February 13, 2014, within one year of the sale of the home, listing $29,000.00 in a bank account on Schedule B and claiming the funds as exempt proceeds from the sale of her home on Schedule C pursuant to the Massachusetts Homestead Statute. The one year period provided under Section 11 of the Homestead statute expired post-petition on March 29, 2014 and the Debtor had not yet re-invested the proceeds in a new home. The Chapter 7 Trustee filed an objection to the homestead exemption, asserting that the Debtor’s exemption claim had vanished by operation of law and that all the proceeds in the bank account were property of the estate available for distribution to the Debtor’s creditors.

The Ruling – The Debtor argued that her exemption was fixed on the petition date – the proceeds were exempt on the date the petition was filed and that could not change with the passage of time. The Court acknowledged the general rule that exemptions are determined when a petition is filed but noted that the scope of the exemption must be determined by state law. The Court first explored the nature and extent of the protection afforded proceeds generated by the sale of homestead property by the Massachusetts statute, stating that the “protection afforded sale proceeds is not absolute.”   The Court noted that the effect of the one year limitation in Section 11 was not to terminate the homestead exemption but rather to limit its term. The Court also found that the time limit in Section 11 did not conflict with the Bankruptcy Code. Therefore, the Court concluded that the temporal limitation in Section 11 of the Homestead Statute was enforceable and ruled that the protection afforded the Debtor’s proceeds by Section 11 had expired. However, because the Debtor’s divorce proceeding was not yet concluded, the Court continued the Trustee’s objection generally, finding that the proceeds were exempt under Section 6 of the Massachusetts Homestead Statute until the Probate proceedings were concluded and the parties rights to marital property were fixed.

Takeaway – The one year time limit in Section 11 of the homestead statute is enforceable post-petition. Proceeds generated by the sale of homestead property that are not invested in a new homestead within one year after the sale date, even if the expiry of the one year period occurs post-petition, are not exempt from creditor claims.

Contributed by:

Donald R. Lassman
Law Office of Donald R. Lassman
[email protected]

Bankruptcy Section — Important 2014-2015 Dates

Kickoff Reception – Thursday, September 4, 2014 at BBA from 5:30 to 7:30 p.m.

Steering Committee Meetings (SECOND Friday of every month at 8:30 a.m.)

September 5, 2014 – Rescheduled due to BBA Programming
October 10, 2014
November 14, 2014
December 5, 2014 – Rescheduled due to BBA Programming
January 9, 2015
February 13, 2015
March 13, 2015
April 10, 2015
May 8, 2015
June  12, 2015

Bankruptcy Section Brown Bag Dates (SECOND Tuesday of every month at noon).

September 9, 2014
October 14, 2014
November 4, 2014  – Rescheduled due to Veteran’s Day
December 9, 2014
January 13, 2015
February 10, 2015
March 10, 2015
April 14, 2015
May 12, 2015
June 9, 2015

25th Annual Bankruptcy Bench Meets Bar Conference – Omni Parker House Thursday, May 14, 2015

Welcome from the Section Co-Chairs

Welcome to the Bankruptcy Section!

Please join us on Thursday September 4, 2014 from 5:30 to 7:30 pm for the BBA Bankruptcy Section’s annual “kick-off” event. We are pleased that two distinguished chapter 7 trustees, Mark DeGiacomo of Murtha Cullina and Lynne Riley of Casner & Edwards, have agreed to share brief remarks about recent experiences briefing and arguing issues before the US Supreme Court. In addition, we will provide a brief overview of the coming year and, of course, allow plenty of time for networking.

The Section’s long-standing commitment to monthly “Brown Bag” lunches will continue this year – offering legal education seminars, training sessions and other social get-togethers covering timely consumer and business bankruptcy topics as well as strategic practice pointers for all of our members. The first Brown Bag lunch will be held on Tuesday, September 9th at the BBA, 16 Beacon Street in Boston.   A complete list of dates will be posted shortly.

The Bankruptcy Section is a forum for discussion and exchange of ideas, for professional training, for volunteerism and for dialogue among the bankruptcy bar and bench, seeking the improvement of the profession as a whole. The Bankruptcy Section is made up of many committees, each lead by volunteer co-chairs representing the diversity of bankruptcy practice in Greater Boston. In addition, the Section has appointed a number of member-liaisons to work with other sections of the BBA.

The Bankruptcy Section maintains a website with information about the Section and its upcoming programs, bankruptcy related news and information about our members and their achievements. See   We invite you to consult the site often, join the distribution list for the blog which is accessible on the site and contribute your news and insights with us.

Once again, welcome, and we hope you will become involved with the Bankruptcy Section and the BBA. If you would like to participate or learn more about Bankruptcy Section activities, please contact us.


John & Adam

John G. Loughnane                              Adam J. Ruttenberg

Nutter McClennen & Fish LLP             Looney & Grossman, LLP


The Volunteer Lawyers Project of the Boston Bar Association (VLP) provides free civil legal assistance to low-income residents of Greater Boston, primarily through the pro bono services of private attorneys.  With your help, VLP makes access to justice possible for people who cannot afford a lawyer.

The following attorneys are commended for accepting a bankruptcy case from VLP during the months of May and June:

David Baker

Eric Blythe

Peter Fellman

Scott Hubbell

Marques Lipton

Henry Mitcheson

Joanna Morris

Kristofer Munroe

Nina Parker

Steven  Pohl

Adrienne Walker

Kevin Walsh

Neil Warrenbrand

Benjamin Zalman