Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

Debtor filed a voluntary petition for Chapter 13 bankruptcy. The bankruptcy court appointed a Trustee and confirmed Debtor’s Chapter 13 plan, which contained a tax return production requirement. When the Trustee received neither a copy of Debtor’s tax return under the tax return production requirement nor a request for an extension, the Trustee filed a motion alerting the bankruptcy court to Debtor’s failure to comply with the tax return production requirement. When Debtor belatedly furnished Trustee with a copy the extension request, the bankruptcy court imposed a $100 sanction on Debtor. The district court upheld the sanction. the First Circuit rejected Debtor’s challenge to the sanction, holding that the district court did not err in upholding it. View "Charbono v. Sumski" on Justia Law

The four debtors involved in these bankruptcy appeals all failed to timely file their Massachusetts income tax returns and failed to pay their taxes. Each debtor eventually filed his late tax returns but still failed to pay the taxes that were due. Each debtor eventually filed for Chapter 7 bankruptcy and sought a ruling that their obligation to pay the unpaid taxes was dischargeable. The Massachusetts Department of Revenue argued that unpaid taxes for which no return was timely filed by the Commonwealth’s statutory deadline fit within an exception to discharge under 11 U.S.C. 532(a)(1)(B)(i). The bankruptcy courts split three to one in favor of the debtors. In the two cases appealed to the Bankruptcy Appellate Panel (BAP), the BAP sided with the debtors. In the two cases appealed to the district court, the court granted summary judgment to the Department. The First Circuit affirmed the district court’s judgment in favor of the Department and reversed the BAP’s grant of judgment for the debtors, holding that a Massachusetts state income tax return filed after the date by which Massachusetts requires such returns to be filed does not constitute a “return” under 11 U.S.C. 523(a) such that unpaid taxes due under the return can be discharged in bankruptcy. View "Fahey v. Mass. Dep’t of Revenue" on Justia Law

T&N Limited (T&N), an asbestos manufacturer, chose to address the liability it faced after the deadly qualities of asbestos were discovered through a Chapter 11 bankruptcy reorganization plan (the Plan). Then Plan transferred to a Trust certain of T&N’s assets and rights, with which the Trust was to pay asbestos claims brought by persons who could have sued T&N but for T&N's bankruptcy. The Plan provided that T&N’s asbestos liability would continue after plan confirmation and that the Trust would bring asbestos suits against T&N as the agent of the actual claimants. In this lawsuit, the Trust brought an asbestos claim that had accrued a decade earlier. The district court dismissed the Trust’s suit on statute of limitations grounds, thus rejecting the Trust’s argument that it was allowed to bring asbestos claims that had not become stale prior to T&N’s filing for bankruptcy protection whenever it wished to do so. The First Circuit affirmed, holding that the Trust’s argument failed because the Plan unambiguously terminated the automatic stay and contained no provision that provided for any further tolling of the limitations period beyond that granted by the Bankruptcy Code. View "Barraford v. T&N Ltd." on Justia Law

Appellant sued Appellees in Massachusetts state court, asserting claims for, inter alia, embezzlement and fraud. Appellees subsequently filed for bankruptcy, and the state court stayed Appellant’s action. The bankruptcy court granted Appellees a discharge. Appellant challenged two orders issued by the bankruptcy court after it granted the discharge. The district court affirmed the bankruptcy court’s order on Appellant’s “motion to affirm,” which requested the bankruptcy court to rule that the discharge it granted Appellees had no effect on Appellant’s right to pursue his claims against Appellees against them in state court, and affirmed the bankruptcy court’s denial of Appellant’s motion for reconsideration of the order denying his motion to affirm. The First Circuit affirmed, holding that the bankruptcy court did not err in its rulings in its order on Appellant’s motion to affirm or in denying Appellant’s motion for reconsideration.View "Moushigian v. Marderosian" on Justia Law

Pinpoint and Atlas filed federal court actions against each other based on a 2009 contract between them. Two months after answering and counterclaiming Pinpoint in the Virginia action, Atlas filed for bankruptcy under Chapter 7 of the Bankruptcy Code. Atlas's filing automatically stayed the Virginia and Puerto Rico actions. At issue was Pinpoint's appeal from the Bankruptcy Appellate Panel's judgment dismissing Pinpoint's challenge to the bankruptcy court's no-stay-relief order. The court rejected the blanket-rule approach and, like the Third Circuit, held that it was possible that in some cases an order denying stay relief may lack finality. Because the order denying stay relief in this case was not final, the court dismissed Pinpoint's appeal for lack of jurisdiction.View "Pinpoint IT Services, LLC v. Atlas IT Export, Corp." on Justia Law

After an Attorney’s representation of the Debtor in this current action ended, the Debtor was left owing the Attorney $62,000. The Debtor later filed petition for bankruptcy protection and listed the amount owing to the attorney among her scheduled debts. The Attorney filed an adversary proceeding asserting that the debt was nondischargeable because it had been incurred through false pretenses and a false representation. The bankruptcy court dismissed the adversary proceeding, concluding that the Attorney had not carried her burden of proving her claims. The Bankruptcy Appellate Panel upheld the dismissal. The First Circuit affirmed, holding that the bankruptcy court did not err in determining that the Attorney failed to carry her burden of proving that the debt was nondischargeable.View "deBenedictis v. Brady-Zell" on Justia Law

John Zullo paid David Lombardo to perform work in Zullo’s house. Lombardo, however, had misrepresented his credentials, and Zullo incurred additional expense to have the inadequate work fixed. Zullo subsequently obtained a Massachusetts state court judgment against Lombardo, which Lombardo never paid. After Lombardo later filed for Chapter 7 bankruptcy, Zullo began an adversary proceeding in the bankruptcy court, alleging that Lombardo’s debt to him was nondischargeable under 11 U.S.C. 532(a)(6), which excepts from bankruptcy discharge “any debt…for willful and malicious injury by the debtor to…to the property of another entity.” The bankruptcy court ultimately granted summary judgment for Lombardo on the 11 U.S.C. 532(a)(6) claim, and the Bankruptcy Appellate Panel affirmed. At issue before the First Circuit was whether the bankruptcy court erred in denying Zullo’s request for leave to amend his complaint. The First Circuit affirmed, holding that the bankruptcy court did not abuse its discretion in denying Zullo’s request where Zullo provided no explanation for the seventeen-month delay between filing his complaint and seeking leave to amend. View "Zullo v. Lombardo" on Justia Law

In 2005, Debtor secured a loan with a mortgage on her home and stayed current on all mortgage payments on the property. Debtor’s bank, however, failed to record the mortgage with the appropriate registry. In 2011, Debtor filed a petition for Chapter 7 bankruptcy. Although Debtor’s home was subject to a homestead exemption, the Trustee of Debtor’s bankruptcy estate sought to sell the home as property of the bankruptcy estate. Accordingly, Trustee filed a complaint to avoid the unrecorded mortgage and to preserve it for the benefit of the estate. The bankruptcy court granted summary judgment for the Trustee, and the Bankruptcy Appellate Panel (BAP) affirmed. The First Circuit reversed, holding that the Trustee’s lien avoidance and preservation powers did not justify him in selling Debtor’s home as property of the bankruptcy estate. View "Degiacomo v. Traverse" on Justia Law

Appellant-property owner filed a Chapter 13 petition for bankruptcy and subsequently filed a third amended reorganization plan proposing to bifurcate Appellee-mortgagee’s claim into secured and unsecured portions. The bankruptcy court denied confirmation of the plan and ordered Appellant to file an amended plan. Appellant appealed and also filed a motion for leave to appeal the bankruptcy court’s interlocutory order. The Bankruptcy Appellate Panel (BAP) granted the motion and affirmed the bankruptcy court’s denial of confirmation. Appellant subsequently filed a notice of appeal and motion for certification of the appeal, which the BAP denied. The First Circuit Court of Appeals issued an order to show cause why the case should not be dismissed for lack of jurisdiction because the BAP’s order affirming the denial of the confirmation did not appear to be a final order. The First Circuit dismissed Appellant’s appeal, holding (1) an intermediate appellate court’s affirmance of a bankruptcy court’s denial of confirmation of a reorganization plan is not a final order if the debtor may still propose an amended plan; and (2) therefore, the Court lacked jurisdiction to hear this appeal. View "Bullard v. Hyde Park Savings Bank" on Justia Law

This appeal concerned a heavily contested Chapter 11 bankruptcy proceeding. After the bankruptcy court determined a secured creditor’s entitlement to post-petition interest under 11 U.S.C. 506(b) and confirmed the debtors’ Chapter 11 plan, the secured creditor appealed to the Bankruptcy Appellate Panel for the First Circuit (“BAP”). The BAP reversed in part, vacating and remanding the confirmation order and significantly increasing the secured creditor’s entitlement to post-petition interest under section 506(b). The City of Boston, as a junior creditor, and the debtors appealed. The First Circuit Court of Appeals (1) vacated the BAP’s section 506(b) order, holding that the BAP erred in reversing the bankruptcy court’s post-petition interest determination; and (2) vacated the BAP’s confirmation order because it was based solely on the BAP's erroneous interest determination. View "SW Boston Hotel Venture, LLC v. Prudential Ins. Co." on Justia Law