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

For nearly twenty years, Plaintiff, Condominium Associations, and several IDC development entities disputed the ownership and use of certain property in Rhode Island. IDC Properties constructed and Defendant, IDC Clambakes, operated the Newport Regatta Club on the contested property after Plaintiff asserted that the rights of the IDC entities to own or develop the property had lapsed. The Rhode Island Supreme Court found in favor of Plaintiff. Defendant later declared bankruptcy. This case came to the First Circuit Court of Appeals from a bankruptcy court decision and concerned the question whether Defendant trespassed on Plaintiff's property or whether, through its actions during the pendency of the litigation, Plaintiff impliedly consented to operation of the Club by Defendant while title to the property was in dispute. The First Circuit affirmed the bankruptcy court's decision that Plaintiff impliedly consented to Defendant's operation of the Club, holding that the bankruptcy court's decision was fully reasoned and supported by the evidence. Remanded for a determination whether compensation was owed for Defendant's authorized use and occupancy. View "Goat Island S. Condo., Inc. v. IDC Clambakes, Inc." on Justia Law

ROK Builders LLC (ROK) constructed a hotel for Moultonborough and had a mechanic's lien on the property. 2010-1 SFG Venture LLC (SFG) was the assignee of the construction lender and had a mortgage on the hotel. After Moultonborough filed for bankruptcy, SFG initiated an adversary proceeding against ROK in bankruptcy court, seeking a declaration that its mortgage was senior to ROK's lien to the extent the construction lender had disbursed loan funds to ROK. ROK, in turn, asserted that its lien was senior to SFG's mortgage. The New Hampshire bankruptcy court and district court entered judgment in favor of SFG. The First Circuit Court of Appeals affirmed, holding that the bankruptcy court did not err in concluding that N.H. Rev. Stat. Ann. 447:12-a established the seniority of SFG's mortgage over ROK's mechanic's lien to the extent of the amount of money the construction lender disbursed to ROK. View "ROK Builders, LLC v. 2010-1 SFG Venture, LLC" on Justia Law

During Appellee's chapter 13 bankruptcy, Educational Credit Management Corporation (ECMC) filed a proof of claim based on Appellee's allegedly unpaid student loans. Appellee objected to the claim because she believed her loans had been repaid. The bankruptcy court sustained Appellee's objection. After the bankruptcy concluded, ECMC resumed collection efforts. Appellee reopened her case and filed an adversary complaint against ECMC, alleging that it had violated the order sustaining her objection. The bankruptcy court concluded the order reflected the prior judge's determination that the obligation remaining on ECMC's claim was zero and therefore sanctioned ECMC for attempting to collect on the debt. The bankruptcy appellate panel affirmed. ECMC appealed, arguing that the bankruptcy court never adjudicated the amount outstanding on Appellee's student loans. The First Circuit Court of Appeals affirmed, holding (1) during bankruptcy proceedings, the issue of the amount ECMC would get from Appellee's estate was resolved by way of the subsidiary factual issue of whether the debt had already been repaid; and (2) the bankruptcy court did not err in imposing sanctions, as ECMC's conduct was an abuse of the bankruptcy process. View "Hann v. Educ. Credit Mgmt. Corp." on Justia Law

Plaintiffs filed a Chapter 7 bankruptcy petition and sought to surrender their home. When Plaintiffs' mortgage lenders (collectively, Beneficial) refused to foreclose or otherwise take title to the residence, Plaintiffs demanded that the mortgage lien be released. After Beneficial also refused to release the mortgage lien, Plaintiffs began an adversary proceeding claiming a discharge injunction violation. The bankruptcy court found Beneficial did not violate the discharge injunction. The bankruptcy appellate panel affirmed. Plaintiffs appealed, arguing that because the facts of this case so closely mirrored those in Pratt v. General Motors Acceptance Corp., the same result should follow. The First Circuit Court of Appeals affirmed the bankruptcy court's judgment, holding that the bankruptcy court's legal conclusions were correct and that the court did not err in its judgment. View "Canning v. Beneficial Me., Inc." on Justia Law

Chapter 11 debtor Redondo Construction Corporation brought an adversary proceeding against the Puerto Rico Highway and Transportation Authority (Authority) in the United States Bankruptcy Court for the District of Puerto Rico, claiming amounts due for work performed on five construction projects. Following a lengthy trial, the bankruptcy court awarded Redondo a total of nearly $10,250,000 in damages, plus interest at six percent per annum from the "payment due" date for each project. The district court affirmed the judgment in all respects. The Authority appealed the award of interest. The First Circuit Court of Appeals vacated the district court's judgment primarily with regard to the interest and (1) remanded for assessment of postjudgment interest for the period between the entry of judgment and the date of deposit; (2) vacated the award of prejudgment interest and remanded for a determination of whether an award of prejudgment interest was appropriate; and (3) remanded for modification of the judgment awarding Redondo an excess amount for one claim. View "Redondo Constr. Corp. v. P.R. Highway and Transp." on Justia Law

Defendant filed for bankruptcy. Defendant was later charged with bankruptcy fraud on the basis that she failed to include in the bankruptcy petition information related to her past fraudulent use of credit cards that she obtained under the names of two acquaintances, one of whom was Susan Blake. Defendant was subsequently convicted of two counts of bankruptcy fraud. The First Circuit Court of Appeals reversed the conviction as to Count One, which alleged that Debtor had knowingly and fraudulently failed and refused to disclose debts to three card issuers. The First Circuit held that Count One failed for lack of proof because the prosecution failed to establish that at the time the bankruptcy petition was filed, there were still extant claims held by the issuers against Defendant for merchandise or services Defendant secured through her use of the cards she procured using Blake's name. View "United States v. Marston" on Justia Law

Malley’s former marital house sold shortly before filing his Chapter 7 bankruptcy petition and netted more than $250,000, from which he declared under oath that he had received nothing. The trustee believed that $27,000, allegedly going to the ex-wife, were to be used to discharge Malley’s credit card debt. In taking action against Malley's ex-wife to avoid that disposition, the trustee determined that Malley had hidden his secret receipt of $25,000. Malley claimed he was unable to turn over the money to the trustee when ordered to do so. Malley’s willful concealment of the funds violated 11 U.S.C. 521. When the trustee moved for sanctions, the court denied discharge, under 11 U.S.C. 727, and charged the concealed amount, plus the cost of untangling the fraud, against the value of an asset claimed as exempt, Malley’s truck. The First Circuit affirmed. Fraudulent concealment of non-exempt assets is an exceptional circumstance in which an offsetting surcharge against otherwise exempt property interests is reasonably necessary to protect the integrity of the bankruptcy process and to ensure that a debtor exempts an amount no greater than the Code permits.View "Malley v. Agin" on Justia Law

Sharfarz hired Goguen to build an addition to his house. Despite taking full payment, Goguen never finished the job. Sharfarz had to pay another to finish the work and sued consumer-protection laws, Mass. Gen. Laws ch. 93A; Mass. Gen. Laws ch. 142A. Sharfarz obtained a default judgment of $272,745. After an evidentiary hearing to assess damages, the state judge wrote that Goguen was "both deceptive and unfair, almost from the beginning and to the end," and that his "violations" had been "willful and knowing." Goguen filed for Chapter 7 bankruptcy. Sharfarz sought to have his judgment declared nondischargeable, under a provision that bars discharge of "any debt ... for money ... to the extent obtained by ... false pretenses, a false representation, or actual fraud" 11 U.S.C. 523(a)(2)(A). The bankruptcy judge denied the petition. The First Circuit vacated and remanded for determination of the nondischargeable amount. Goguen’s false statements were both the legal and factual cause of Sharfarz’s loss. View "Sharfarz v. Goguen" on Justia Law

During the early 1990s, debtor Redondo entered into three construction contracts with the Authority: the Patillas project, construction of a bridge and access road; the Dorado project, replacement of a different bridge; the Mayguez project, highway improvements. The Authority retained the right to modify the plans; Redondo had the right to seek extra compensation. Redondo also could claim extra compensation for certain contingencies requiring substantial additional work. Each project encountered unanticipated problems, including unforeseen site conditions and flawed design plans. Redondo completed all three projects and submitted claims for additional amounts owed under the contracts, including claims for two subcontractors on the Mayaguez project. With the claims unresolved, Redondo filed for bankruptcy protection, 11 U.S.C. 1101-1174, and served the Authority with adversary complaints. The bankruptcy court awarded the debtor a total of $12,028,311.92 plus prejudgment interest at 6.5 percent, later reduced by $69,792.26. The district court affirmed. The First Circuit affirmed in part, rejecting claims concerning timely notice on one project and Redondo's standing to assert subcontractor claims. The court vacated and remanded calculation of extended overhead damages and the award of prejudgment interest. View "PR Highway and Transp. Auth. v. Redondo Constr. Corp." on Justia Law

While engaged in a Chapter 7 bankruptcy action, the debtor brought claims against government officials and a police officer, seeking damages for an allegedly illegal search of his property. He did not amend his bankruptcy schedules, as required, to disclose the existence of his claims as newly acquired assets prior to obtaining a discharge from bankruptcy. The court granted summary judgment in favor of the government defendants, on the basis of judicial estoppel. Although failure to disclose his claims did not give debtor an unfair advantage in the civil proceeding, he had successfully adopted a position in the bankruptcy proceeding inconsistent with the position he took in the damages claim. The First Circuit affirmed. To allow debtor to rely on a belated report of the claims, which he had repeatedly denied, "would neither serve the equities of this case nor create the proper incentive for future debtors to disclose assets in a bankruptcy proceeding completely and accurately."View "Guay v. Burack" on Justia Law