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

While the recording of the deed to mortgaged property was in "limbo" because of a defect, the borrowers declared bankruptcy, resulting in a stay under 11 U.S.C. 362. The lender nonetheless presented a corrected deed for registration. The borrowers filed suit and the court ordered that the deed be withdrawn, but denied damages and fees. The bankruptcy appellate panel affirmed. The First Circuit reversed and remanded, stating that there was no justification for disregarding the statutory language concerning awards of damages and fees for willful violation of a stay.

Homeowners fell behind on their mortgage and the bank initiated foreclosure. The homeowners filed a Chapter 13 bankruptcy. The judge denied their motion for rescission of the mortgage and for damages, based on noncompliance with state laws. The district court and First Circuit affirmed. The homeowners signed right-to-cancel forms required under the Massachusetts Consumer Credit Cost Disclosure Act, modeled after the federal Truth in Lending Act (15 U.S.C. 1635); technical flaws in the form cannot serve as a basis for invalidating a transaction five years later. Similarly, a slight delay in receipt of a required high-cost loan disclosure did not justify rescission five years later.

In 2009 the bankruptcy court revoked a 2000 Chapter 7 discharge, finding fraud with respect to a 1997 divorce settlement. The district court and First Circuit affirmed. While the debtor "largely avoided explicit false statements," the debtor allowed the trustee and the court to believe that he was turning over whatever he received to secured creditors, which was not true, and he withheld information about accelerated payments under the divorce settlement.