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

The underlying dispute in this case concerned a mortgage purported granted by Andrew and Maureen DeMore to the predecessor in interest to HSBC Bank, USA, N.A. on a parcel of property owned by the DeMores. This appeal came by way of bankruptcy court after each of the DeMores filed separate voluntary petitions for bankruptcy under Chapter 7 of the Bankruptcy Code. Donald Lassman, as trustee for the DeMores’ bankruptcy cases, filed adversary actions against HSBC to avoid the mortgage, arguing that the mortgage on the DeMores’ property was voidable under Massachusetts state law because the certificate of acknowledgment was “materially defective.” Specifically, Lassman asserted that the certificate failed to make clear that the DeMores executed the mortgage as their free act and deed. The Bankruptcy Court granted summary judgment to Lassman. The district court reversed. The First Circuit affirmed, holding that the certificate of acknowledgment was not materially defective because it made clear that the DeMores had executed the mortgage as their free act and deed. View "HSBC Bank USA, N.A. v. Lassman" on Justia Law

The Centers for Medicare & Medicaid Services (CMS) terminated its Provider Agreement with Parkview Adventist Medical Center after finding that Parkview was no longer a “hospital” under the Medicare statute. Parkview, which had filed for bankruptcy, attempted to use the Bankruptcy Code to challenge the actions of CMS in terminating the agreement. Parkview filed a motion to compel post-petition performance of executory contracts, arguing that the Provider Agreement was an “executory contract” under 11 U.S.C. 365 and accordingly within the bankruptcy court’s jurisdiction and, as such, CMS’s termination of the agreement was a post-petition termination without court authority in violation of the Bankruptcy Code. Further, Parkview argued that CMS’s termination of the Provider Agreement violated the automatic stay in 11 U.S.C. 362(a)(3) and the non-discrimination provision in 11 U.S.C. 525(a). The bankruptcy court concluded that it lacked jurisdiction over the motion and that CMS had not violated either the automatic stay or the non-discrimination provision. The district court affirmed. The First Circuit affirmed, holding (1) the automatic stay did not bar CMS’s termination of the Provider Agreement; and (2) CMS’s termination of the Provider Agreement was not impermissible discrimination. View "Parkview Adventist Medical Center v. United States" on Justia Law

Appellant, a financially sophisticated individual, petitioned for bankruptcy. A bankruptcy court denied the petition, in part, because Appellant omitted the existence of his Cash Balance Plan (CBP), a retirement account, from his Schedule B filing. When questioned on whether he had a CBP that he failed to list on his Schedule B, Crawford said, “I gave all this information to [my former attorney].” Crawford, however, did disclose the account’s value through inclusion with a second retirement account, a 401(k). The bankruptcy court concluded that Crawford’s failure to include his CBP in his schedule B amounted to a false oath. The District of Massachusetts affirmed the false oath claim. The First Circuit affirmed, holding that, by omitting an account from his Schedule B, Appellant committed a false oath. View "Premier Capital, LLC v. Crawford" on Justia Law

Patrick Hannon and his wife sought protection from their creditors by filing a voluntary bankruptcy petition under Chapter 11 of the Bankruptcy Code. Three companies filed an adversary complaint against Hannon in the bankruptcy proceeding objecting to his discharge in bankruptcy. The Companies then moved for partial summary judgment on their claim that Hannon had made a false oath or filed a false account in connection with his bankruptcy proceeding, and therefore, he should be denied a discharge. After a hearing, the bankruptcy judge granted summary judgment in favor of the Companies and refused to grant Hannon a discharge in bankruptcy. The First Circuit affirmed, holding that the Companies were entitled to judgment as a matter of law because Hannon made a false statement under oath in the course of his bankruptcy proceeding, Hannon did so knowingly and fraudulently, and the false statement related to a material fact. View "Hannon v. ABCD Holdings, LLC" on Justia Law

Robert Harris sought to recover in federal bankruptcy court a real estate broker’s commission that he alleged he was owed by Rosa Scarcelli and Oak Knoll Associates, LP (together, Oak Knoll). The bankruptcy court granted Oak Knoll’s motion for summary judgment, concluding, as a matter of law, that Harris was not owed a commission. The First Circuit affirmed, holding that the bankruptcy court correctly granted summary judgment in favor of Oak Knoll, as (1) Harris’s proof of claim for his unpaid commission was unenforceable against Oak Knoll; and (2) Harris failed to identify a right that would entitle him to equitable relief. View "Harris v. Scarcelli" on Justia Law

As an individual and doing business as Halloween Costume World, Appellant filed a voluntary petition for bankruptcy under Chapter 11 of the Bankruptcy Code. The Trustee filed a motion to dismiss or convert the case to a liquidation proceeding under Chapter 7 of the Bankruptcy Code. The district court granted the motion. The district court affirmed, concluding that cause existed to convert the case to Chapter 7 under section 11 U.S.C. 1112(b)(4)(A). The First Circuit affirmed, holding that there was no error of law or abuse of discretion by the bankruptcy court in converting Appellant’s Chapter 11 bankruptcy case to Chapter 7. View "Hoover, III v. Harrington" on Justia Law

Appellant filed for Chapter 13 bankruptcy protection, and the bankruptcy court set July 19, 2012 as the deadline for creditors to file unsecured claims. The case was dismissed on June 13, 2012 and reinstated on August 1, 2012. On August 7, 2012, Appellee, Appellant’s creditor, sought leave to file an untimely unsecured claim, explaining that it had assumed the July 19 deadline was no longer operative after the case’s dismissal. The bankruptcy court reset the filing deadline to September 6, 2012 and accepted Appellee’s claim. The district court affirmed. The First Circuit affirmed, holding that because the initial statutory ninety-day deadline for Appellee to file an unsecured claim fell in a period between the case’s dismissal and subsequent reinstatement, the claim was timely. View "Gil-De La Madrid v. Bowles Custom Pools & Spa" on Justia Law

Steven Fustolo’s affiliate companies issued four promissory notes to Patton Drive, LLC. Fustolo personally guaranteed two of the notes. When the principal debtors defaulted on all four notes, Patton drive sued Fustolo. The Massachusetts state court found Fustolo liable for breach of contract and entered judgment against Fustolo. Fustolo appealed, challenging the interest due. Meanwhile, Patton Drive joined with two of Fustolo’s other creditors to file a petition seeking to place Fustolo into involuntary Chapter 7 bankruptcy. Fustolo, in turn, asserted that Patton Drive was not qualified it to serve as a petitioning creditor because his pending state court appeal subjected Patton Drive’s judgment to “bona fide dispute as to liability or amount.” The bankruptcy court allowed Patton Drive to join in initiating involuntary bankruptcy proceedings against Fustolo. The district court affirmed, finding that Fustolo’s state court appeal could not raise a bona fide dispute as to Patton Drive’s claim. The First Circuit affirmed, holding that because the amount of Fustolo’s liability on the guaranteed notes was not subject to bona fide dispute, and because Patton Drive’s claim on the guaranteed notes could be considered separately from Patton Drive’s claim on the judgment within which its underlying contract claims were submerged, Patton Drive qualified as a petitioning creditor. View "Fustolo v. 50 Thomas Patton Dr., LLC" on Justia Law

Redondo Construction Corporation filed for Chapter 11 bankruptcy. Through the proceedings, Redondo filed three complaints against the Puerto Rico Highway and Transportation Authority for money owed under construction contracts, alleging that it was entitled to damages and prejudgment interest. The bankruptcy court ruled in Redondo’s favor and found that Redondo was entitled to prejudgment interest. The First Circuit vacated the award of prejudgment interest and remanded. On remand, the bankruptcy court awarded Redondo prejudgment interest on its contract claims under Article 1061 of the Puerto Rico Civil Code, accruing through the payment of principal. The Authority moved to amend the judgment. The bankruptcy court denied the Authority’s motion, and the district court affirmed. The First Circuit vacated the judgment, holding (1) Redondo did not forfeit its claim to prejudgment interest under Article 1061; but (2) 28 U.S.C. 1961 exclusively controls awards of postjudgment interest in federal court, and therefore, the bankruptcy court should not have extended the prejudgment interest accrual period past the entry of judgment. Remanded for a calculation of section 1961 interest and a recalculation of Article 1061 interest. View "P.R. Highway & Transp. v. Redondo Constr. Corp." on Justia Law

Debtor filed a chapter 7 bankruptcy petition seeking to discharge nearly $3,500,000 in unsecured debt. The bankruptcy court denied Debtor a discharge, concluding that Debtor had not satisfactorily explained the disposition of his assets during the period leading up to the filing of his bankruptcy petition. The Bankruptcy Appellate Panel upheld the denial of the discharge on the grounds that Debtor had violated both 11 U.S.C. 727(a)(3) and 11 U.S.C. 727(a)(5). The First Circuit affirmed, holding that because Debtor failed, without any objectively reasonable justification, to keep and preserve records, and because Debtor failed to submit any information resembling a satisfactory explanation for his apparent losses and deficiencies, the bankruptcy court did not err in denying Debtor a discharge. View "Harrington v. Simmons" on Justia Law