In re Pena, (1st Cir.BAP (Mass.))

December 17, 2008: Jury - Adversary defendants were not entitled to a jury trial.

A Massachusetts bankruptcy court did not err in denying the adversary defendants' request for a jury trial, the First Circuit's Bankruptcy Appellate Panel (BAP) has held. The defendants did not request a jury trial prior to the bankruptcy court's entry of default, but only did so in their late-filed answer to the Chapter 7 debtors' complaint. The defendants thus had no constitutional right to trial by jury, and they failed to identify a specific federal statute that guaranteed them a right to jury trial.

In re Noyes, (Bkrtcy.D.Mass.)

Debtor Protections - Mortgagee was entitled to relief from automatic stay and co-debtor stay allowing it to foreclose its mortgage.

A Chapter 13 debtor failed to demonstrate the likelihood that she and her son would succeed on the merits of the claims that they had asserted against their mortgagee in state court pursuant to, inter alia, Massachusetts's unfair trade practices law and the Real Estate Settlement Procedures Act, so as to establish a defense to the mortgagee's motion for stay relief by, in effect, establishing the debtor's entitlement to an injunction against the continuation of the mortgagee's foreclosure proceedings pending a merits determination in the state court. Although the debtor presented serious questions about the conduct of the mortgage brokerage firm and its mortgage broker and the propriety of the loan transaction, and possibly could succeed in the state court, in the bankruptcy court she did not tie any misconduct by the firm or the mortgage broker to the mortgagee. Therefore, the mortgagee, which had demonstrated its legitimate claim to the real property owned jointly by the debtor and her co-borrower son, based on their failure to make the required monthly payments, was entitled to relief from the automatic stay and co-debtor stay allowing it to foreclose its mortgage.

In re Keefe, Case No: 06-01198

Discharge - Debtor's depression at seeing financial records was not justification for their destruction.

A Chapter 7 debtor's alleged depression at seeing the financial records of his failing business and desire not to be reminded of his financial difficulties was not a justification for his deliberate destruction of these records, such as he could raise in defense of a complaint to deny his discharge under 11 U.S.C.A. 727(a)(3). While the debtor may have acted with benign intent in destroying the records and not out of any desire to frustrate his creditors, his destruction of project records was in no sense right, good or appropriate, and could not be regarded as justifiable, for bankruptcy discharge purposes. A debtor's failure to keep or preserve financial records is justified, and will not provide basis for the denial of his bankruptcy discharge, if it is right or appropriate under the circumstances.

Date of decision: 12/27/07

Full opinion click here.

In re Shorton

Discharge - Debtor's breach of his obligations as escrow agent was defalcation while acting in fiduciary capacity.

A Chapter 7 debtor-attorney's conduct, in his capacity as escrow agent for both the vendor and purchaser on a sale in which he had represented the vendor, in applying the purchaser's escrowed deposit to attorney fees owed by the vendor without the purchaser's consent, was in the nature of a "defalcation" that the attorney committed while acting in a fiduciary capacity and served to preclude discharge of the resulting debt. A bankruptcy judge in Massachusetts rejected the debtor's argument that the purchaser had breached the sales agreement and lost any right to the escrowed funds.