Kupperstein v. Schall (In re Kupperstein)

638 B.R. 21

IN RE: Donald C. KUPPERSTEIN, Debtor.

Donald C. Kupperstein, Appellant,

v.Irene Schall, Personal Representative of the Estate of Fred W. Kuhn, Appellee.

In re: Donald C. Kupperstein, Debtor.

Donald C. Kupperstein, Appellant,

v.Executive Office of Health and Human Services, Appellee.

Civ. Act. No. 21-10201-TSH

Civ. Act. No. 21-10202-TSH

United States District Court, D. Massachusetts.

Filed April 1, 2022

David G. Baker, Boston, MA, for Appellant.

Paul T. O'Neill, Commonwealth of Massachusetts - Dept. of State Police, Framingham, MA, for Appellee Executive Office of Health and Human Services of the Commonwealth of Massachusetts.

Roger C. Stanford, Moses, Smith Markey & Walsh, New Bedford, MA, for Appellee Irene B. Schall.

MEMORANDUM AND ORDER ON APPEAL FROM BANKRUPTCY COURT March 31, 2022

HILLMAN, D.J.

Nature of the Proceeding

This is an appeal from a final order of the United States bankruptcy court for the District of Massachusetts in adversarial proceedings brought by Irene Schall, Personal Representative of the Estate of Fred W. Kuhn ("Schall"), and the Executive Office of Health and Human Services ("EOHHS" and, together with Schall "Appellees") brought against Donald C. Kupperstein ("Kupperstein" or "Appellant") granting summary judgment in favor of Schall and EOHHS and thereby denying Kupperstein a discharge.

Background

The Appellees both filed multi-count Adversarial Actions¹ against Kupperstein in his Chapter 7 bankruptcy proceedings seeking to deny him a discharge pursuant to 11 U.S.C. § 727(a)(4)(A) (false oath or account) and other provisions of the Bankruptcy Code. The Appellees’ Adversarial Actions are based on a related set of facts and therefore, the proceedings were consolidated in the bankruptcy court as they have been in this Court. The Appellees filed joint motions for summary judgment in those actions, which were granted by the bankruptcy court while Kupperstein's cross-motions for summary judgment were denied.

In his appeals, Kupperstein seeks to overturn the bankruptcy court's decisions granting Schall's and EOHHS's joint motions for summary judgment in the two Adversarial Actions, which thereby denied him a discharge in his voluntary petition for relief under Chapter 7 of the Bankruptcy Code ("Chapter 7 Petition"). Kupperstein requests the matters be remanded to the bankruptcy court for entry of a discharge or, in the alternative, to reconsider its summary judgment decisions in light of factual disputes raised by him. Appellees in the first instance question whether these appeals are premature and should be dismissed for lack of jurisdiction as no final judgment, order or decree has been entered by the bankruptcy court because other matters in their adversary complaints remain outstanding and unadjudicated. Should the Court address the merits of Kupperstein's appeals, Appellees assert that the bankruptcy court properly granted their joint motions for summary judgment and therefore, this Court should deny the appeals.

Whether The Appeal Should Be Dismissed For Lack Of Subject Matter Jurisdiction

Appellees assert that these appeals are premature and must be dismissed for lack of jurisdiction because no final judgment, order and decree has been entered in the bankruptcy court in the underlying Adversarial Actions and there remain matters to be adjudicated. Appellant, on the other hand, seemingly acknowledges that no final, judgment order or decree has entered, but argues that by granting Appellees’ motions for summary judgment, the Court has denied his discharge. He asserts that the only open issue in the respective Adversarial Actions is a determination of whether his alleged debt to Appellees is excepted from discharge, however, given the bankruptcy court's ruling on the motions for summary judgment, there is no discharge form which the debt could be excepted. Therefore, he argues, the bankruptcy court's order granting summary judgment in those actions is, in effect, a final judgment.

This Court has jurisdiction to hear appeals from final judgments, orders, and decrees of the bankruptcy court pursuant to 28 U.S.C. § 158(a)(1). The bankruptcy court has stayed the underlying Adversarial Actions pending this Court's disposition of these appeals, which supports Appellees’ contention that there are matters left to be adjudicated in those proceedings. See Docket Entry No. 147 in Adversarial Proceeding No. 18-01100-CJP and Docket No. 135 in Adversarial Proceeding No. 135 18-01101- CJP. While the bankruptcy court's entry of a stay suggests a lack of finality which would preclude this Court's review of the orders from which Kupperstein has appealed, for the following reasons the Court is persuaded that review is appropriate. First, the Bankruptcy Appellate Panel for the First Circuit has repeatedly held that an order denying a debtor's discharge is a "final order." See Francis , 604 B.R. 101, 105 (B.A.P. 1st Cir. 2019), aff'd sub nom. In re Francis , 996 F.3d 10 (1st Cir. 2021) and cases cited therein. Additionally, the First Circuit has held that the Massachusetts probate court's orders pursuant to which Kupperstein is indebted to Appellees did not violate the Bankruptcy Code's automatic stay. Therefore, for all intents and purposes, there are no issues left to be resolved regarding the claims raised by Appellees in the Adversarial Actions. Having found that jurisdiction is proper, the Court will address the appeals on their merits.

The Merits of Kupperstein's Appeals

Standard of Review

"A district court has jurisdiction to hear an appeal of a decision of a bankruptcy court under 28 U.S.C. § 158(a). A district court reviews a bankruptcy court decision ‘in the same manner’ as the court of appeals would review a district court decision. Legal conclusions are reviewed de novo, and factual findings are reviewed for clear error. ‘[C]onsiderable deference’ is given to the ‘factual determinations and discretionary judgments made by a bankruptcy judge.’ "

In re Wolverine, Proctor & Schwartz, LLC , 527 B.R. 809, 819 (D. Mass. 2015) (internal citations and citation to quoted case omitted).

Discussion

In his appeals, Kupperstein asserts that the bankruptcy court's decision should be overturned because under section 727(a)(4)(A), discharge should only be denied to a debtor where the debtor has "knowingly and fraudulently, in or in connection with the case ... made a false oath or account" relating to a material fact. See id. and Lussier v. Sullivan , 455 B.R. 829, 837 (B.A.P. 1st Cir. 2011). The bankruptcy judge found that Kupperstein omitted and affirmatively misrepresented information on his statement of financial affairs ("SOFA") and other documentation filed with his Chapter 7 Petition. Kupperstein contends that none of the omissions or misrepresentations identified by the bankruptcy judge were false (or material for that matter) and therefore, the bankruptcy judge's finding denying him a discharge under section 727(a)(A)(4) must be overturned. Appellees, on the other hand, argue that the evidence supports a finding that Kupperstein knowingly and fraudulently made numerous false statements and omissions under oath on his SOFA and other documentation submitted in support of his Chapter 7 Petition and that such omissions and representations were material. Therefore, they argue the bankruptcy judge's summary judgment orders which deny Kupperstein a discharge should be affirmed.

At the summary judgment stage, the bankruptcy court found against Kupperstein under 11 U.S.C. § 724(a)(4)(A) which precludes the entry of discharge if in relation to his bankruptcy proceedings, a debtor knowingly and fraudulently made a false oath relating to a material fact. See Lussier , 455 B.R. at 837. The plaintiff has the burden to prove falsity, and if the plaintiff reasonably does so, the debtor must then come forward with evidence that he did not make any such false statements. Id. Judge Hoffman found that Kupperstein made false statements on his SOFA and other documentation filed in relations to his Chapter 7 Petition regarding gross income from his law practice (Judge Hoffman found he had affirmatively and falsely represented that he had none), and further falsely represented that he had no business or connections to a business in the four years before filing for bankruptcy. Judge Hoffman found that because these false oaths were knowingly and fraudulently made and since they related to the existence and gross income from a business, were material. Based on these findings, Judge Hoffman determined that Kupperstein was not entitled to a discharge. Nonetheless, he went on to discuss other instances in which Kupperstein knowingly and fraudulently made false oaths regarding material facts in his submissions in support of his Chapter 7 Petition.

Judge Hoffman found that...