Grossman v. Durham Commercial Capital Corp. (In re Ablitt)
| Decision Date | 27 February 2019 |
| Docket Number | Case No. 14-14164,Adv. Pro. 16-01163 |
| Citation | 597 B.R. 700 |
| Court | U.S. Bankruptcy Court — District of Massachusetts |
| Parties | IN RE CONNOLLY GEANEY ABLITT & WILLARD, P.C., Debtor Stewart Grossman, Chapter 7 Trustee of Connolly Geaney Ablitt & Willard, P.C., Plaintiff v. Durham Commercial Capital Corp. and Maasai Holdings, LLC, Defendants |
Nicholas J. Nesgos, David J. Reier, Arent Fox LLP, Boston, MA, for Plaintiff.
Lee Harrington, Nixon Peabody LLP, Boston, MA, for Defendants.
The matter before the Court is the Plaintiff's Motion for Summary Judgment pursuant to which Stewart F. Grossman, the Chapter 7 Trustee of the bankruptcy estate of Connolly Geaney Ablitt & Willard, P.C. (the "Debtor" or the "Law Firm"),1 seeks summary judgment against the Defendant, Durham Commercial Capital Corp. ("Durham"), on Counts I and II of his Complaint to avoid $ 1,024,799.48 in transfers of cash and other property to Durham pursuant to 11 U.S.C. § 548 (Count I) and pursuant to 11 U.S.C. § 544(b) and Mass. Gen. Laws, ch. 109A, §§ 5 and 6 (Count II). The Plaintiff also seeks summary judgment against Durham and Defendant, Maasai Holdings, LLC ("Maasai"),2 on Count III of his Complaint to recover for the benefit of the estate the value of the avoided transfers pursuant to 11 U.S.C. § 550(a)(1). Specifically, the Plaintiff seeks judgment against Durham as the "initial transferee" and against Maasai as "the entity for whose benefit such transfer[s] [were] made."3 The Plaintiff filed with his Motion a Concise Statement of Material Facts together with the Affidavit of Nicholas J. Negros, Esq. to which 20 exhibits were attached, including affidavits and reports of three expert witnesses concerning issues pertinent to key elements of the Plaintiff's claims under 11 U.S.C. §§ 548, 550 and Mass. Gen. L. Ch. 109A, including the amount of the transfers, insolvency, and the absence of reasonably equivalent value.
The Defendants filed an Opposition to the Motion to which they attached three exhibits and the Affidavit of Durham's president, Craig L. McGrain ("McGrain"). The Defendants did not file with their Opposition "a concise statement of the material facts of record as to which it is contended that there exists a genuine issue to be tried, with page references to affidavits, depositions and other documentation" as required by D. Mass. LR 56.1, made applicable to this adversary proceeding by MLBR 7056-1.4 The Defendants also did not file any expert reports to challenge the opinions of the Plaintiff's experts.
Brown, 957 F.Supp. at 1297. See also
Ruiz Rivera v. Riley, 209 F.3d 24, 28 (1st Cir. 2000) ().
In Brown, the defendants moved for summary judgment and to strike the plaintiff's statement of facts. The district court, noting that the plaintiff's fact statement failed to comply with the applicable local rule, observed that the statement "generates a lot of dust, ... [but] it does not further the goal of sharply focusing areas of dispute." Brown, 957 F.Supp. at 1297 (citing Key Trust Co. of Maine v. Doherty, Wallace, Pillsbury & Murphy, P.C., 811 F.Supp. 733, 734 n. 2 (D. Mass. 1993) ). Rather than granting the defendants' motion to strike, however, the court imposed the sanction provided for in the rule itself, namely deeming all facts set forth in the defendants' fact statement to be admitted, at least where defendants provide a citation to the record which supports the assertion of fact in question. Brown, 957 F.Supp. at 1298.
This Court conducted a hearing on the Trustee's Motion for Summary Judgment on January 9, 2019. At the hearing, the following colloquy took place:
Notwithstanding the Defendants' attorney's statement that the Defendants did not particularly dispute the material facts, the Defendants in their Opposition argue otherwise. In their Opposition, the Defendants raised factual issues regarding reasonably equivalent value and insolvency, but they did not offer a statement of disputed facts or experts opinions in support of those factual issues.
In view of the foregoing representations made by Defendants' counsel, the Defendants' failure to submit a statement of disputed material facts, and the Court's review of the submissions of the parties, the Court determines that the Defendants failed to comply with D. Mass. LR 56.1. Accordingly, the Court deems the material facts set forth in the Plaintiff's statement of facts to be admitted. See Amoah v. McKinney, No. 4:14-40181-TSH, 2016 WL 6134119, at *2 (D. Mass. Sept. 2, 2016), aff'd , 875 F.3d 60 (1st Cir. 2017).5
As noted above, the Plaintiff seeks summary judgment against Durham with respect to Counts I and II to avoid $ 1,024,799.48 in transfers that occurred during the period between January 14, 2013 and February 7, 2013, and against both Durham, as the initial transferee, and Maasai, as the entity for whose benefit such transfers were made, with respect to Count III to recover for the benefit of the estate the value of the avoided transfers. As a result of Defendants' counsel's concession that the Defendants did not comply with D. Mass. LR 56.1., the Court now makes the following findings of fact, paraphrasing and supplementing the Concise Statement of Facts submitted by the Plaintiff.
As of October 2012, and continuing through at least February 2013, the Debtor was organized under the laws of Rhode Island and registered as a foreign corporation in Massachusetts. It operated as a Massachusetts law firm under the name "Ablitt Scofield, P.C." (f/k/a "Ablitt & Charlton, A Professional Corporation") at 304 Cambridge Road, Woburn, MA 01801 ("Property"). The Debtor's two principals were Steven Ablitt ("Ablitt") and Lawrence Scofield ("Scofield"). The Property was owned by SAA Group, LLC ("SAA") which, in turn, was owned in whole or substantially in part by Ablitt.
The Debtor's primary business was high-volume consumer home mortgage loan enforcement on behalf of national loan servicers and financial institutions, including, by way of example, Ocwen Loan Servicing, LLC, Select Portfolio Servicing, Inc. ("SPS"), and Bank of America, N.A. ("BofA").
On September 3, 2014, Summit Title Corporation, Petite Etoile Corporation, Pioneer Title and Abstract LLC, and Ablitt filed an involuntary Chapter 7 petition against the Debtor. On October 16, 2014, the Court entered an order for relief under Chapter 7.
As of October 2012, and continuing until at least February 2013, the Debtor was burdened by substantial indebtedness. In or around October 2012, DCR Mortgage IV Sub III, LLC ("DCR") held, by assignment from Sovereign Bank, three distinct loan obligations relating to the Debtor and/or SAA. Sovereign Bank assigned the loan obligations to DCR Mortgage IV Sub I, LLC, which in turn assigned them to DCR. These loan obligations are set forth in detail in an Amended and Restated Forbearance Agreement, dated February 7, 2013, which was executed by DCR, SAA, the Debtor, and Ablitt ("DCR Forbearance Agreement"). The loan obligations are summarized as follows:
Obligation Primary Guarantors Original Stated Outstanding Accrued and
Obligor Principal Principal Unpaid
Amount Balance Interest
Dec. 21, 2007 SAA Ablitt, Debtor $4,000,000.00 $3,711,119.14 $100,452.10
Term Note
Aug. 13, 2008 SAA Ablitt, Debtor $ 560,000.00 $ 276,532.01 $ 8,741.10
Note
Dec. 21, 2007 Debtor Ablitt, SAA $1,500,000.00 $1,448,819.94 $ 44,792.67
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