Randall v. Haddad (In re Haddad)

• Decision Date: 20 September 2011
• Docket Number: Bankruptcy No. 10–19145–JNF.,Adversary No. 11–1128.
• Parties: In re Marion HADDAD, Debtor.Father Joseph Randall, and St. Nectarios Monastery, Plaintiffs v. Marion Haddad, The Holy Annunciation Monastery Church of The Golden Hills, The Attorney General of Massachusetts, Massachusetts State Retirement Board, Trustee, Defendants.
• Court: United States Bankruptcy Courts. First Circuit. U.S. Bankruptcy Court — District of Massachusetts

464 B.R. 501

In re Marion HADDAD, Debtor.Father Joseph Randall, and St. Nectarios Monastery, Plaintiffs

v.Marion Haddad, The Holy Annunciation Monastery Church of The Golden Hills, The Attorney General of Massachusetts, Massachusetts State Retirement Board, Trustee, Defendants.

Bankruptcy No. 10–19145–JNF.

Adversary No. 11–1128.

United States Bankruptcy Court, D. Massachusetts.

Sept. 20, 2011.

Gerald W. Mead, Jr., Law Office of Gerald W. Mead, Jr., Bedford, MA, for Debtor.

MEMORANDUM

JOAN N. FEENEY, Bankruptcy Judge.I. INTRODUCTION

The matters before the Court are 1) the “Defendants Attorney General of Massachusetts and Massachusetts State Retirement Board's Motion to Dismiss,” and 2) the Motion to Dismiss filed by Marion Haddad (the “Debtor” or the “Defendant”). The Attorney General and the Massachusetts State Retirement Board (individually, the “Attorney General” and the “Retirement Board” and, jointly, the “Commonwealth Defendants”) and the Debtor seek dismissal of the “Adversary Complaint for Declaratory Judgment” filed by Father Joseph Randall and St. Nectarios Monastery (the “Plaintiffs”) against the Commonwealth Defendants, the Debtor, and The Holy Annunciation Monastery Church of the Golden Hills (the “Annunciation Monastery”). The Plaintiffs oppose the Motions. The Commonwealth Defendants base their motion to dismiss, in part, on the mandatory and discretionary abstention provisions of Title 28 of the United States Code. See 28 U.S.C. § 1334(c)(1) and (c)(2).

The Court heard the Motions to Dismiss on August 10, 2011 and took the matters under advisement. At the hearing, none of the parties requested an evidentiary hearing. Additionally, none of the parties contested the material facts established by the attachments to the Plaintiffs' Complaint and the attachments to the Commonwealth Defendants' Motion to Dismiss. Accordingly, the Court shall treat the Motions to Dismiss as a Motion for Summary Judgment. See Fed.R.Civ.P. 12(d), made applicable to this proceeding by Fed. R. Bankr.P. 7012(b).

The issues presented include 1) whether ownership of monies obtained by the Debtor from the sale of real property owned by the Annunciation Monastery are property of the bankruptcy estate; 2) whether this Court has jurisdiction to consider the prayers for relief set forth in the Plaintiffs' Complaint, which include a declaratory judgment as to the rightful owner of the funds and an order requiring the Retirement Board to turnover the funds to the Annunciation Monastery, where the Debtor has received a discharge under 11 U.S.C. § 727 and where the Chapter 7 Trustee has not intervened in the adversary proceeding as a party plaintiff and has filed a Report of No Distribution; and 3) whether, if the Court has jurisdiction, it should abstain from ruling on the motions to dismiss. A predicate to the Court's determination of the last two issues is whether the Debtor's interest in retirement funds, which she obtained from the sale of real property owned by the Annunciation Monastery and which now are held by the Retirement Board, is property of the bankruptcy estate. See 11 U.S.C. § 541(a).

II. BACKGROUND¹

The Debtor filed a voluntary Chapter 7 petition on August 24, 2011. On September 1, 2011, she filed Schedules A through J. On Schedule C–Property Claimed as Exempt, she claimed an exemption in a Massachusetts Retirement Fund in the sum of $55,000 pursuant to 11 U.S.C. § 522(d)(12).² She attached to her Schedules a letter from the State Board of Retirement which provided, in pertinent part, the following:

Please be advised the records of this office show your overall total in the state Employees' Retirement System is $48,761.84 consisting of $8,133.76 in pre-tax deposit, $40,000 in after tax deposits and $628.02 in pre-tax interest.

The Chapter 7 Trustee conducted the section 341(a) meeting of creditors at its originally scheduled time of September 28, 2010 and continued the meeting to November 2, 2010. The Plaintiffs did not timely file a complaint under 11 U.S.C. § 523(c) or § 727(a) within 60 days of the first scheduled meeting of creditors. See Fed. R. Bankr.P. 4004(b) and Fed. R. Bankr.P. 4007(c). Following the initial meeting, the Debtor filed a “Statistical Summary of Certain Liabilities and Related Data (28 U.S.C. § 159),” in which she indicated that her debts were not primarily consumer debts, and her Chapter 7 Individual Debtor's Statement of Intention, which contained no information other than a date and was unsigned. The Trustee conducted a further meeting of creditors on November 2, 2011. The Plaintiffs timely filed an Objection to the Debtor's claimed exemption. See Fed. R. Bankr.P. 4003(b)(1). The Court conducted a hearing with respect to the Plaintiffs' Objection and continued it generally. Accordingly, the Court has made no determination as to whether the funds which the Debtor has claimed as exempt are property of the estate which can then be exempted from property of the estate pursuant to 11 U.S.C. § 522(d)(12).

On December 1, 2010, the Court granted the Debtor a discharge pursuant to 11 U.S.C. § 727(a). The Chapter 7 Trustee filed a Report of No Distribution on January 24, 2011. The Debtor listed both Father Joseph Randall and St. Nectarios Monastery on Schedule F–Creditors Holding Unsecured Nonpriority Claims as the holders of a disputed claim in the sum of $40,000. She did not list the Annunciation Monastery as a creditor in her Schedules.

III. THE ADVERSARY PROCEEDING

The Plaintiffs filed a Complaint against the Debtor, the Commonwealth Defendants and the Annunciation Monastery on April 18, 2011, seeking a determination that $40,000 in proceeds from the sale of real property located at 211 Bay State Road, Melrose, Massachusetts (the “Property”), formerly owned by the Annunciation Monastery, and currently held by the Massachusetts State Retirement Board, is the property of the Annunciation Monastery and not the property of the Debtor's bankruptcy estate, as well as an order requiring the Retirement Board to “return the $40,000 deposited by the Debtor into her State Retirement Board account to the Holy Annunciation corporation” and an order requiring the $40,000 to be “held in escrow by the corporation pending execution of the Superior Court judgment by the Plaintiffs.” ³ The Plaintiffs and the Commonwealth Defendants attached numerous documents to their filings with the Court with respect to two complaints, one filed by the Plaintiffs in April of 2004 in the Middlesex Superior Court to resolve a dispute as to the ownership of the Property, and the other filed in the Suffolk Superior Court, captioned a “Complaint to Set Aside Fraudulent Conveyance and for Trustee Process.” The documents included the following:

An “Order for Impoundment/Escrow,” dated March 2, 2006, entered by Sandra L. Hardin, Justice of the Superior Court, Department of the Trial Court, Middlesex Division, in which the court ruled as follows:

That all proceeds from the sale of the Monastery building at 211 Bay State Road in Melrose, Mass., under the direct or indirect custody or control of the defendants or their agents, shall be held in escrow by the defendants, pending a hearing and further order of the Court;

A Sovereign Bank Check, dated March 3, 2006, in the sum of $40,000 made payable to the Massachusetts State Board of Retirement;

A Complaint to Set Aside Fraudulent Conveyance and for Trustee Process filed by the Plaintiffs in the Suffolk Superior Court, against the Commonwealth Defendants the Debtor, the Annunciation Monastery, and Richard Capana ⁴ on November 19, 2008;

A Final Judgment, dated August 6, 2008, entered by Thayer Fremont–Smith, Justice of the Superior Court, Department of the Trial Court, Middlesex Division, in favor of the Plaintiffs and against the Debtor and the Annunciation Monastery in the sum of $105,000 plus interest and costs.

The Memorandum of Decision and Order entered on June 10, 2009 by Regina L. Quinlan, Associate Justice of the Suffolk Superior Court, granting the Commonwealth's Motion to Dismiss the Fraudulent Conveyance Complaint; ⁵

An order, dated August 19, 2010, with respect to the Plaintiffs' Motion for Summary Judgment, pursuant to which Thomas E. Connolly, Justice of the Suffolk Superior Court, Department of the Trial Court, 1) found that “Ms. Haddad, in her position as sole officer and director of the Holy Annunciation Monastery Church of the Golden Hills, withdrew $98,771.00 from the Holy Annunciation corporate account, and did not place it into an escrow account as ordered by the court,” 2) ordered the Massachusetts State Retirement Board “to disgorge funds in the amount of $40,000, which were tendered to it by the Defendant Marian [sic] Haddad on March 3, 2006;” 3) ordered the funds to be paid to the Clerk pursuant to Superior Court Rule 22; and 4) ordered the Clerk, upon receipt of the funds, to tender the funds to the Plaintiffs through their attorney of record;

The Plaintiffs' appeal from the order dismissing the Commonwealth as a defendant in the Fraudulent Conveyance action pending in the Appeals Court.

IV. DISCUSSIONA. Summary Judgment Standard

Pursuant to Fed.R.Civ.P. 12(d), made applicable to this proceeding by Fed. R. Bankr.P. 7012, “[i]f, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” ⁶ In Hammond v. JPMC Specialty Mortg. LLC, No. 10–11121–DPW, 2011 WL 1463632 (D.Mass. April 15, 2011), the court articulated the summary judgment standard in the context of a challenge to the validity of a foreclosure sale. The court stated:

A movant is entitled to summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. Rule Civ. P. 56(a). If the moving party meets this burden, “the opposing party can then defeat the motion by...