Harrington v. Simmons
- Summarized by David Baker , Law Office of David G. Baker
- 9 years 10 months ago
- Citation:
- Harrington v. Simmons, BAP No. MW 14-048
- Tag(s):
-
- Ruling:
- Bankruptcy court's order denying a chapter 7 discharge affirmed.
- Procedural context:
- Simmons appealed from a decision of the Massachusetts Bankruptcy Court (Worcester) granting summary judgment to Harrington, US Trustee for Region 1.
- Facts:
- Simmons, a high school graduate with 2 years of college, formed a real estate business with another individual, but then went out on his own. Over time, he acquired 27 residential properties through out Massachusetts. He hired managers to collect the rents and manage the properties. However, he did not keep adequate records. When he commenced his chapter 7 case in November, 2010, his bankruptcy papers indicated that he was virtually destitute, with unsecured claims in excess of $4 million from mortgage deficiencies and secured claims of about $1.5 million on 5 remaining properties.
The UST conducted an investigation into Simmons' affairs and conducted a rule 2004 examination. Some documents were produced, but Simmons could not produce many documents, such as rent rolls or ledgers.
The UST commenced an adversary to deny discharge, with three counts - failure to keep or preserve records; false oath or account; and failure to explain satisfactorily the loss of assets. Simmons asserted several affirmative defenses, including acts of third parties for which he should not be responsible.
The UST requested summary judgment on two counts, with substantial support. Although Simmons disputed any fraudulent or deceptive intent and claimed that his former partner was responsible for the deficiencies in record keeping, the bankruptcy court was not persuaded. The court did not base its decision on credibility, or lack thereof, but concluded that his inadequate record keeping was not justifiable under the circumstances.
On appeal, Simmons claimed that a genuine issue of material fact existed regarding his reliance on his former partner. Noting that "[a]n impeccable system of bookkeeping" is not required but must nonetheless be sufficient to enable an intelligent inquiry, the BAP affirmed, finding that Simmons had not come forward with sufficient evidence to raise a triable issue.
- Judge(s):
- Deasy, Kornreich (author) and Finkle.
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