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Litton Loan Servicing, L.P. v. Dennis Schubert

Summarizing by Amir Shachmurove


Case Type:
Case Status:
Reversed and Remanded
BAP No. 17-038` (1st Circuit, Nov 01,2018) Published
In a per curium decision, the BAP found that the bankruptcy court clearly erred in its factual analysis and thus erred on the law.
Procedural context:
The underlying litigation was a dischargeability complaint pursuant to §§ 523(a)(2)(A) and (a)(6). The bankruptcy court found for the debtor. Creditor appealed. BAP reversed s to §523(a)(2)(A) and thus did not reach (a)(6).
Quoting from the decision: Stewart, the debtor, is the owner of Data Industries, Inc., which did business as Boardwalk North (“Boardwalk”), a company specializing in home remodeling. In June 2013, the DeWitts entered into a contract with Boardwalk, whereby Boardwalk agreed to renovate the DeWitts’ New Hampshire home for $1,649,936.5 The contract included a three-page payment schedule based on the “start of” certain construction milestones. At the commencement of each of these specified milestones, the contract required the DeWitts to pay to Boardwalk the sum of $41,931.81. The contract did not explicitly state, however, how the milestone payments were to be disbursed or allocated. Pursuant to a change order executed on August 2, 2013 (the “Change Order”), the contract amount was reduced to $1,300,000. One year later, when the project was only 45% complete, and after the DeWitts had paid Boardwalk a total of $1,175,350, Boardwalk abandoned the project. In September 2014, Boardwalk filed a petition for chapter 7 relief. Stewart’s own chapter 7 bankruptcy petition followed several months later. The DeWitts have since paid a new contractor an additional $730,000 to complete the project, far more than the remaining contract balance of $175,755. The DeWitts filed a proof of claim in Stewart’s case, indicating that they held an unsecured claim in the amount of $558,335.28.
Feeney, Tester and Finkle.

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