Parker v. Handy (In re Handy)
- Citation:
- 2010 WL 4142219 (1st Cir. 2010)
- Tag(s):
-
- Ruling:
- The United States Court of Appeals for the First Circuit affirmed the ruling of both the Bankruptcy Appellate Panel and the bankruptcy court, which held that 11 U.S.C. § 524(a)(2) precluded Parker from pursuing his Maine state court proceeding action against Handy, brought pursuant to Maine's version of the Uniform Fraudulent Transfer Act (UFTA). Specifically, during the state court proceeding, Handy filed for bankruptcy, staying Parker's state action against her. Although Parker filed a motion for relief from stay, Handy received a discharge which included Parker's motion. At the time of discharge, Parker had niether obtained a judgment in state court, nor a lien against Handy's property.
- Procedural context:
- Appeal from a Bankruptcy Appellate Panel decision affirming a bankruptcy court order denying a motion for relief from stay, after the debtor received a discharge from bankruptcy under § 524(a)(2).
- Facts:
- Parker sued Handy in a Maine state district court, alleging that Handy purchased a residence with funds conveyed to her by her ex-husband in violation of Maine's Uniform Fraudulent Transfer Act (UFTA). Parker sought both money damages and the imposition of a constructive trust on the residence. The state court entered judgment for Handy, and Parker appealed to the Maine Supreme Judicial Court. However, his appeal was stayed by Handy's bankruptcy filing under Chapter 7.
Parker subsequently filed a motion for relief from stay, arguing that his requested relief in state court included an order of sale of Handy's residence, and therefore was a claim in rem against Handy. Thus, Parker alleged that Handy's discharge would not affect his in rem claim even though he was an unsecured creditor. Handy filed an objection in response, asserting that Parker was merely an unsecured creditor and did not hold an in rem claim for purposes of §524(a)(2).
The bankruptcy court denied Parker's motion and granted a discharge to Handy. In denying the motion for relief, the court stated that Parker had not established an interest in the property by attachment or a provisional remedy, nor did Parker’s request for a constructive trust, give rise to a cause of action in rem. The BAP affirmed, stating that a constructive trust is a remedy, not a status, that Parker failed to cite any authority supporting his assertion that the Code allows him to proceed post-discharge, and that Parker could not proceed against the exempt property because he did not posses a claim in rem.
On appeal, the First Circuit began its discussion by explaining that Parker did not state a claim in rem, as evidenced by the fact that he did not obtain a lien, attachment, or other provisional remedy. On appeal, Parker only argued that he could maintain an in rem claim because he requested a constructive trust. The Circuit Court stated that Parker failed to cite any Maine case law in support of his argument, and that a mere request for a constructive trust did not give rise to a cause of action in rem. The Court stated that without more to support his proposition, Parker could not transform a request for a remedy in rem into a cause of action in rem, and therefore, he only held a claim against Handy in personam at the time of the bankruptcy filing.
The court also addressed Parker’s argument that he was allowed to pursue his fraudulent conveyance claims post-discharge. Touching briefly upon this argument, the Court stated that Parker’s claim fails because he did not hold an in rem claim pre-discharge, and that any other aspect of his argument to pursue his fraudulent conveyance claim was not adequately presented on appeal, and thus not properly before the court.
- Judge(s):
- Chief Judge Lynch, Circuit Judge Torruella, Circuit Judge Howard
ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!
