Balzotti v. RAD Investments, LLC (In Re Shepherds Hill Development Co.)

316 B.R. 406, 59 Fed. R. Serv. 3d 1235, 53 Collier Bankr. Cas. 2d 278, 2004 Bankr. LEXIS 1684, 43 Bankr. Ct. Dec. (CRR) 231, 2004 WL 2470240
CourtBankruptcy Appellate Panel of the First Circuit
DecidedNovember 4, 2004
DocketBAP Nos. 04-011, 04-012. Bankruptcy No. 99-11087-JMD. Adversary Proceeding No. 99-01087
StatusPublished
Cited by18 cases

This text of 316 B.R. 406 (Balzotti v. RAD Investments, LLC (In Re Shepherds Hill Development Co.)) is published on Counsel Stack Legal Research, covering Bankruptcy Appellate Panel of the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Balzotti v. RAD Investments, LLC (In Re Shepherds Hill Development Co.), 316 B.R. 406, 59 Fed. R. Serv. 3d 1235, 53 Collier Bankr. Cas. 2d 278, 2004 Bankr. LEXIS 1684, 43 Bankr. Ct. Dec. (CRR) 231, 2004 WL 2470240 (bap1 2004).

Opinion

VOTOLATO, Bankruptcy Judge.

RAD Investments, LLC and Robert A. Dilanni (“Defendants”) appeal from the March 18, 2004, orders of the United States Bankruptcy Court for the District of New Hampshire: (1) denying their request for an extension of time to file an appeal from a final default judgment; and (2) denying their Motion for Relief from Default Judgment pursuant to Bankruptcy Rule 9024 and Fed.R.Civ.P. 60(b) (“Rule 60(b)”).

BACKGROUND 1

On February 12, 2004, after more than three years of delay, the bankruptcy court entered a Final Default Judgment against the Defendants due to their failure to answer the complaint in this adversary proceeding. The Defendants blame their failure to respond on “a series of misunderstandings ... which led to the entry of the default judgment.” See Defendants’ Brief at 7. Since this litigation involves the Plaintiffs’ efforts regarding service on and notice to the Defendants, as well as a series of defaults, missed deadlines, and excuses as to why the Defendants repeatedly failed to respond to the Plaintiffs’ pleadings or to appear at scheduled hearings, a review of the procedural travel of this case is necessary.

A. Commencement of the Adversary Proceeding

On or about June 30, 2000, the appel-lees/majority shareholders in the debtor-corporations (“Plaintiffs”), filed an adver *410 sary proceeding against the Defendants seeking damages for breach of contract regarding a purchase and sale agreement. 2 According to the Plaintiffs, the Defendants were personally served with the original Summons and Complaint at their business address in Maynard, Massachusetts. However, on September 12, 2000, the bankruptcy court issued a new Summons requiring the Defendants to answer the complaint within thirty days and to appear at a pretrial conference on November 8, 2000. 3

Also, according to the Plaintiffs, Sheara F. Friend, Esq., an attorney purportedly representing the Defendants, requested an extension of time to respond to the complaint, and the Plaintiffs agreed to allow her 60 days (rather than the standard 30 days) to answer. The Plaintiffs say that Friend also promised to accept service of the Summons and Complaint, but that she reneged on that agreement. Subsequent attempts to personally serve the Defendants were unsuccessful as they could no longer be located in Massachusetts, 4 and the bankruptcy court ultimately approved an alternative form of service, by publication in The Boston Globe from December 13, 2000, through December 19, 2000, and by service upon Attorney Friend. However, on December 13, 2000, Friend notified the bankruptcy court that she did not represent the Defendants and could not accept service on their behalf. The Plaintiffs contend that although Friend did not file a formal entry of appearance, she clearly held herself out as counsel for the Defendants, admitted at her deposition that she consulted with the Defendants, worked to “assemble a [defense] team,” and requested an extension of time within which to answer the complaint on the Defendants’ behalf. Based on her extensive participation on behalf of the Defendants, and because of the Plaintiffs’ reliance induced by her conduct, we conclude that Friend was de facto counsel for the Defendants.

B. First Request for Entry of Default Judgment

Despite the extension of time obtained by Friend, the Defendants failed to answer the complaint and the bankruptcy court entered an Order of Default on January 24, 2001. On February 7, 2001, the Plaintiffs filed a Motion for Default Judgment and a hearing was scheduled. On February 21, 2001, more than 8 months after the commencement of this adversary proceeding, Norman Novinsky, Esq. (a member of the legal team assembled by Attorney Friend), filed the Defendants’ first pleading in this case, an Objection to Motion for Default Judgment. On March 12, 2001, the Defendants filed a Motion to Strike the Order of Default, to which the Plaintiffs objected.

C. Dismissal and Reinstatement of Adversary Proceeding

At that juncture, the bankruptcy court, concerned over its jurisdiction, sua sponte entered an Order to Show Cause why the *411 default should not be vacated and the adversary complaint dismissed for lack of jurisdiction. Briefing and oral argument did not alleviate the bankruptcy court’s concerns, and it dismissed the proceeding, sua sponte, on May 15, 2001. On appeal, the U.S. District Court held that the bankruptcy court did have subject matter jurisdiction, vacated the dismissal order, and remanded to the bankruptcy court for further proceedings. The Defendants appealed the district court’s decision to the First Circuit Court of Appeals, but that appeal was dismissed upon the parties’ stipulation, which became a final order on January 23, 2003.

D. Renewed Request for Entry of Default Judgment

With the adversary proceeding reinstated, the bankruptcy court scheduled a pretrial hearing for April 2, 2003, and the Plaintiffs renewed their Motion for Default Judgment. Again, the Defendants failed to appear, and the pretrial conference was continued to May 14, 2003. At that time, the Defendants were not represented, Norman Novinsky having withdrawn as counsel on March 13, 2003. Successor counsel, the law firm of Deutsch Williams Brooks DeRensis & Holland (“Deutsch Williams”) filed an appearance on May 9, 2003.

On June 3, 2003, the Defendants filed an Amended Motion to Strike the Order of Default, the Plaintiffs objected, and an evi-dentiary hearing on the motion was scheduled for November 3, 2003. On the morning of the hearing the parties announced an agreement which was read into the record, and an order entered stating that the Plaintiffs had withdrawn their objection to the Amended Motion to Strike, that the Defendants agreed to waive all Fed. R.Civ.P. 12(b) defenses except Rule 12(b)(6), and that the Defendants were required to file an answer to the complaint on or before December 3, 2003.

One week before the answer deadline, Deutsch Williams filed a motion for leave to withdraw as counsel for the Defendants, with a copy via Federal Express to Mr. DiLanni, and the motion was granted on December 2, 2003. In a letter to the bankruptcy court dated December 3, 2003, apparently unaware that their withdrawal had already been approved, Deutsch Williams wrote:

The firm of Deutsch Williams Brooks DeRensis & Holland, P.C. (“the Firm”) presently has a pending motion to withdraw as counsel for the Defendants, RAD Investments, Inc. and Robert A. Dilanni in the above-referenced adversary proceeding. Because we are in the process of requesting to withdraw, the Firm did not feel it appropriate to file an Answer on behalf of the Defendants, or to request an extension of time for the filing of the Answer in our motion to withdraw.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Ross v. Garcia (Garcia)
532 B.R. 173 (First Circuit, 2015)
In re Higol Teran Racamonde
526 B.R. 89 (D. Puerto Rico, 2015)
In re Zine
521 B.R. 31 (D. Massachusetts, 2014)
Acosta v. Reparto Saman Inc. (In re Acosta)
497 B.R. 25 (D. Puerto Rico, 2013)
Gonsalves v. Belice (In re Belice)
480 B.R. 199 (First Circuit, 2012)
In re Heartland Memorial Hospital, LLC
473 B.R. 897 (N.D. Indiana, 2012)
In Re Lozada Rivera
470 B.R. 109 (D. Puerto Rico, 2012)
Reynolds v. Bank of Canton (In Re Reynolds)
455 B.R. 312 (D. Massachusetts, 2011)
Aja v. Fitzgerald (In Re Aja)
441 B.R. 173 (First Circuit, 2011)
Hamilton v. Appolon (In Re Hamilton)
399 B.R. 717 (First Circuit, 2009)
Pifalo v. Pifalo
379 B.R. 1 (First Circuit, 2007)
Eastern Savings Bank v. Lafata(In Re Lafata)
344 B.R. 715 (First Circuit, 2006)
Rainey v. Davenport (In Re Davenport)
342 B.R. 482 (S.D. Texas, 2006)
In Re Anderson
330 B.R. 180 (S.D. Texas, 2005)

Cite This Page — Counsel Stack

Bluebook (online)
316 B.R. 406, 59 Fed. R. Serv. 3d 1235, 53 Collier Bankr. Cas. 2d 278, 2004 Bankr. LEXIS 1684, 43 Bankr. Ct. Dec. (CRR) 231, 2004 WL 2470240, Counsel Stack Legal Research, https://law.counselstack.com/opinion/balzotti-v-rad-investments-llc-in-re-shepherds-hill-development-co-bap1-2004.