In re: NaMor, Inc et al

Filing 17

District Judge Timothy S. Hillman: ORDER entered. MEMORANDUM AND ORDER affirming the Order of the Bankruptcy Court.(Castles, Martin)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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ROBERT ARMISTEAD,
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CIVIL ACTION
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Appellant,
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NO. 16-CV-12006-TSH
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v.
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NA-MOR INC.,
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EUGENE P. O’DONNELL, JR.,
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Appellee.
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MEMORANDUM AND ORDER ON APPEAL FROM BANKRUPTCY COURT
September 22, 2017

HILLMAN, D.J.
Appellant Robert Armistead, a Court Approved Creditor in the bankruptcy of Na-Mor, Inc.
(“Debtor”), brings this appeal from an Order of the United States Bankruptcy Court for the District
of Massachusetts dated September 22, 2016 (“Order”), denying Armistead’s Motion to Show
Cause as to Why this Court Should not Find O’Donnell in Contempt, Sanction Him, Order a New
Corrective Accounting and Order O’Donnell to Place Missing Funds into Escrow with the Court
(“Motion to Show Cause”). Armistead also argues that the that the Bankruptcy Court erred in
denying his request for an Evidentiary Hearing on newly found evidence pursuant to Fed. R. Bankr.
P. 2004. For the reasons outlined below, the Order of the Bankruptcy Court is affirmed.
Background
On March 22, 2010, Na-Mor, Inc. filed a voluntary petition for bankruptcy relief under
Chapter 11 of the U.S. Bankruptcy Code. See Voluntary Petition, Bankr. Case No. 10-41302,

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Docket No. 1. This was later converted to a Chapter 7 petition on December 5, 2015 by the
appointed Chapter 11 Trustee, Joseph Collins (“Collins”), who was then appointed Chapter 7
Trustee. Prior to the bankruptcy filing, Eugene O’Donnell (“O’Donnell”) was appointed by
Worcester Probate and Family Court as Receiver of Cynthia Dziurgot (“Cynthia”)’s business
interests, including Na Mor, Inc., in the context of divorce proceedings between Cynthia and John
Farnsworth (“Farnsworth”). As part of this Receivership, O’Donnell sold personal and real
property belonging to Cynthia, and distributed the proceeds in accordance with Orders from the
Worcester Probate and Family Court. In one example, in the context of the divorce proceedings,
O’Donnell was appointed Master by Worcester Probate and Family Court and ordered to sell
Cynthia’s personal property located at 75 Walnut St., Clinton, MA. He hired Skinner Auction
house to conduct the auction in June 2009, which generated $16,729.60 in proceeds, all of which
O’Donnell distributed to Attorney John Anastasi, counsel to Farnsworth. 1
O’Donnell was also responsible for liquidating assets belonging to Na-Mor, Inc, and he
filed the initial voluntary petition for Chapter 11 bankruptcy for Na Mor, Inc., in March of 2010.
Per order of the Bankruptcy Court dated October 29, 2014, O’Donnell filed a “Final Accounting”
on November 25, 2014. Bankr. Case No. 10-41302, Docket No. 600.
Robert Dziurgot (“Robert”), Cynthia’s brother, is a court approved creditor of the Debtor,
and Appellant Armistead is the assignee of Robert’s interests. 2 Armistead claims that O’Donnell,
in his role as Receiver, sold property belonging to the Debtor and misappropriated the proceeds.
He further claims to have found newly discovered information to support a finding that O’Donnell

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The Settlement Statement from Skinner Auctions, listing each item and its sale price, were
attached as Exhibit 2 to the Appellee’s Brief. See Docket No. 13-1.
2
Robert assigned his claim in to Armistead on May 6, 2016. Bankr. Case No. 10-41302, Docket
No. 769.
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committed perjury numerous times, as well as theft, fraud, and embezzlement. By way of example,
he maintains that O’Donnell
did not account for funds in his Last and Final Accounting belonging to the Debtor
from Skinner Auctions, that were taken by O’Donnell and given to Attorney
Anastasi, attorney for John Farnsworth, who after substantial litigation in the
bankruptcy court was found not to be a creditor of the Debtor….The Appellant is
entitled to an evidentiary hearing to determine if, Farnsworth’s attorney was
entitled to receive any of the funds belonging to the Debtor and if O’Donnell, in his
capacity as Receiver of Na-Mor Inc. conspired with Anastasi to misappropriate the
funds of the Debtor….

Appellant’s Brief at p.6. In the same vein, Armistead offers a handful of other examples of assets
belonging to the Debtor that he contends O’Donnell failed to disclose in his Final Accounting,
however, Armistead points to no documentary evidence to support that the specific assets he
mentions are or were, in fact, property of the Debtor. 3
Armistead also takes issue with Trustee Collins, who did not oppose O’Donnell’s Final
Accounting, and who moved to abandon assets of the Debtor that related in any way to the
Receivership or any transactions involving O’Donnell. Trustee Collins asserted that any such
property was “burdensome to the Estate in that it continues to be the source of multiple motions
and pleadings that have had the effect of diminishing assets available to creditors of the Estate,”
and cited numerous actions taken by Armistead’s predecessor in interest, Robert Dziurgot,
throughout the case, attacking O’Donnell, including the filing of several motions, which were
routinely denied. Bankr. Case No. 10-41302, Docket No. 736. On December 18, 2015, the
bankruptcy judge authorized the Trustee and the Na-Mor, Inc. Bankruptcy Estate to abandon

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On review of the bankruptcy court filings, only two of the six instances of “newly discovered
evidence” that Armistead details in his briefing were presented to the bankruptcy court in support
of his motion and request for evidentiary hearing: 1) the $16,729.60 in proceeds from a 2009
auction at Skinner Auction house, and 2) a $30,000 distribution from Clinton Savings Bank. See
Bankr. Case No. 10-41302, Docket Nos. 797 and 800.
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certain legal and equitable claims that arose from or were related to the Receivership, or
transactions involving O’Donnell. Bankr. Case No. 10-41302, Docket No. 760.
On August 15, 2016, Armistead filed with the Bankruptcy Court the Motion to Show
Cause, and requested an evidentiary hearing on newly found evidence pursuant to Fed. R. Bankr.
2004. On September 22, 2017, the Bankruptcy Court denied Armistead’s motion and his request
for an evidentiary hearing. This appeal followed.
Discussion
This Court reviews a bankruptcy court's legal conclusions de novo, and findings of fact for
clear error. Palmacci v. Umpierrez, 121 F.3d 781, 785 (1st Cir.1997). The denial of Armistead’s
Motion to Show Cause is reviewed for abuse of discretion. See, e.g., Rosado v. Banco Popular de
Puerto Rico, 561 B.R. 598, 604 (B.A.P. 1st Cir. 2017) (order on motion for contempt is reviewed
for abuse of discretion); In re 1095 Commonwealth Corp., 236 B.R. 530, 535 (D. Mass. 1999)
(order on a motion for sanctions is reviewed for an abuse of discretion).
A review of the record shows that this most recent motion by Armistead is one in a long
list of actions taken against O’Donnell, throughout the pendency of the bankruptcy case, including
multiple motions for contempt and sanctions, a motion to compel the deposition of O’Donnell, a
motion requesting the bankruptcy judge to take judicial notice of the filing of false information, a
motion seeking derivative standing to sue O’Donnell, a motion to file summary judgment against
O’Donnell, and a motion for leave to file an Adversary Proceeding – all denied. See, e.g., Bankr.
Case No. 10-41302, Docket Nos. 601, 602, 603, 604, 609, 610, 620, 626, 627, 629, 727, 637, 652,
653, 654, 664, 677, 678, 697, 698, 720, 721, 732, and 752. Clearly, the bankruptcy court is aware
of issues regarding O’Donnell’s Receivership, which has been under attack and review for many
years, first by Armistead’s predecessor in interest, and now by Armistead. The abundant motions

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similar to the one on appeal is what obliged the Trustee to abandon property related to claims as
to O’Donnell or his Receivership. Moreover, in O’Donnell’s Opposition to Armistead’s Motion
to Show Cause, he provided documentation to the Bankruptcy Court to support that assets
Armistead identified as belonging to the Debtor did not actually belong to the Debtor, and thus
were properly excluded from O’Donnell’s Final Accounting. Bankr. Case No. 10-41302, Docket
No. 808. Such documentary evidence provided ample support for the bankruptcy judge’s order
denying Armistead’s motion. Accordingly, this Court finds the Bankruptcy Court did not abuse its
discretion in denying Armistead’s latest motion.
In addition, the Bankruptcy Court’s acceptance of O’Donnell’s Final Accounting concern
questions of fact, including which assets did or did not belong to the Debtor.

Factual

determinations are reviewed for clear error. After examining the documents presented, this Court
finds no such clear error. For example, Armistead asserts that $16,729.60 from the Skinner
Auction sale is part of the Debtor's estate, but the Appellee provided the Settlement Statement
from Skinner Auction house identifying a list of personal items that appear to belong to Cynthia,
which were auctioned nearly a year before the filing of the Debtor’s bankruptcy petition. See
Docket No. 13-1, Ex. 2. Armistead fails to show how or where the court erred in finding that the
listed items were not the property of Na-Mor, Inc. This Court also finds no clear error by the
Bankruptcy Court in finding that O'Donnell’s Final Accounting was accurate insofar as it omitted
items that were not, in fact, property of the Debtor.
With regards to the evidentiary hearing, “[t]he bankruptcy court has the discretion to decide
an issue without holding an evidentiary hearing,” and the denial of a request for such hearing is
reviewed for abuse of discretion. In re Garcia, 532 B.R. 173, 182 (B.A.P. 1st Cir. 2015) (quoting
Rockstone Capital LLC v. Metal, 508 B.R. 552, 558 (E.D.N.Y.2014)). “A bankruptcy judge ‘does

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not abuse her discretion in reaching a decision without holding an evidentiary hearing where the
record provided ample evidence on which the court could make such a decision.’” Id. (quoting
Rockstone, 508 B.R. at 559).
While Armistead claimed “newly discovered” evidence in his filings with the Bankruptcy
Court, his submissions were conclusory accusations lacking sufficient documentary support.
Further, given the scope and length of the six year history of these proceedings, it seems reasonable
that the bankruptcy court would have sufficient facts before it to determine that an evidentiary
hearing was unnecessary, and thus this Court finds that there was no abuse of discretion in denying
Armistead’s request. To the extent the denial of the evidentiary hearing was based in part on the
Bankruptcy judge’s findings of fact as to the accuracy of the Accounting, such findings are
reviewed for clear error, and as discussed above, this court finds no clear error.

Conclusion
For the reasons set forth above, the Order of the Bankruptcy Court is affirmed.

SO ORDERED.

/s/ Timothy S. Hillman
TIMOTHY S. HILLMAN
DISTRICT JUDGE

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