Acre et al v. Chase Manhattan Mortgage Corp. et al

Filing 410

MEMORANDUM (Order to follow as separate docket entry) re: cross-motions to enforce settlement agreement 383 & 385 & judgment & mandate of 3rd Cir USCA 402 & 403 . (See memo for complete details.)Signed by Chief Judge Christopher C. Conner on 10/11/13. (ki)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

EDDIE and SHARON LESTER, et al.

: CIVIL ACTION NO. 3:01-CV-1182
:
Plaintiffs
: (Chief Judge Conner)
:
v.
:
:
GENE PERCUDANI, et al.
:
:
Defendants
:
-----------------------------------------------------------------------------PABLO ACRE, et al.,
Plaintiffs
v.
CHASE MANHATTAN
MORTGAGE CORP., et al.
Defendants

:
:
:
:
:
:
:
:
:
:

CIVIL ACTION NO. 1:04-CV-0832
(Chief Judge Conner)

MEMORANDUM
Presently before the court are cross-motions (Case No. 3:01-CV-1182, Docs.
515, 517; Case No. 1:04-CV-0832, Docs. 383, 385) to enforce a settlement agreement
entered into between plaintiffs and the Percudani defendants, Gene Percudani,
Chapel Creek Homes, Inc., Raintree Homes, Inc., Homes by Vintage, Inc., Y-Rent,
Inc., and Chapel Creek Mortgage Banker, Inc. (hereinafter “defendants”). This
motion comes to the court on remand from the Third Circuit Court of Appeals with
instructions to make additional findings concerning whether plaintiffs have fully
complied with their obligations under the parties’ settlement agreement to provide
defendants with certain bankruptcy orders. For the reasons that follow, the court

will order plaintiffs to provide bankruptcy orders from the bankruptcy cases of
Odell and Stacy Harrison, Robert and Sylvia Johnson, and Richard and Mary
Negron. The court will further order plaintiffs to provide defendants new releases
from Pedro and Olga Caban, Carol Thompson, and Bernice Williams.
I.

Background and Procedural History1
Lead plaintiffs Eddie and Sharon Lester, on behalf of a plaintiff class,

commenced a class action against real estate developer Gene Percudani and
multiple defendants on June 28, 2001. (See Case No. 3:01-CV-1182, Doc. 1). After
dismissal of the class action, on April 16, 2004, plaintiffs Pablo and Ivette Acre,
along with over 150 others, pursued a civil action against defendants and Chase
Manhattan Mortgage Corporation (“Chase”), William K. Spaner, and Dominick P.
Stranieri. (Case No. 1:04-CV-0832, Doc. 1). The parties reached an oral settlement
agreement on or about February 10, 2009, in which defendants agreed to pay
plaintiffs a sum of $300,000 in return for a release of all claims by plaintiffs against
defendants. (Case No. 3:01-CV-1182, Doc. 525 at 8; Case No. 1:04-CV-832, 393 at 8).
On February 20, 2009, the court issued an order (Case No. 3:01-CV-1182, Doc. 474;
Case No. 1:04-CV-0832, Doc. 331) staying the case and closing it for statistical
purposes only in light of the agreement. Thereafter, plaintiffs’ counsel began the

1

A more extensive discussion of the facts of this case may be found in the
court’s memorandum and order dated December 8, 2011 (see Case No. 3:01-CV1182, Doc. 525; Case No. 1:04-CV-0832, Doc. 393), and in the opinion of the Third
Circuit dated February 27, 2013 (see Case No. 3:01-CV-1182, Doc. 538; Case No. 1:04CV-0832, Doc. 403), familiarity with which is presumed.
2

process of securing written releases from plaintiffs regarding the settlement of
claims against defendants. After considerable delay, the parties executed a written
settlement agreement on September 3, 2010. (Case No. 3:01-CV-1182, Doc. 511;
Case No. 1:04-CV-0832, Doc. 380)
On June 9, 2011, plaintiffs filed a motion (Case No. 3:01-CV-1182, Doc. 515;
Case No. 1:04-CV-0832, Doc. 383) to enforce the settlement agreement. Defendants
filed a cross-motion (Case No. 3:01-CV-1182, Doc. 517; Case No. 1:04-CV-0832, Doc.
385) to enforce the settlement agreement on June 10, 2011, in opposition to
plaintiff’s motion. The principal issue addressed in these motions was whether
plaintiffs had provided all required releases and bankruptcy orders in accordance
with the terms of the settlement agreement. (See Case No. 3:01-CV-1182, Doc. 515
Ex. D, Doc. 516 at 2; Case No. 1:04-CV-0832, Doc. 383 Ex. D, Doc. 384 at 2). On
December 8, 2011, the court granted plaintiffs’ motion to enforce the settlement
agreement. (Case No. 3:01-CV-1182, Doc. 525; Case No. 1:04-CV-0832, Doc. 393).
The court found as a factual matter that defendants received all the required
releases, and rejected defendants’ challenges to the wording of the releases. (Id.)
The court also rejected defendants’ assertion that plaintiffs violated the express
terms of the settlement agreement by asking the parties to sign releases when
negotiations of the settlement agreement were still ongoing. (Case No. 3:01-CV1182, Doc. 525 at 11; Case No. 1:04-CV-0832, Doc. 393 at 11). The court reasoned
that plaintiffs’ counsel began obtaining signed releases after reaching an oral
settlement agreement with defendants on February 10, 2009, and that “it is of no
3

moment that a written agreement was not yet executed.” (Id.) Defendants
appealed.
The Third Circuit largely affirmed the court’s decision, except for one caveat:
it could not determine whether plaintiffs provided all required bankruptcy orders to
defendants. (Case No. 3:01-CV-1182, Doc. 538-1; Case No. 1:04-CV-0832, Doc. 403-1).
The Third Circuit remanded, and it instructed this court to make additional factual
findings or to explain its conclusions concerning whether purportedly “missing”
bankruptcy orders were required. (Id.)
In their original briefing, defendants provided a list of eleven individuals and
thirteen couples who defendants claimed had not provided a bankruptcy order.2
(See Case No. 3:01-CV-1182, Doc. 518 ¶ 5, Ex. A; Case No. 1:04-CV-832, Doc. 386 ¶ 5,
Ex. A; Doc. 388, Ex. E). Upon remand, the court ordered defendants to file a
memorandum identifying all plaintiffs for whom there are deficiencies in the
settlement documentation, i.e., missing releases or bankruptcy orders. (Case No.
3:01-CV-1182, Doc. 541; Case No. 1:04-CV-832, Doc. 406). In lieu of a memorandum,
defendants’ counsel wrote a letter to the court listing a variety of complaints

2

The original list of missing bankruptcy orders included the following
plaintiffs: Joy Arcia, Floyd and Merlyn Bennett, Stanley Boots, Pedro Caban, Olga
Caban, Francis and Marisol Corchado, Louise and Ambrose Devaux, Vincent and
Michelle Dezonie, Luis and Grace Gonzalez, Odell and Stacey Harrison,
Christopher and Tania Hendricks, Robert and Sylvia Johnson, Jeffrey and Miriam
Krisiak, Bernard Lewis, Joseph and Grace Mahama, Richard and Mary Negron,
Robert C. Nichols, Anthony and Evelyn Sanchez, Diana Stanley, Carolyn and
Dwayne Thompson, Bernice Williams, Camille Williams, John Williams III, and
Robert Hercules. (See Case No. 3:01-CV-1182, Doc. 518 ¶ 5 Ex. A; Case No. 1:04-CV832, Doc. 386 ¶ 5 Ex. A, Doc. 388 Ex. E).
4

regarding the settlement documentation for fifteen individuals and twenty-two
couples. (See Case No. 3:01-CV-1182, Doc. 543; Case No. 1:04-CV-832, Doc. 407).
The letter is anomalous because the Third Circuit’s opinion had foreclosed most of
the complaints set forth therein. The letter is also somewhat confounding because
it identifies several plaintiffs who were not included on defendants’ original list of
missing bankruptcy orders3 and omits several plaintiffs who were included on
defendants’ original list of missing bankruptcy orders.4 In light of the
inconsistencies hereinabove described, the court directed defendants to clarify their
position and to omit any names foreclosed by the Third Circuit’s opinion. (Case No.
3:01-CV-1182, Doc. 547; Case No. 1:04-CV-0832, Doc. 408). The court also directed
defendants to respond to plaintiffs’ assertion that certain bankruptcy orders were
unnecessary by operation of law. (Id.) Unfortunately, defendants’ reply did not
explain the additions or omissions and failed to address two individuals who were

3

Defendants included the following plaintiffs in their letter, but not in their
original list of missing bankruptcy orders: Robin Altenor, Terry and Flordaliza
Burdick, Luis and Amalia Domenech, Merlyn Lewis, and Sharon Warburton.
(Compare Case No. 3:01-CV-1182, Doc. 543; Case No. 1:04-CV-832, Doc. 407 with
Case No. 3:01-CV-1182, Doc. 518 ¶ 5, Ex. A; Case No. 1:04-CV-832, Doc. 386 ¶ 5, Ex.
A; Doc. 388, Ex. E).
4

Defendants included the following plaintiffs in their original list of missing
bankruptcy orders, but not in their letter: Floyd and Merlyn Bennett, Louise and
Ambrose Devaux, Robert C. Nichols, and John Williams III. (Compare Case No.
3:01-CV-1182, Doc. 543; Case No. 1:04-CV-832, Doc. 407 with Case No. 3:01-CV-1182,
Doc. 518 ¶ 5, Ex. A; Case No. 1:04-CV-832, Doc. 386 ¶ 5, Ex. A; Doc. 388, Ex. E).
5

included in their letter but not in their original list of missing bankruptcy orders.5
Despite these anomalies, the court has conducted a thorough review of the record,
and the court concludes that this matter is ripe for disposition.
II.

Discussion
The court must first determine the specific plaintiffs for whom there are still

alleged deficiencies in the bankruptcy order documentation. The court concludes
that defendants are satisfied with the bankruptcy order documentation for those
plaintiffs who were identified in defendants’ original list but subsequently omitted
from their letter following remand, namely, Floyd and Merlyn Bennett, Louise and
Ambrose Devaux, Robert C. Nichols, and John Williams III. The court also
concludes that defendants waived their concerns regarding the plaintiffs who were
not included in defendants’ original list of missing bankruptcy orders, namely,
Robin Altenor, Terry and Flordaliza Burdick, Luis and Amalia Domenech, Merlyn
Lewis, and Sharon Warburton. Finally, in the course of providing the court with
supplemental briefing, it is apparent that the parties resolved their dispute
concerning the settlement documentation for Fran and Robert Hercules. (See Case
No. 1:01-CV-1182, Doc. 543 at 7, Doc. 546 at 11, Doc. 546-1 Ex. H, Doc. 548 at 8; Case
No. 1:04-CV-0832, Doc. 407 at 7).

5

Those two individuals are Robin Altenor and Sharon Warburton.
(Compare Case No. 3:01-CV-1182, Doc. 543; Case No. 1:04-CV-832, Doc. 407 with
Case No. 3:01-CV-1182, Doc. 518 ¶ 5 Ex. A, Doc. 548; Case No. 1:04-CV-832, Doc. 386
¶ 5 Ex. A, Doc. 388 Ex. E).
6

Documentation for the following plaintiffs – listed alphabetically – remains at
issue: Joy Arcia, Stanley Boots, Pedro and Olga Caban, Francis and Marisol
Corchado, Vincent and Michelle Dezonie, Luis and Grace Gonzalez, Odell and
Stacy Harrison, Christopher and Tania Hendricks, Robert and Sylvia Johnson,
Jeffrey and Miriam Krisiak, Bernard Lewis, Joseph and Grace Mahama, Richard
and Mary Negron, Anthony and Evelyn Sanchez, Diana Stanley, Carol and Dwayne
Thompson, Bernice Williams, and Camille Williams.6
As a preliminary matter, a bankruptcy estate generally includes “all legal or
equitable interests of the debtor in property as of the commencement of the case.”
11 U.S.C. § 541(a)(1). This definition includes the debtor’s interest in a cause of
action. Kollar v. Miller, 176 F.3d 175, 178 (3d Cir. 1999). Neither party disputes that
each plaintiff’s bankruptcy estate initially encompassed the cause of action
governed by the subject settlement. When a individual debtor’s cause of action
belongs to the bankruptcy estate, the bankruptcy trustee has exclusive standing to
assert the claim. Matter of Educators Group Health Trust, 25 F.3d 1281, 1284 (5th
Cir. 1994).
Property of the bankruptcy estate will remain as such unless it is either
administered or abandoned. 11 U.S.C. § 554(d). Under § 554(a), the bankruptcy
trustee may abandon any property of the estate that is burdensome or of

6

The court notes several discrepancies in the spelling of these plaintiffs’
names in the parties’ submissions. The court has endeavored to spell each
plaintiff’s name as it appears in the case caption on the docket for Case No. 1:04CV-0832.
7

inconsequential value after notice and a hearing. Under § 554(b), the bankruptcy
court may order the trustee to abandon any property of the estate that is
burdensome or of inconsequential value upon request of a party in interest and
after notice and a hearing.7 Section 554(c) provides that property appropriately
scheduled under 11 U.S.C. § 521(a)(1) that is not administered at the close of the
bankruptcy case is abandoned to the debtor and administered pursuant to 11 U.S.C.
§ 350. If a debtor never listed the cause of action as an asset on the debtor’s
schedules, that cause of action cannot be abandoned pursuant to § 554. See Krank
v. Utica Mut. Ins. Co., 109 B.R. 668, 669 (E.D. Pa. 1990), aff’d, 908 F.2d 962 (3d Cir.
1990).
Plaintiffs allege that a number of plaintiffs were not required to provide
bankruptcy orders because the trustee or the court abandoned the plaintiffs’ claims
in the litigation pursuant to 11 U.S.C. § 554(a) or (b). (Case No. 3:01-CV-1182, Doc.
546). Plaintiffs also contend that several plaintiffs did not need to provide
bankruptcy orders due to the timing of their bankruptcy action. (Id.) The court will
address each contention in turn.
A.

Abandonment via 11 U.S.C. § 554(a)

Plaintiffs allege that eight couples and one individual did not need to provide
bankruptcy orders because their respective bankruptcy trustees abandoned the

7

Under either § 554(a) or (b), a hearing is not necessarily required if notice is
given properly and a party in interest does not timely request such a hearing. 11
U.S.C. § 102.
8

claims under § 554(a).8 (Case No. 3:01-CV-1182, Doc. 546 Ex. E). In support,
plaintiffs present correspondence in which the trustees indicate that they do not
intend to pursue the claims against defendants as part of the bankruptcy estates.
Specifically, the trustees state that they would not object if plaintiffs filed motions
with the court. (Id.) Defendants contend that the claims were never properly
abandoned pursuant to § 554(a) because neither the trustees nor the plaintiffs ever
filed motions to compel abandonment and because the statutorily required “notice
and hearing” was never provided. (Case No. 3:01-CV-1182, Doc. 548).
Upon review of the plaintiffs’ bankruptcy case dockets, the court concludes
that the trustees never initiated the abandonment of the claims under § 554(a). (See
Case No. 5:02-BK-688; Case No. 5:04-BK-56207; Case No. 5:04-BK-52703; Case No.
5:05-BK-53783; Case No. 5:99-BK-2643; Case No. 5:09-BK-1219; Case No. 5:98-BK1210; Case No. 5:00-BK-3730; Case No. 5:02-BK-1729). In fact, the correspondence
from the trustees merely indicates that they would not have objected if plaintiffs
filed motions for court approval of the settlement, not that they intended to
abandon the claims themselves. (See Case No. 3:01-CV-1182, Doc. 546 Ex. E).
Moreover, there is no indication from the record that the trustees provided notice
and the opportunity for a hearing. The trustees did not abandon these plaintiffs’

8

Those plaintiffs are Pedro and Olga Caban, Vincent and Michelle Dezonie,
Odell and Stacy Harrison, Christopher and Tania Hendricks, Robert and Sylvia
Johnson, Joseph and Grace Mahama, Richard and Mary Negron, Carol and
Dwayne Thompson, and Bernice Williams. (Case No. 3:01-CV-1182, Doc. 546 at 612, 14-15, 17-19).
9

claims under § 554(a), and the court must order these plaintiffs to provide
bankruptcy orders absent some other operation of law.
Under § 554(c), any scheduled property that is not administered at the close
of the bankruptcy case is abandoned and no longer considered property of the
bankruptcy estate. Similarly, the dismissal of a bankruptcy case “revests the
property of the estate in the entity in which such property was vested immediately
before the commencement of the case under this title.” 11 U.S.C. § 349(b)(3); In re
Van Stelle, 354 B.R. 157, 167-68 (Bankr. W.D. Mich. 2006) (stating that the term
“revest” as used in § 349(b)(3) means “the absolute transfer out of the estate of
whatever interests” were part of the bankruptcy estate by operation of the
Bankruptcy Code). In other words, the dismissal or closure of a bankruptcy case
extinguishes the bankruptcy estate and negates any need for a bankruptcy order.
Thus, pursuant to § 554(c), bankruptcy orders are not required from the
plaintiffs whose bankruptcy cases are closed,9 provided that each plaintiff’s claim
was a properly scheduled asset of the plaintiff’s bankruptcy estate. Additionally,
pursuant to § 349(b)(3), plaintiff Bernice Williams need not provide a bankruptcy
order because her case was dismissed on September 28, 2011, for material default.
(Case No. 5:09-BK-1219, Doc. 57).

9

The following plaintiffs’ bankruptcy cases are closed: Pedro and Olga
Caban, Vincent and Michelle Dezonie, Christopher and Tania Hendricks, Joseph
and Grace Mahama, and Carol and Dwayne Thompson. (See Case No. 5:02-BK-688
(closed March 14, 2011); Case No. 5:04-BK-56207 (closed June 21, 2010); Case No.
5:04-BK-52703 (closed June 17, 2009); Case No. 5:05-BK-53783 (closed September
16, 2010); Case No. 5:99-BK-2643 (closed June 18, 2012).
10

Defendants aver that bankruptcy orders are nevertheless required from the
closed bankruptcy cases because those plaintiffs amended their schedules to
include only their settlement with Chase, not their separate settlement with
defendants. (Case No. 3:01-CV-1182, Doc. 548). Defendants argue that plaintiffs’
respective claims to the litigation were not properly included in their respective
bankruptcy estates, and could not be abandoned under § 554. Defendants
emphasize that the schedule amendments could not pertain to the plaintiffs’
settlement with them because the amendments occurred prior to September 3,
2010, when plaintiffs finalized their settlement with defendants. (Id.)
Defendants’ assertions are unavailing. The asset listed in each plaintiff’s
amended schedule does not explicitly differentiate between the different defendants
involved in the lawsuit. (See Case No. 5:02-BK-688, Doc. 57 (“Acre, et al v. Chase
Manhattan Mort. Corp, et al Case No. 1-04-CV-832”); Case No. 5:04-BK-56207, Docs.
123, 124 (“Potential Claim for Damages in Federal law-suit filed against Gene
Percadani [sic], Y Rent, et al.”); Case No. 5:04-BK-52703, Doc. 49 (“Pablo and Ivette
Acre, et al. v. Chase Manhattan Mortage. Pending Lawsuit.”); Case No. 5:05-BK53783, Doc. 30 (“Acre, et al v. Chase Manhattan Mort. Corp., et al Case No. 1-04-CV832"); Case No. 5:99-BK-2643, Docs. 44, 97 (“Acre, et al v. Chase Manhattan Mort.
Corp., et al Case No. 1-04-CV-832")). Defendants argue that the scheduled assets
refer only to the plaintiffs’ settlement with Chase rather than the full value of their
claim. To the contrary, most of the schedules instructed the plaintiffs to merely
provide the “estimated” or “current” value of their claims. (See Case No. 5:02-BK11

688, Doc. 57; Case No. 5:05-BK-53783, Doc. 30; Case No. 5:04-BK-52703, Doc. 49;
Case No. 5:99-BK-2643, Docs. 44, 97). Indeed, one plaintiff listed the value of the
asset as “unknown.” (See Case No. 5:04-BK-56207, Docs. 123, 124). The plaintiffs’
schedule amendments may have been filed prior to September 3, 2010, the date the
settlement with defendants was finalized, but they were prepared after February 10,
2009, the date of the parties’ oral settlement agreement. The court has already
determined – and the Third Circuit affirmed – that “it is of no moment that a
written agreement was not yet executed” when plaintiffs began gathering the
necessary documentation for settlement. (Case No. 3:01-CV-1182, Doc. 525 at 11;
Case No. 1:04-CV-0832, Doc. 393 at 11).
Therefore, plaintiffs do not have to provide bankruptcy orders from the
bankruptcy cases of Pedro and Olga Caban, Vincent and Michelle Dezonie,
Christopher and Tania Hendricks, Joseph and Grace Mahama, Carol and Dwayne
Thompson, and Bernice Williams. However, plaintiffs must provide bankruptcy

12

orders for Odell and Stacy Harrison, Robert and Sylvia Johnson,10 and Richard and
Mary Negron, because their respective bankruptcy cases are still open, and their
claims to the litigation remain property of the bankruptcy estate. (See Case No.
5:98-BK-1210; See Case No. 5:00-BK-3730, Case No. 5:02-BK-1729).
The court recognizes that its holding casts doubt on the enforceability of
certain plaintiffs’ releases: if plaintiffs signed a release before the plaintiff’s claim to
the litigation was abandoned as property of the bankruptcy estate, the release is not
valid or enforceable. See, e.g., In re DeGroot, 460 B.R. 159, 166 (Bankr. W.D. Mich.
2011), aff’d, 484 B.R. 311 (6th Cir. BAP 2012) (holding that a debtor had no right to
release his claim for payment of a prepetition receivable when the prepetition
receivable was included as property of the bankruptcy estate); In re Rothwell, 159
B.R. 374, 377 (Bankr. D. Mass. 1993) (noting that a debtor is not free to dispose of a
cause of action until the bankruptcy trustee abandons it). Accordingly, the court

10

There is some question as to whether a bankruptcy order for the Johnsons
is strictly necessary because the bankruptcy trustee filed a final report and account
on November 16, 2010, asserting that the estate was fully administered. (See Case
No. 5:00-BK-3730, Doc. 52). Pursuant to Federal Rule of Bankruptcy Procedure
5009, when a trustee files a final report and account certifying that the estate has
been fully administered, and the United States trustee does not file an objection
within 30 days, there is a presumption that the estate has been fully administered.
If the Johnson’s bankruptcy estate has been fully administered, it logically follows
that their claim against defendants is no longer part of the bankruptcy estate. See
11 U.S.C. § 554(d). But see In re Beaton, 211 B.R. 755 (Bkr. N.D. Ala. 1997) (holding
that even if Rule 5009 altered the meaning of abandonment of property under 11
U.S.C. § 554, this would create a conflict and the bankruptcy code provision would
prevail). Nevertheless, plaintiffs do not argue that the Johnsons effectively
abandoned their claim on this ground, and so the court declines to analyze the issue
further.
13

must compare the date that these plaintiffs signed their releases and the date their
claim was no longer property of the bankruptcy estate. Vincent and Michelle
Dezonie, Christopher and Tania Hendricks, and Joseph and Grace Mahama all
signed their releases after their claim was no longer property of the bankruptcy
estate. (Compare Case No. 3:01-CV-1182, Doc. 515-9 Ex. D; Case No. 1:04-CV-0832,
Doc. 383 Ex. D with Case No. 5:04-BK-56207; Case No. 5:04-BK-52703; Case No.
5:00-BK-3730; Case No. 5:05-BK-53783). Pedro and Olga Caban, Carol Thompson,11
and Bernice Williams all signed their releases before the close or dismissal of their
bankruptcy cases. (Compare Case No. 3:01-CV-1182, Doc. 515-9 Ex. D; Case No.
1:04-CV-0832, Doc. 383 Ex. D with Case No. 5:02-BK-688; Case No. 5:99-BK-2643;
Case No. 5:09-BK-1219). These plaintiffs did not have authority to sign releases
because their respective interests in the litigation were still part of a bankruptcy
estate. Thus, plaintiffs must provide defendants new releases from Pedro and Olga
Caban, Carol Thompson, and Bernice Williams.

11

A letter from plaintiff’s counsel, David M. Cedar, Esquire, indicates that
Dwayne Thompson is missing, has a child support judgment against him, and lost
possession of the home to his ex-wife, Carol Thompson. (Case No. 3:01-CV-1182,
Doc. 515-10, Ex. E; Case No. 3:04-CV-0832, Doc. 383, Ex. E). The court was unable
to find a release in the record for Dwayne Thompson, but defendants did not raise
this issue as a deficiency in the settlement documentation.
14

In summary, plaintiffs must provide bankruptcy orders for Odell and Stacy
Harrison, Robert and Sylvia Johnson and Richard and Mary Negron.12 Bankruptcy
orders from Pedro and Olga Caban, Carol Thompson, and Bernice Williams are not
required, but these plaintiffs must provide defendants new releases. The court does
not require any further documentation from Vincent and Michelle Dezonie,
Christopher and Tania Hendricks, and Joseph and Grace Mahama.
B.

Abandonment via 11 U.S.C. § 554(b)

Plaintiffs allege that three couples and one individual are not required to
provide bankruptcy orders because the bankruptcy court deemed the litigation an
abandoned asset in their bankruptcy actions pursuant to § 554(b).13 (See Case No.
3:01-CV-1182, Doc. 546, Exs. D, F, G, I). Defendants contend that § 554(b) does not
apply because these plaintiffs amended their schedules to include only their
settlement with Chase, not their settlement with defendants. (Case No. 3:01-CV1182, Doc. 548). Defendants emphasize that the schedule amendments could not
pertain to the plaintiffs’ settlements with defendants because the amendments
occurred prior to September 3, 2010, the date the settlement was finalized. (Id.)

12

These plaintiffs’ releases are invalid because they executed the releases
when their interests in the litigation were actually part of the bankruptcy estates.
These plaintiffs need not provide new releases in addition to the bankruptcy orders.
The Third Circuit explicitly held that plaintiffs had to provide one or the other, but
not both. (See Case No. 3:01-CV-1182, Doc. 538-1 at 6 n.2; Case No. 1:04-CV-0832,
Doc. 403-1 at 6 n.2).
13

Those plaintiffs are Stanley Boots, Francis and Marisol Corchado, Luis and
Grace Gonzalez, and Jeffrey and Miriam Krisiak. (Case No. 3:01-CV-1182, Doc.
546).
15

Defendants’ assertions are without merit. Similar to the plaintiffs discussed
supra, each of the plaintiffs’ amended schedules listed the asset as “Pablo Acre and
Ivette Acre et al v. Chase Manhattan Mortgage Corp. et al, case no. 1-04-CV-832.”
(See Case No. 5:01-BK-3706, Doc. 44; Case No. 5:02-BK-4522, Doc. 21; Case No. 5:98BK-1260, Doc. 11; Case No. 04-BK-54395, Doc. 23). The plaintiffs’ amended
schedules do not differentiate between the different defendants involved in the
lawsuit. Further, each plaintiff’s motion to compel abandonment referred to the
monetary value listed in the amended schedule “as the value of” the debtor’s claim
in the entire litigation, absent “legal fees and costs.” (See Case No. 5:01-BK-3706,
Doc. 45; Case No. 5:02-BK-4522, Doc. 27; Case No. 5:98-BK-1260, Doc. 12; Case No.
04-BK-54395, Doc. 24). Additionally, in their motions, plaintiffs used the term
“Pocono Litigation” to refer to the entire suit, and the court used plaintiffs’
proposed orders to deem the “Pocono Litigation” abandoned. (See Case No. 5:01BK-3706, Doc. 52; Case No. 5:02-BK-4522, Doc. 33; Case No. 5:98-BK-1260, Doc. 17;
Case No. 04-BK-54395, Doc. 33). As previously observed with respect to other
parties, these plaintiffs’ schedule amendments and motions to compel were filed
after February 10, 2009, the date of the parties’ oral settlement agreement. (See
Case No. 5:01-BK-3706, Docs. 44, 45; Case No. 5:02-BK-4522, Docs. 21, 27; Case No.
5:98-BK-1260, Docs. 11, 12; Case No. 04-BK-54395, Docs. 23, 24). Hence, the court
finds that bankruptcy orders are not required in the cases of Stanley Boots, Francis
and Marisol Corchado, Luis and Grace Gonzalez, and Jeffrey and Miriam Krisiak.

16

C.

Timing of Bankruptcy Action

Finally, plaintiffs aver that bankruptcy orders are not necessary from the
remaining plaintiffs14 as a result of the unique timing of their bankruptcy actions.
First, plaintiffs claim that bankruptcy orders are not required from Joy Arcia,
Bernard Lewis, and Anthony and Evelyn Sanchez because these plaintiffs were
discharged from bankruptcy (without any distribution of their assets) several years
prior to the settlement. (Case No. 3:01-CV-1182, Doc. 546). Bankruptcy orders are
not required from these plaintiffs because their bankruptcy estates are fully
administered and closed. (See Case No. 5:07-BK-50426 (closed June 11, 2007); Case
No. 5:04-BK-52678 (closed September 2, 2004); Case No. 5:01-BK-1622 (closed April
15, 2010)). Clearly, these plaintiffs’ claims to the litigation are abandoned and no
longer part of the bankruptcy estate pursuant to § 554(c).
Defendants repeat the now familiar refrain that § 554(c) cannot apply
because plaintiffs only scheduled their potential claim from Chase. (Case No. 3:01CV-1182, Doc. 548). The court finds this argument unavailing for the same reasons
discussed supra. Indeed, the schedules of Joy Arcia and Bernard Lewis specifically
reference defendant Gene Percudani. (See Case No. 5:07-BK-50426, Doc. 16 (listing
“[p]otential claim against Chase Manhattan Mortgage/Percondini [sic]”); Case No.
5:04-BK-52678, Doc. 1 (listing “RICO & Fraud Claim v. Percedani [sic], et al”). The

14

The remaining plaintiffs with contested settlement documentation are Joy
Arcia, Bernard Lewis, Anthony and Evelyn Sanchez, Diana Stanley, and Camille
Williams.
17

court finds that bankruptcy orders are not necessary from Joy Arcia, Bernard
Lewis, and Anthony and Evelyn Sanchez.15
Further, plaintiffs aver that a bankruptcy order was not required for Diana
Stanley because Ms. Stanley filed for bankruptcy after she signed a release. (See
Case No. 3:01-CV-1182, Doc. 546 at 17). Plaintiffs attached a certification from
plaintiffs’ counsel, David M. Cedar, Esquire, confirming this sequence of events.
(See Case No. 3:01-CV-1182, Doc. 546-1, Ex. N, N-1, N-2). Defendants do not dispute
plaintiffs’ assertion. (Case No. 3:01-CV-1182, Doc. 548 at 13). Thus, Ms. Stanley no
longer possessed a legal interest in the cause of action against defendants at the
commencement of her bankruptcy case. See 11 U.S.C. § 541(a)(1) (stating that
property of the bankruptcy estate only encompasses “all legal or equitable interests
of the debtor in property as of the commencement of the case”) (emphasis added).
The court agrees with plaintiffs’ counsel that a bankruptcy order is not required
under these circumstances.

15

New releases are also not required from any of these plaintiffs because they
signed their releases after their estates were fully administered and their cases were
closed. (Compare Case No. 3:01-CV-1182, Doc. 515-9, Ex. D; Case No. 1:04-CV-0832,
Doc. 383, Ex. D with Case No. 5:07-BK-50426; Case No. 5:01-BK-1622; Case No. 5:04BK-52678). Bernard Lewis’ case had been reopened when he signed his release,
but the court reopened it by mistake and promptly closed it with no additional
scheduled assets or administration. (See Case No. 5:04-BK-52678, Docs. 19, 24).
The cause of action remained abandoned and was not part of the bankruptcy estate
at the time he signed his release. See In re Goswami, 304 B.R. 386, 392 (9th Cir.
BAP 2003) (stating that property abandoned under § 554(c) “is not automatically
reeled back in” if the case is reopened) (quoting In re Menk, 241 B.R. 896, 914 (9th
Cir. BAP 1999); In re DeVore, 223 B.R. 193, 198 (9th Cir. BAP 1998) (“We fail to see
how the reopening of a bankruptcy case and withdrawal of a no asset report,
without more, negate a valid technical abandonment.”).
18

Finally, plaintiffs contend that a bankruptcy order was not required for
Camille Williams because her Chapter 13 bankruptcy case was dismissed in 2004
due to the court’s inability to confirm the plan. (Case No. 3:01-CV-1182, Doc. 546 at
19, Doc. 546-1 Ex. O and P; Case No. 03-BK-54517, Doc. 22). Dismissal of a
bankruptcy case “revests the property of the estate in the entity in which such
property was vested immediately before the commencement of the case under this
title.” 11 U.S.C. § 349(b)(3). In other words, the dismissal of Ms. Williams’
bankruptcy case extinguished the bankruptcy estate; therefore, no bankruptcy
order is required.
III.

Conclusion
For the foregoing reasons, the court finds that no further documentation is

required for Joy Arcia, Stanley Boots, Francis and Marisol Corchado, Vincent and
Michelle Dezonie, Luis and Grace Gonzalez, Christopher and Tania Hendricks,
Jeffrey and Miriam Krisiak, Bernard Lewis, Joseph and Grace Mahama, Anthony
and Evelyn Sanchez, Diana Stanley, and Camille Williams. Plaintiffs must obtain
bankruptcy orders from the bankruptcy cases of Odell and Stacy Harrison, Robert
and Sylvia Johnson, and Richard and Mary Negron. New releases are required
from Pedro and Olga Caban, Carol Thompson, and Bernice Williams. An
appropriate order follows.

/S/ CHRISTOPHER C. CONNER
CHRISTOPHER C. CONNER
Chief Judge, Middle District of Pennsylvania

Dated:

October 11, 2013