United States District Court, D. New Hampshire
Kristina Finley, Esq. Terrie L. Harman, Esq. Timothy Laurent
Chevalier, Esq. Jonathan M. Flagg, Esq. Michael P. Trainor,
Esq. John Harold McCann, Esq. Olga L. Gordon, Esq. Geraldine
L. Koronis, Esq.
ORDER ON APPEAL
N. LAPLANTE, UNITED STATES DISTRICT JUDGE
appeal turns on whether the Bankruptcy Court abused its
discretion by denying the appellant's motion to amend his
adversary complaint before granting the appellees'
motions to dismiss that complaint. Appellant Thomas Frangos
brought an adversary complaint in the United States
Bankruptcy Court, claiming that the mortgage that he executed
in 2005 was invalid because he did not hold title to the
mortgaged property at that time and, further, that this
invalidity of the underlying mortgage rendered invalid his
reaffirmation agreement, approved by the Bankruptcy Court
during a separate Chapter 7 proceeding. In this appeal,
Frangos argues that the Bankruptcy Court erred by denying his
motion to amend that adversarial complaint to include the
Frances Ann Frangos 2002 Revocable Trust u/t/d March 12, 2002
as a plaintiff because the Trust held title to the property
at the time of the mortgage.
court has jurisdiction to hear appeals from “final
judgments, orders, and decrees” of the Bankruptcy Court
under 28 U.S.C. § 158(a)(1). See also L.R.
77.4. Finding no error in the Bankruptcy Court's
decision to deny Frangos leave to amend his complaint, the
court affirms it.
Standard of review
hearing an appeal from the Bankruptcy Court, this court
applies the same standards of review governing appeals of
civil cases to the appellate courts. See Groman v. Watman
(In re Watman), 301 F.3d 3, 7 (1st Cir. 2002). As such,
this court reviews the Bankruptcy Court's “findings
of fact for clear error and conclusions of law de
novo.” Old Republic Nat'l Title Ins. Co. v.
Levasseur (In re Levasseur), 737 F.3d 814, 817 (1st Cir.
2013). It reviews a “denial of leave to amend [a
complaint] for abuse of discretion, ” and
“defer[s] to the [Bankruptcy Court's] hands-on
judgment so long as the record evinces an adequate reason for
the denial.” Nikitine v. Wilmington Tr. Co.,
715 F.3d 388, 389 (1st Cir. 2013)
Thomas Frangos and his wife, Ann Frangos, executed a
mortgage on property located at 33 Gosport Road in
Portsmouth, New Hampshire on April 26, 2005. The mortgage
secured a note, executed by Frangos alone, promising to repay
a loan for $599, 000. The mortgage names “Thomas A.
Frangos, a married person, ” as the borrower and
references both Thomas and Ann Frangos as individuals.
time the mortgage was executed, however, title to the
property was held in the name of the Trust, with Ann Frangos
as trustee. The mortgage does not mention the Trust. Shortly
after the Frangoses executed the mortgage, the Trust conveyed
the property to Frangos, though Frangos -- who effectuated
the transfer -- now contends that he lacked authority to do
filed a Chapter 7 bankruptcy petition on November 20, 2007,
and received his discharge on January 9, 2009. During those
proceedings, Frangos signed a bankruptcy reaffirmation
agreement, reaffirming the mortgage in the amount of $710,
499.58. Frangos once again defaulted on the loan in 2009.
Appellee Bank of New York Mellon (BNYM), which held both the
note and the mortgage, began foreclosure proceedings in
2013. This led to a series of lawsuits brought
by the Frangoses to prevent that foreclosure.
Frangoses first brought claims for breach of contract, breach
of the covenant of good faith and fair dealing, and
injunctive relief against appellees BNYM and Bank of America,
the loan's former servicer. See generally Frangos v.
Bank of America, N.A., 2015 WL 6829104, at *1 (D.N.H. Nov. 6,
2015) (“Frangos I”) (Barbadoro, J.). The
court dismissed the Frangoses' breach of the covenant
claim and granted summary judgment to the defendants on their
claims for breach of contract and injunctive relief.
Id. Foreclosure proceedings recommenced.
Frangos filed a second lawsuit. This time, in addition to
injunctive relief, Frangos challenged the validity of the
mortgage, brought claims against BNYM and appellee New Penn
Financial, LLC, doing business as Shellpoint Mortgage
Servicing, for violations of state and federal laws against
unfair debt collection, see 15 U.S.C. § 1692 et seq. and
N.H. Rev. Stat. Ann. § 358-C, and asserted a
claim against Bank of America for misrepresentation of the
amount due on the Frangoses' monthly mortgage payments.
See generally Frangos v. Bank of New York Mellon,
2017 WL 4876284, at *1 (D.N.H. Oct. 27, 2017)
(“Frangos II”) (McCafferty, J.). After amending
the complaint, Frangos moved to join the Trust as an
indispensable party to that action. See Fed. R. Civ.
P. 19(a). The court denied that motion, concluding, among
other things, that Frangos and the Trust shared an interest
in proving the mortgage's invalidity and avoiding
foreclosure, and that the Trust was not a required party
under Rule 19(a) because of this shared interest.
Id., 2017 WL 4876284, at *3. The court then
dismissed Frangos's misrepresentation claim as barred by
the economic loss doctrine. Id., 2017 WL
4876284, at *2. Frangos voluntarily dismissed his
remaining claims “without prejudice” during the
pendency of a motion to dismiss those claims.
Frangos's action was pending before Judge McCafferty, he
filed the adversary complaint in the Bankruptcy Court that
give rise to this appeal. In this complaint, Frangos alleged
(1) that the mortgage was void because the Trust owned the
property at the time the mortgage was executed; and (2) the
reaffirmation and loan modification agreements were void
because the mortgage was void. He further alleged that, under
Rule 19, Ann Frangos, as trustee of the Trust, must
be added to the action as a plaintiff.
appellees moved to dismiss Frangos's adversary complaint,
invoking the doctrines of res judicata and judicial estoppel.
The Bankruptcy Court granted that motion. It found that res
judicata barred Frangos's claims challenging the
mortgage's validity in light of Frangos I and
that judicial estoppel also barred them because Frangos
sought approval of the reaffirmation agreement during his
Chapter 7 bankruptcy proceedings. Frangos does not challenge
this decision on appeal.
same time that it dismissed his complaint, the Bankruptcy
Court denied Frangos leave to amend his complaint to add the
Trust as a party pursuant to Rule 19(a). In doing
so, it found that the Trust's only beneficiaries were
Thomas and Ann Frangos, that their children were designated
as successor beneficiaries, that Ann served as the trustee,
and that the Trust was revocable. Because of this unity of
interests, and referencing Frangos II, the
Bankruptcy Court concluded that adding the Trust as a
plaintiff would not “in any way change the res judicata
effect of the prior litigation between Mr. Frangos ...