IN RE DONALD C. KUPPERSTEIN, Debtor.
IRENE B. SCHALL, Personal Representative of the Estate of Fred Kuhn; EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES, Appellees. DONALD C. KUPPERSTEIN, Appellant,
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MASSACHUSETTS [Hon. Leo T. Sorokin, U.S. District
G. Baker for appellant.
Stanford, with whom Irene B. Schall and Moses, Smith, Markey
& Walsh were on brief, for appellee Irene B. Schall.
T. O'Neill, Assistant General Counsel, for appellee
Executive Office of Health and Human Services.
Torruella, Thompson, and Barron, Circuit Judges.
THOMPSON, CIRCUIT JUDGE.
years ago, Thomas Sheedy bought Carol Thibodeau's house
for a pittance and gave it to appellant Donald Kupperstein,
an attorney licensed in Massachusetts. The state court
reversed the sale, but Kupperstein kept collecting rent.
These appeals are the latest round in his long fight to keep
the money, which he now owes the Commonwealth of
Massachusetts (we'll explain why). So far, he's
defied seven state court orders, four arrest warrants, and a
mountain of contempt sanctions. He filed bankruptcy to ward
them off - hoping the Bankruptcy Code's "automatic
stay" would stop the state court from enforcing its
orders. But the bankruptcy court lifted the stay, so
Kupperstein skedaddled while his lawyer appealed. Fed up,
Massachusetts asked the judge to dismiss the appeal based on
the "fugitive disentitlement doctrine" - the rule
that a fugitive (usually a criminal one) forfeits the right
to appeal the judgment (usually a conviction) he's
fleeing. The district court agreed and dismissed the appeal.
serial misconduct and contempt for the state courts trouble
us, too. And his victims argue (fairly) that the Bankruptcy
Code doesn't shield him from his comeuppance. But the
district court never reached that issue; it booted the appeal
prematurely. Because we find this early dismissal was an
abuse of discretion, we reverse and remand for a decision on
WE GOT HERE
her father died, Carol Thibodeau (Fred Kuhn's only child)
was left with his only significant asset: a house at 346
Reservoir Street in Norton, Massachusetts. Unfortunately for
Thibodeau, Kuhn's estate also owed approximately $191,
747 to the Massachusetts Office of Health and Human Services,
more commonly known as "MassHealth." (For the
uninitiated, MassHealth can recoup paid benefits from a
recipient's estate after he dies. See Mass. Gen.
Laws ch. 118E, §§ 31, 32). The state had long ago
placed a lien on Kuhn's house to secure the debt. After
Kuhn passed, MassHealth planned to have Thibodeau, who was
also the Estate's personal representative, sell the house
(worth around $168, 000, per the probate court) to pay off
the lien. It filed a petition in probate court to make that
Kupperstein and his associate, Thomas Sheedy - who had other
plans. In November 2014, they showed up at Thibodeau's
home with a sales pitch. First, they had bad news: the Estate
owed the Town of Norton $3, 379.13 in unpaid real estate
taxes. Not to worry - they could help. All
she had to do was hand over the house to Sheedy, who would
take care of the taxes. Thibodeau promptly agreed. And so,
without notifying the Estate's attorney (Austin McHoul),
Kupperstein notarized a deed that conveyed the property to
Sheedy (as trustee for the "Reservoir Street Realty
Trust") in exchange for "less than $100" and
"tax redemption of $3, 379.13."
to Thibodeau, the deal was against the law (the probate court
would later hold): she could not sell the house before paying
MassHealth's six-figure claim. When McHoul discovered
what happened, he (in the probate court's words)
"requested Mr. Kupperstein and Mr. Sheedy return the
property to the Estate of Mr. Kuhn due to the improper nature
of the transaction." The duo refused.
State Court Cases
began the five-year campaign to wrest back control of the
house from Sheedy and Kupperstein, who dug in their heels.
When McHoul told MassHealth of the house swap, MassHealth
sued the pair in Massachusetts state court. After a year of
legal wrangling,  the probate court voided the transfer to
Sheedy, restored the property to the Kuhn estate, and ordered
its sale to pay MassHealth. The court also ordered that
Kupperstein and Sheedy account for "any and all"
rents they'd collected from the property and hand them
over to MassHealth.
said than done, it'd turn out. Within a few months of the
probate court's decision (by December 2016), Sheedy had
leased the house for around $1, 800 a month. Mid-way through
2017, Sheedy passed off his claimed ownership to Kupperstein
(as the trustee and beneficiary of the "Norton Realty
Trust"), who kept collecting rent. All in all, Sheedy
and Kupperstein raked in at least $54, 750 from tenants.
Despite the district court's order, they gave none of it
to MassHealth or the Estate.
on August 4, 2017, the probate court held the two in
contempt. To no effect. Less than a month later, Kupperstein
had installed two new tenants, whose lease dubbed
Kupperstein's trust "the fee owner of [the] property
at 346 Reservoir Street" and charged them the same $1,
800 monthly. In answer, the probate court issued a decree
making pellucid that "[n]either Thomas E. Sheedy nor
Donald C. Kupperstein . . . shall execute or record any
further documents concerning 346 Reservoir Street" and
that any documents they executed were "without force or
effect." Moreover, neither man, nor "anyone acting
. . . at their direction(s)," was to "enter the
property for any reason without further order."
with how the probate proceedings were going, Kupperstein
sought a second opinion. He sued Thibodeau in the
Massachusetts Land Court, asking it to declare him the
house's rightful owner. In his filings, Kupperstein
forgot to mention the probate court's decisions. Playing
legal whack-a-mole, MassHealth intervened to educate the land
court, which dismissed Kupperstein's complaint as
"wholly insubstantial and frivolous . . . because he
completely ignored" that the probate court had already
"fully and finally adjudicated the title to the
Property" against him. The court concluded that
Kupperstein "brought [the case] in bad faith" and
awarded MassHealth and Thibodeau over $9, 000 in
next day (December 22, 2017), the probate court doubled down,
finding Sheedy and Kupperstein in contempt again and ordering
them (again) to cough up the rent they'd collected. It
also ordered them to "surrender all keys and any other
means of access" to the house, along with "any
documents, leases or other instruments," to the Estate
by the close of business. And it threatened to jail them for
30 days unless they paid MassHealth $5, 400. In response,
Kupperstein and Sheedy surrendered roughly $3, 000 in checks,
but not the keys and leases. Losing patience (and without
being asked), the court directed the pair to explain why it
shouldn't impose the 30-day jail sentence. It scheduled
the hearing for January 12, 2018.
January 11, 2018 - the day before the hearing - Kupperstein
filed this case in the United States Bankruptcy Court for the
District of Massachusetts, listing the Kuhn house as his own
asset worth $350, 000.
background: a bankruptcy filing triggers an automatic stay
that halts lawsuits against the debtor in other courts until
a federal court ends the case or lifts the stay. See In
re Soares, 107 F.3d 969, 975 (1st Cir. 1997)(citing 11
U.S.C. § 362(a)). The idea is to stop creditors from
scrambling for "the lion's share of the debtor's
assets" (so they can be divvied-up more fairly) and to
give the debtor breathing room to manage his debts (so he can
get a fresh start). Id. at 975, 977. At his hearing
the next day, Kupperstein claimed that the automatic stay
tied the state court's hands, so it could not sanction
him for failing to produce the rents and keys. The probate
court didn't see it that way. It held that Kupperstein
had violated its orders a fourth time, locked him up in a
holding cell for the rest of the day, then gave him another
chance to give up the house keys (though Kupperstein ...