Kupperstein v. Schall ( 2019 )

United States Court of Appeals
For the First Circuit
Nos. 18-2248
18-2249
IN RE DONALD C. KUPPERSTEIN,
Debtor.
_____________________
DONALD C. KUPPERSTEIN,
Appellant,
v.
IRENE B. SCHALL, Personal Representative of the Estate of Fred
Kuhn; EXECUTIVE OFFICE OF HEALTH AND HUMAN SERVICES,
Appellees.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Leo T. Sorokin, U.S. District Judge]
Before
Torruella, Thompson, and Barron,
Circuit Judges.
David G. Baker for appellant.
Roger Stanford, with whom Irene B. Schall and Moses, Smith,
Markey & Walsh were on brief, for appellee Irene B. Schall.
Paul T. O'Neill, Assistant General Counsel, for appellee
Executive Office of Health and Human Services.
November 15, 2019
THOMPSON, Circuit Judge.
PREFACE
Five 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.
Kupperstein's 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 the merits.
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HOW WE GOT HERE
The House
When 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."1 (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 happen.
Enter 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
1 "Personal representative" is Massachusetts' term for an
administrator or executor. See Mass. Gen. Laws ch. 190B, § 1-201.
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(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."2
Unbeknownst 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.
The State Court Cases
So 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,3 the probate court voided the transfer to Sheedy,
2
The appellees tell us that Kupperstein notarized the deed
in Rhode Island, though he wasn't licensed to do so there, and
falsely attested he'd done it in Bristol to make it seem legit.
3
For those willing to walk the procedural maze, MassHealth
first sued Thibodeau, Sheedy, and Kupperstein in Suffolk Superior
Court, which dismissed MassHealth's claim for fraud (because the
complaint alleged misrepresentations to Thibodeau, not
MassHealth), and left the sale intact (finding that Thibodeau, who
inherited the house, had the power to sell it in her individual
capacity).
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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.4
Easier 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.
And so, 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
However, the judge also held that MassHealth's lien was still
valid and urged the agency to ask the probate court to force the
property's sale to satisfy the debt. MassHealth took the court's
cue and filed its petition. In granting it, the probate court
voided the transfer to Sheedy, saying it violated MassHealth
regulations. The superior court later resolved any conflict
between its decision and that of the probate court by adopting the
probate court's conclusion and entering judgment for MassHealth
against Kupperstein.
4 Kupperstein did not appeal that order.
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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."
Unsatisfied 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 attorneys' fees.
The 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
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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.
On 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 $350,000.5
Some 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
5 To mitigate things, Kupperstein did note that he owned the
house "subject to Probate Court rescission Order and Execution
against prior owner."
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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 claimed he didn't have them). At the next court date
(in March 2018), after retrying the automatic stay argument
(unsuccessfully), Kupperstein pulled $5,400 cash from his pocket
to purge the contempt. He also produced a set of keys.
Then Kupperstein went AWOL. The court held him in
contempt twice more for snubbing his three next court dates as
well as the court's previous orders. To sum up, the court wrote,
in violation of its orders, Kupperstein and Sheedy had: swapped
and leased the house, installed new tenants, changed the locks,
trespassed, listed the property as a personal asset on
Kupperstein's bankruptcy petition, and withheld $54,750 in rent.
The court ordered Kupperstein and Sheedy to pay MassHealth the
outstanding rents, plus (as sanctions) $10,485 in attorneys' fees
and the $70,289.65 statutory interest on MassHealth's unpaid
Medicaid claim.6 It also warned they'd be arrested and jailed for
30 days unless they worked with MassHealth to agree on a payment
6Also, in November 2018, the superior court entered judgment
ordering Kupperstein to pay all those amounts, plus $6,330 costs
and fees already awarded in the land court case and $575,240.37
(three times the MassHealth claim of $191,746.79), with interest,
to MassHealth.
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plan. To date, Kupperstein has still not complied with those
orders, and the probate court has issued four warrants for his
arrest. Despite several attempts to locate and arrest him — once
at his last known address — he's remained at large. During one
attempt, the sheriff reported that Kupperstein's house appeared
"closed up" and "abandoned" with the furniture covered in cloths.
This Case
Meanwhile, the Estate (through Appellee Irene Schall, a
lawyer who replaced Thibodeau as its representative) and
MassHealth petitioned the bankruptcy court to grant them relief
from the automatic stay so the state court actions could proceed.7
Kupperstein's counsel shot back with a motion to hold MassHealth
in contempt, arguing that by asking the probate court to hold
Kupperstein in contempt and litigating other motions in that court
after the bankruptcy filing, the agency violated the automatic
stay. While the motions were pending, the bankruptcy court granted
Schall partial relief from the stay to (finally) sell the house,
which she did.
The bankruptcy court later denied Kupperstein's motion
for contempt and granted MassHealth relief from the stay. It
reasoned that the probate court's contempt proceedings were exempt
7
Schall and MassHealth also filed adversary proceedings
arguing that the bankruptcy court should not discharge the debts
Kupperstein owes them, and should dismiss his bankruptcy petition
outright. Those proceedings are still pending.
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from the automatic stay under 11 U.S.C. 362(b)(4) because they
aimed "to enforce [a] governmental unit's . . . police and
regulatory power," citing In re Dingley, 852 F.3d 1143, 1146 (9th
Cir. 2017) and Alpern v. Lieb, 11 F.3d 689, 690 (7th Cir. 1993).
As a result, on August 13, 2018, the bankruptcy court ordered that
all three state court actions (in superior court, land court, and
probate court) could proceed to collect "any restitution and
sanction amounts," including attorneys' fees, from Kupperstein.8
Kupperstein appealed both rulings (the one granting relief from
the automatic stay and the other refusing to hold MassHealth in
contempt for violating it) to the district court. He asked the
bankruptcy and district courts to keep the stay in place pending
his appeal, which both those courts denied.9 He then petitioned
8
The court caveated, though, that MassHealth could not
attempt to enforce "any judgment with respect to the $191,741.79
MassHealth reimbursement claim or attempt to collect from
Kupperstein all or any part thereof."
9
Kupperstein also asks us to review the district court's
September 6, 2018 decision declining to keep the automatic stay in
place while it considered his appeal. However, his notice of
appeal mentioned only the "orders entered . . . on December 17,
2018" (i.e., the orders dismissing his appeal). "Even though
notices of appeal are to be liberally construed, if the appellant
chooses to designate specific determinations in [her] notice of
appeal — rather than simply appealing from the entire judgment —
only the specified issues may be raised on the appeal." Santos-
Santos v. Torres-Centeno, 842 F.3d 163, 169 (1st Cir. 2016)
(citations and quotation marks omitted). Kupperstein does not
explain why we should make an exception to that rule here — waiving
the argument — so we find ourselves without jurisdiction to review
the decision denying him a stay pending his district court appeal.
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us to impose our own stay. We construed that petition as for writ
of mandamus and denied it.
In the meantime, Kupperstein missed his September 2018
contempt hearing, resulting in another arrest warrant (for his
seventh contempt, for those counting). That was the last straw
for MassHealth and the Estate. They moved the district court to
dismiss both appeals based on the fugitive disentitlement
doctrine, which allows courts to dismiss the appeal "of a fugitive
who is still on the lam." Walsh v. Walsh, 221 F.3d 204, 214 (1st
Cir. 2000). MassHealth (joined by the Estate) argued that by
"flouting" the probate court's orders and evading arrest,
Kupperstein became a "fugitive from justice." The agency did not
argue that Kupperstein violated any orders in this federal case.
Nonetheless, in its view, Kupperstein's appeals were just his
latest ploy in his "contumacious" campaign "to frustrate and delay"
the state court's orders. As such (it urged) the appeal should be
dismissed under our analysis in Goya Foods, Inc. v. Unanue-Casal,
275 F.3d 124, 128 (1st Cir. 2001) (where we tossed two fugitives'
appeals from orders executing judgment and holding them in
contempt).
See United States v. Salimonu, 182 F.3d 63, 74 n.10 (1st Cir. 1999)
(holding that parties waive arguments they fail to develop).
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Reserving ruling, the district court promptly directed
MassHealth to report whether Kupperstein showed at his next
(December 14, 2018) probate court hearing to purge the contempt.
After Kupperstein missed that hearing, too (triggering another
arrest warrant), the district court dismissed his appeals "for the
reasons stated in [MassHealth's] motion."
Kupperstein appealed to us.
THE FUGITIVE DISMISSAL RULE: A PRIMER
Federal courts have the discretion to dismiss an appeal
without hearing the merits "if the party seeking relief is a
fugitive while the matter is pending." Degen v. United States,
517 U.S. 820, 824 (1996). We've done it "even where the appeal
[was] taken from a civil judgment." Goya, 275 F.3d at 128–29
(citing Walsh, 221 F.3d at 214). This so-called "fugitive
disentitlement doctrine"10 is one of many tools — like the power
to dismiss a case for failure to prosecute, to punish contempt of
court, or to vacate judgments gained by fraud — that spring from
federal courts' "inherent authority to protect their proceedings
and judgments." Degen, 517 U.S. at 823 (citing Chambers v. NASCO,
Inc., 501 U.S. 32, 43–46 (1991) (reviewing federal courts' "implied
powers" to "impose . . . submission to their lawful mandates" and
10 It got the name from Molinaro v. New Jersey, where the
Supreme Court held that a fugitive's escape "disentitle[d]" him to
appeal his criminal conviction. 396 U.S. 365, 365–66 (1970).
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sanction "conduct which abuses the judicial process")). It targets
litigants who try to "reap the benefit of the judicial process
without subjecting [themselves] to an adverse determination."
United States v. Pole No. 3172, 852 F.2d 636, 643 (1st Cir. 1988).
However, discretionary dismissal is a "severe sanction"
that cuts hard against our strong preference to decide disputes on
their merits. Id. at 642 (internal quotations omitted); see also
Degen, 517 U.S. at 828 (warning that respect for courts "is eroded,
not enhanced, by too free a recourse to rules foreclosing
consideration of claims on the merits"). And "principles of
deference counsel restraint" when using an inherent power forged
by unelected judges. Degen, 517 U.S. at 823. The fugitive
dismissal rule, like any such power, is "limited by the necessity
giving rise to its exercise." Id. at 829. So courts may wield it
only when needed to serve its purposes: to ensure the "judgment on
review" can be enforced, avoid delay or prejudice to the other
side, protect the court's "dignity," and deter flight. Id. at
824–25; see also Walsh, 221 F.3d at 215 (reiterating that "the
sanction . . . [of] dismissal" must be "necessary to effectuate
the[se] concerns underlying the fugitive disentitlement doctrine"
(internal quotation marks omitted)).
Given the stakes, we keep dignity and deterrence in mind
("[b]oth interests are substantial," Degen, 517 U.S. at 828), but
focus on "the kind of practical considerations that inform the
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decision whether to dismiss a suit with prejudice as a sanction
for mistakes, omissions, or misconduct." Walsh, 221 F.3d at 215
(quoting Sarlund v. Anderson, 205 F.3d 973, 974 (7th Cir. 2000));
accord Goya, 275 F.3d at 129 (noting that the Court in Degen
"focused attention on practical considerations particular to the
case rather than abstract concerns about court dignity or future
deterrence"). And so, at least in civil cases, the best reasons
to threaten and impose dismissal are to (1) avoid rendering an
unenforceable judgment and (2) prevent unfairness to the other
party resulting from the appellant's fugitive status. Gao v.
Gonzales, 481 F.3d 173, 177 (2d Cir. 2007).
All that said, we trust the district court to weigh these
interests and determine what's "necessary" to serve them — within
reason. As in any appeal from a discretionary dismissal imposed as
a sanction, we'll reverse if the judge abused his discretion, but
affirm if not. See Mastro v. Rigby, 764 F.3d 1090, 1096 & n.5
(9th Cir. 2014) (reviewing dismissal under fugitive disentitlement
doctrine for abuse of discretion); Bano v. Union Carbide Corp.,
273 F.3d 120, 125 (2d Cir. 2001) (same); see also Bachier-Ortiz v.
Colon-Mendoza, 331 F.3d 193, 194 (1st Cir. 2003) (stating on appeal
from a discretionary dismissal for lack of prosecution that we
"review the district court's dismissal of a case as a sanction for
abuse of discretion"); Young v. Gordon, 330 F.3d 76, 81 (1st Cir.
2003)(reviewing for abuse of discretion the discretionary
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dismissal of a case for failure to comply with court orders).
Along the way, we review legal conclusions de novo (with no
deference) and factual findings for clear error, Walsh, 221 F.3d
at 214 — meaning we defer to the district judge's take on the facts
unless our review of the whole record gives us "a strong,
unyielding belief" that he made a mistake. In re O'Donnell, 728
F.3d 41, 45 (1st Cir. 2013) (internal quotation marks omitted).
All-in-all, the abuse-of-discretion standard "is not appellant-
friendly," and "a sanctioned litigant bears a weighty burden in
attempting to show that an abuse occurred." Young, 330 F.3d at
81.
OUR TAKE
As we'll explain, Kupperstein meets that burden here.
But first, we address his first two arguments — and in doing so,
we'll tee up his third, which carries the day.
A Fugitive
First, Kupperstein is "bewilder[ed] at the suggestion
that he is a fugitive." According to him, he's "not evading
arrest"; when MassHealth filed its motions to dismiss, he was "at
home in South Easton" Massachusetts. It's not his fault that "the
sheriff cannot find him," he tells us. However, the district court
had good reason to find that Kupperstein was "a fugitive who
remains in hiding . . . actively evading apprehension by the
Sheriff." Despite seven contempt orders and an outstanding arrest
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warrant (which Kupperstein does not dispute he knew about),
Kupperstein remained a no-show in the probate court. And so far
as the sheriff could tell, he'd abandoned his house. Wherever he
is, Kupperstein is hiding from arrest to shirk the probate court's
sanctions. That makes him a fugitive. See Molinaro, 396 U.S. at
365–66 (holding bailed defendant became a fugitive because he
"failed to surrender himself to state authorities" when required);
United States v. Barnette, 129 F.3d 1179, 1184 (11th Cir.
1997)(ruling appellant became a fugitive "by hiding" from arrest
warrant for contempt of court, even though it wasn't clear he'd
left the jurisdiction); Empire Blue Cross & Blue Shield v.
Finkelstein, 111 F.3d 278, 282 (2d Cir. 1997) (appellants were
fugitives when they disappeared after warrants issued for missing
depositions and disobeying court orders).
A Civil Case
Second, Kupperstein maintains that the fugitive dismissal
rule only applies to fugitives from criminal prosecutions, while
the probate case is a civil matter. Not so long ago, this swing
would've connected. In 1992, we rejected an ask to toss an appeal
based on the fugitive dismissal rule because the company-defendant
defied the district court's preliminary injunction and contempt
order; we cautioned that we'd only applied the doctrine to criminal
fugitives, and we were "extremely reluctant to invoke [it] when
[the] appellant ha[d] not committed any criminal act." United
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Elec., Radio and Mach. Workers of Am. v. 163 Pleasant St. Corp.,
960 F.2d 1080, 1098–99 (1st Cir. 1992) (holding that the Scottish
company's contempt did not forfeit its right to appeal based on
its "good-faith challenges" to the U.S. district court's
jurisdiction over it).
Nonetheless, we later extended the doctrine to dismiss
the appeals of two civil contemnors who frustrated, then fled, the
civil judgment and contempt order they appealed. Goya, 275 F.3d
at 129. And we gave two examples of other circuits doing the same.
Id. at 129 n.2 (citing Empire Blue Cross, 111 F.3d at 282 (holding
"that we have discretion to dismiss the appeal of a civil litigant
who becomes a fugitive to escape the effect of a civil judgment")
and Barnette, 129 F.3d at 1186 (ditto)). We noted that the
appellants' misconduct (they sold their shares in real estate
securing the judgment and absconded with the money) was "extremely
serious," their "flight gr[ew] directly out of [the plaintiff's]
effort to enforce its judgment in the civil proceeding," and the
"appeals [were] themselves little more than devices to frustrate
and delay the enforcement" of that civil judgment. Id. at 129.
So Kupperstein's bid to cabin the doctrine to criminal fugitives
comes too late.
The Rub
However, unlike in Goya, Kupperstein was a fugitive from
the state court's judgment, not the bankruptcy or district courts'
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(whose orders he never disobeyed). So his third argument — that
the district court could not dismiss his case to help enforce the
state court's orders — cuts more ice. As noted earlier, a federal
court's discretion to dismiss a fugitive's case flows from its
"inherent power" to protect its own "proceedings and judgments" —
not another court's. Degen, 517 U.S. at 823–24; see Ortega–
Rodriguez v. United States, 507 U.S. 234, 250 (1993)(rejecting
"the faulty premise that any act of judicial defiance, whether or
not it affects" the appellate court's "process, is punishable by
appellate dismissal"); Bano, 273 F.3d at 125–26 (observing that a
"court will ordinarily employ [the doctrine] only to ensure the
enforceability of its decisions; to discourage flouting its
process . . . or to avoid prejudice to the other side affecting
litigation that is or may be before it"). But the district court
dismissed Kupperstein's appeal because he failed to show in the
Bristol Probate Court and made that court's judgment
uncollectable.11 And that's the rub.
The Supreme Court has twice rebuffed courts for
dismissing one case to punish flight from another, noting that the
escape wouldn't frustrate the dismissing court's judgment or
11 Appellees' brief suggests that Kupperstein is flouting
"Bankruptcy Court Orders," but doesn't identify any bankruptcy
court order Kupperstein failed to obey. Anyway, before the
district court, MassHealth only argued (and the district court
only found) that Kupperstein had frustrated the orders of "the
Bristol Probate Court."
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impact its process. In Ortega-Rodriguez, the Eleventh Circuit had
dismissed the appeal of a "former fugitive" who'd skipped town
before sentencing but was recaptured pre-appeal. 507 U.S. at 242–
44. The Court reversed. First, it said, there were no
"enforceability concerns": the recaptured defendant could be
forced to serve his sentence. Id. at 44. Second, the past escape
(while it stalled sentencing) did not impact "the appellate
process": it didn't slow the appeal, id. at 245, or handicap the
government in its efforts to win the appeal or any retrial (which
wasn't an option), id. at 249. And third, since the defendant
returned before appeal — when "jurisdiction [ ] vest[s] in the
appellate court" and "any deterrent to escape must flow from
appellate consequences" — the district court had had "a wide range
of penalties" to encourage surrender. Id. at 247. In a nutshell,
the defendant had "flouted the authority of the District Court,
not the Court of Appeals," so "it [was] the District Court that
ha[d] the authority to defend its own dignity, by sanctioning an
act of defiance that occurred solely within its domain." Id. at
246.
The Court drove home the point in Degen, whose namesake
also fled a different proceeding. The district court, relying on
the fugitive disentitlement doctrine, had entered judgment against
Degen in his civil forfeiture case (allowing the government to
commandeer properties he allegedly bought with drug money) because
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he'd hightailed to Switzerland to avoid prosecution. Degen, 517
U.S. at 822. Again, the Court reversed. Sure, Degen's Euro trip
waylaid any potential judgment in the criminal case. But it
wouldn't "frustrat[e]" the government's efforts to prove "the
merits of [its] forfeiture claims" (it'd win unless Degen showed
up) and "the court's jurisdiction over the property [was] secure
despite Degen's absence." Id. at 825. So as in Ortega-Rodriguez,
"there [was] no danger the court in the forfeiture suit w[ould]
waste its time rendering a judgment unenforceable in practice."
Id. Moreover, the escape wouldn't make the (civil) case at hand
unfair to the government; the district court had tools to keep
Degen from using it to gain an unfair advantage in the stalled
prosecution, and if Degen's absence hampered the civil case (e.g.,
if he missed a deposition), the district court could hit him with
"the same sanctions" it'd use on "any other" litigant who failed
to cooperate in a civil case (e.g., use the civil rules to charge
him fees, strike his pleadings, or order dismissal for snubbing
orders in that (civil) case). Id. at 827.
Relying on Degen and Ortega-Rodriguez, several courts
have rejected the use of dismissal to sanction litigants for
dodging another court's orders when the snub didn't impact the
case on appeal. Take Mastro, holding that the district court
blundered when it dismissed a bankruptcy appeal based on the
appellant's "disregard for the authority of a different court"
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(she fled a related prosecution), since her absence would not
frustrate the judgment against her in the case at hand. 764 F.3d
at 1096 & n.5. Or Bano, where the Second Circuit held a district
court could not prevent a company from defending itself in a U.S.
lawsuit because the company refused to stand trial in India. 273
F.3d at 126–27. There was "no question about the enforceability
of any judgment" the U.S. district court might render, and "no
discernible prejudice" to the plaintiff in the U.S. litigation.
Id. at 126–27. And the district court could only dismiss the case
"to protect its own dignity, efficiency, and efficacy," not the
Indian courts'. Id. at 127 (emphasis added). We could go on.
See, e.g., Marran v. Marran, 376 F.3d 143, 148–49 (3d Cir. 2004)
(mother's contempt of state court child custody order was an
"affront [] to the dignity of the Pennsylvania courts, not to [the
Third Circuit]" and "ha[d] no direct effect on the processing" of
her related federal appeal); Daccarett-Ghia v. Comm'r, 70 F.3d
621, 626 (D.C. Cir. 1995) (claimant's flight from related
prosecution "neither affect[ed] the [tax] court's ability to carry
out its judicial business nor prejudice[d] the government as a
litigant" in the tax case on appeal).
On the other hand, the appellees do not cite any post-
Degen case in which a court approved the use of the fugitive
dismissal power to protect another court's judgments or
proceedings, or to sanction contempt for orders other than the
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judgment on review.12 In Goya — as in Empire Blue Cross and
Barnette — the appellants evaded the same orders they appealed.
See Goya, 275 F.3d at 129 (stressing that "the appeal [was] from
actions and orders of the district court designed to enforce th[e]
very judgment" they evaded). In Empire Blue Cross, the Second
Circuit emphasized that point: the appellants' disappearance
"[did] not affect some related matter; it impact[ed] the very case
on appeal." 111 F.3d at 282. And the court limited its holding
accordingly: "a fugitive whose absence severely prejudices a
proceeding may forfeit the right to appeal an adverse judgment
entered in that case." Id. We stressed the same fact in Goya —
12 Courts have applied a statute (the Civil Asset Forfeiture
Reform Act of 2000), passed after Degen, permitting federal courts
to disentitle fugitives in civil forfeiture cases, so long as the
accused "evades the jurisdiction of the court in which the criminal
case is pending against" them. P.L. 106–185, § 14(a), April 25,
2000, codified at 28 U.S.C. § 2466; see, e.g., Collazos v. United
States, 368 F.3d 190, 198 (2d Cir. 2004). Since this isn't a
forfeiture case, we deal only with the district court's inherent
(non-statutory) disentitlement power.
And although appellees don't mention it, we note that even
after Degen, other circuits have blessed the doctrine's use against
criminal defendants who seek review of their state indictments or
convictions under habeas corpus and 42 U.S.C. § 1983. See, e.g.,
Sarlund, 205 F.3d at 974 (§ 1983 case); Bagwell v. Dretke, 376 F.3d
408, 414 (5th Cir. 2004)(habeas case); Parretti v. United States,
143 F.3d 508, 509 (9th Cir. 1998) (habeas case). Once upon a time,
we applied the fugitive disentitlement doctrine in a similar case:
to dismiss an AWOL soldier's appeal from the denial of his petition
for habeas corpus. See U.S. ex rel. Bailey v. U.S. Commanding
Officer, 496 F.2d 324, 326 (1st Cir. 1974). He sought review of
— and fled — military custody, not the order from which he directly
appealed. Id. Such cases may present issues distinct from a civil
contemnor's bankruptcy appeal, and we need not address them here.
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writing that "the appellants' flight [was] not from some other
proceeding, as in Degen" — and good thing, we said; that would
have "rais[ed] the specter" that we meant to use dismissal "to
coerce appearance" before another court. Goya, 275 F.3d at 129.
So that specter haunts us here. In this case, dismissal
didn't serve the original reason for the fugitive dismissal rule:
to ensure that courts don't waste time affirming a judgment that
can't be enforced against the absconder. See Degen, 517 U.S. at
824 ("[S]o long as the party cannot be found, the judgment on
review may be impossible to enforce."); Ortega-Rodriguez, 507 U.S.
at 240 (citing Smith v. United States, 94 U.S. 97, 97 (1876)
(dismissing fugitive's criminal appeal because he was not "where
he [could] be made to respond to any judgment we may render")).
This was the courts' "main concern" in Barnette, 129 F.3d at 1183,
and key to Empire Blue Cross, 111 F.3d at 282 and Goya, 275 F.3d
at 129 (reasoning that the appellants' flight "prevents [the
plaintiff] from discovery that might be used to . . . enforce its
judgment"); see also Yousif v. Yousif, 61 Mass. App. Ct. 686, 689–
90 (2004) (asking whether the fugitive's "status is connected to
the judgment appealed from" and "impairs the enforceability of
[that] judgment"). Here though, the district court (even if it
affirmed, and the automatic stay remained lifted) could not have
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ordered Kupperstein to pay the state court judgment.13 So there
was no chance the district court would affirm an unenforceable
order.
Moreover, though Kupperstein's resistance hobbled the
probate case, it didn't undermine the district court's
"proceedings [or] judgments," Degen, 517 U.S. at 823, or "affect[]
the appellate process," Ortega-Rodriguez, 507 U.S. at 250; it
didn't delay the appeal, skew it in Kupperstein's favor, or
handicap the Estate's or MassHealth's bid to lift the stay (and
keep it up). In Goya, the appellants' flight (from an action in
the U.S. district court to enforce a judgment against them) not
only represented a "blatant defiance of explicit [U.S. district]
court orders," but also "prevent[ed] [the plaintiff] from
discovery that might be used to unearth the proceeds of the sale
or otherwise enforce its judgment." 275 F.3d at 129; see also
Empire Blue Cross, 111 F.3d at 282 (where the appellants "severely
prejudice[d]" appellees because they "made themselves unavailable
for service of process and post-trial depositions" and so "rendered
the judgment unenforceable"); Sarlund, 205 F.3d at 975
13Though of course, the bankruptcy court could still
determine that the probate court's judgment is non-dischargeable
or that it should be paid from Kupperstein's nonexempt assets as
part of the distribution of his bankruptcy estate. See 11 U.S.C.
§§ 523, 704(a)(1), 726. We express no view on these matters, since
the only orders on appeal to the district court were those lifting
the automatic stay and refusing to hold MassHealth in contempt for
allegedly violating it.
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(defendant's absence "severely prejudice[d] . . . his adversaries"
in his civil case because he wouldn't show for depositions or pay
sanctions for his suit, which was frivolous). But Kupperstein
appeared in the bankruptcy case when required and answered Schall's
questions (in a court-ordered exam) about his financial condition,
the original deal with Thibodeau, and Kupperstein's subsequent
dealings with the house. So the appellees were able to develop
the facts below. And they can win on appeal (if the merits be in
their favor) whether or not Kupperstein shows up to watch.
True, Kupperstein's appeal seeks relief from the probate
court's orders: he asked the district court to reinstate the stay
and stop the probate court from enforcing them. But if Kupperstein
gets that relief, it'll be because the Bankruptcy Code entitles
him to it. Unlike in Goya, Kupperstein's merits argument — that
his bankruptcy petition stayed the state court's efforts to collect
the contempt sanctions — is a fair one. Cf. Goya, 275 F.3d at
129–30 (finding appellant's arguments were "clearly frivolous"
because we'd already rejected them). Several judges in this
circuit agree with him. See In re McKenna, 566 B.R. 286, 289
(Bankr. D.R.I. 2017) (holding "proceedings to enforce and collect
monetary sanctions" are stayed); In re Birchall, No. 07-13232,
2007 WL 1992089, at *9 (Bankr. D.Mass. July 3, 2007)(holding that
civil contempt proceedings are subject to the automatic stay).
That a debtor hasn't paid his state-court debts outside the
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bankruptcy process can't be the reason we decline to decide whether
he's supposed to do so in the first place — lest we create a
"fugitive" exception to the automatic stay without analyzing the
statute. And though it may mean more wrangling for the appellees,
the costs of litigating that reasonable dispute don't offset our
strong preference for decision on the merits, either. See Pole
No. 3172, 852 F.2d at 642.
Let's be clear: none of this excuses Kupperstein's
misconduct, which has a long, harmful history. By the state
courts' telling, he and Sheedy ripped off Thibodeau, executed two
sham deeds (one of which he illegally notarized), then — spurning
two years of court orders and arrest warrants — installed two
rounds of tenants, milked over $50,000 in rents, and kept the money
to this day. By the time he filed his appeal to the district
court, Kupperstein's serial contempt of the state court had already
drawn this dispute into a three-year battle to enforce the probate
court's judgment.14 The Estate lost funds that could've gone to
Thibodeau (Kuhn's sole heir) and MassHealth but for Kupperstein's
"repeated refusal to obey" the probate court's orders. And the
probate Estate "cannot be closed and final distribution made" while
14 Kupperstein's conduct is especially troubling because, as
we noted up front, he's an attorney still licensed to practice in
Massachusetts. Despite his various ethical breaches, chronicled
in multiple state court decisions, we're told that this litigation
has, for whatever reason, held up disciplinary action against him.
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the state court's "sanction awards are outstanding." Without a
doubt, Kupperstein's contemptuous behavior has caused the estate
costs to mount. But unless the district court (or we) reinstate
the automatic stay, it's the probate court's prerogative to decide
how to enforce its own orders and punish disrespect for them. See
Ortega-Rodriguez, 507 U.S. at 246–47. And "[w]hile [the] case is
pending" before the state courts, continued "flight can be deterred
with the threat of a wide range of penalties available" to them.
Id. at 247. For example, the probate court could threaten and
(after due process) impose criminal contempt. See Furtado v.
Furtado, 380 Mass. 137, 141 (1980). Meanwhile, the federal courts
must apply the bankruptcy laws Congress charged them to enforce.
And by the way, those laws give the bankruptcy courts
other tools to fight abuse of their processes. For example,
MassHealth already asked to lift the stay (and dismiss the case)
for "cause," 11 U.S.C. § 362(d)(1) — saying Kupperstein filed in
bad faith.15 Should the district court decide that the automatic
stay applies, the bankruptcy court (on any remand) can grant
appellees whatever relief might be available to them under the
Bankruptcy Code — including (if appropriate) exercising its
discretion to lift the stay for "cause," see In re Fin. Oversight
15 Among other things, MassHealth claims Kupperstein listed
few unsecured creditors, filed this case the day before his show-
cause hearing, and "has an open equity line on his home of $300,000
that is untouched and fully available."
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& Mgmt. Bd. for Puerto Rico, No. 18-1463, 2019 WL 4667518, at *3
(1st Cir. Sept. 25, 2019) (citing 11 U.S.C. § 362(d)(1)); In re
Unanue-Casal, 159 B.R. 90, 96, 101 (D.P.R. 1993), aff'd, 23 F.3d
395 (1st Cir. 1994), or dismissing Kupperstein's petition, see 11
U.S.C. § 707(a), (b)(1) (permitting dismissal "for cause" or if
granting relief to certain debtors "would be an abuse" of Chapter
7). These other methods of protecting the courts and appellees
against any abuse of the bankruptcy process by Kupperstein, should
he prevail in his appeal, cinch our conclusion that the blunt
sanction of disentitlement was unneeded to serve the doctrine's
purposes in this case. See Degen, 517 U.S. at 827 (citing courts'
"alternative means" of ensuring the fugitive could not use the
civil litigation to unfairly one-up the government in the criminal
case as a reason that disentitlement was unnecessary).
In Sum
This is a frustrating case — for MassHealth, the
beleaguered probate Estate, and most of all for Carol Thibodeau.
The appellees won in state court but still haven't been able to
collect their judgment. As the bankruptcy court found, the Code
might clear a path for the state court to enforce its orders. But
the district court's inherent power to protect its own proceedings
is not implicated here. And so, we must reverse and remand for
the district court to decide the merits of Kupperstein's appeals.
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