daniels v. agin, 1st cir. (2013)

7/26/2019 Daniels v. Agin, 1st Cir. (2013)

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United States Court of AppealsFor the First Circuit

No. 12- 2376 WI LLI AM M. DANI ELS,

Appel l ant ,

v.

WARREN E. AGI N, Chapter 7 Trust ee, and WI LLI AM K. HARRI NGTON,Uni t ed St at es Tr ust ee f or Regi on 1,

Appel l ees.

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF MASSACHUSETTS

[ Hon. Deni se J . Casper , U. S. Di st r i ct J udge]

Bef or e

Lynch, Chi ef J udge,Howar d and Kayat t a, Ci r cui t J udges.

Ti mot hy J . Burke, wi t h whom Burke & Associ at es was onbr i ef , f or appel l ant .

J ohn G. Loughnane, wi t h whom Char l ot t e L. Bednar andEcker t Seamans Cher i n & Mel l ot t , LLC wer e on br i ef , f or appel l eeWarr en Agi n.

Cameron M. Gul den, wi t h whom Ramona D. El l i ot t , Deput yDi r ect or / Gener al Counsel , Execut i ve Of f i ce f or U. S. Tr ust ees,Depar t ment of J ust i ce, P. Mat t hew Sut ko, Associ at e Gener al Counsel ,Execut i ve Of f i ce f or U. S. Tr ust ees, Depar t ment of J ust i ce, J ohn P.Fi t zger al d, Assi st ant Uni t ed St at es Tr ust ee, Wendy L. Cox, and

J enni f er L. Her t z, wer e on br i ef , f or appel l ee Wi l l i amHar r i ngt on.

November 25, 2013


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KAYATTA, Circuit Judge. Rul i ng on mot i ons f or summary

j udgment i n a bankrupt cy proceedi ng, t he bankrupt cy cour t made t wo

det er mi nat i ons t hat are t he pr i mar y subj ect of t hi s appeal . Fi r st ,

t he cour t r ul ed t hat t he debt or f ai l ed t o mai nt ai n hi s pr of i t -

shar i ng pl an i n subst ant i al compl i ance wi t h t he appl i cabl e t ax

l aws. Thi s rul i ng meant t hat asset s i n t he pr of i t - shar i ng pl an and

t wo I RAs f unded wi t h pl an asset s were part of t he bankr upt cy

est at e, avai l abl e t o sat i sf y t he cl ai ms of credi t or s. Second, t he

bankr upt cy cour t r ul ed t hat t he debt or i nt ent i onal l y f ai l ed t o

di scl ose, and i n f act del i ber at el y conceal ed, t he exi st ence of t he

t wo I RAs i nt o whi ch t he debt or had t r ansf er r ed asset s f r om hi s

pr of i t - shar i ng pl an. Thi s r ul i ng pr ovi ded al t er nat i ve gr ounds f or

t r eat i ng t he I RAs as nonexempt . I t al so pr ovi ded t he basi s f or t he

bankrupt cy cour t t o r evoke t he debt or ' s di schar ge. Dani el s, t he

debt or , chal l enges bot h r ul i ngs on appeal . For t he r easons set out

bel ow, we af f i r m.

I. Background

Both Dani el s and t he Chapt er 7 Bankr upt cy Tr ust ee,

Appel l ee Agi n, moved f or summar y j udgment on t he quest i on of

whet her Dani el s' s pr of i t - shar i ng pl an was exempt f r omi ncl usi on i n

t he bankrupt cy est at e. I n accor d wi t h Rul e 56. 1 of t he Local Rul es

of t he Di st r i ct of Massachuset t s, 1 each f i l ed a st at ement of

1 Mass. Local Rul e 56. 1 i s made appl i cabl e t o bankr upt cypr oceedi ngs by Mass. Local Bankr upt cy Rul e 7056- 1.

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mat er i al f act s t hat t hey cl ai med wer e undi sput ed. Under t he r ul e,

each was t hen r equi r ed t o f i l e a st at ement i n r esponse t o t he

ot her ' s st at ement of mat er i al f act s, i dent i f yi ng whi ch f act s wer e

di sput ed, wi t h ci t at i ons t o r ecor d evi dence est abl i shi ng t he

exi st ence of a di sput e. Agi n di d not f i l e such a r esponsi ve

st at ement , i nst ead f i l i ng an opposi t i on br i ef and movi ng t o st r i ke

Dani el s' s mot i on, "r eser v[ i ng] t he r i ght t o obj ect t o t he

i nt r oduct i on of " document s of f er ed i n suppor t of Dani el s' s mot i on.

Dani el s di d f i l e a r esponse, but i t r ar el y r ef er r ed t o r ecor d

evi dence.

The bankr upt cy cour t made sense of t he procedur al

def al cat i ons by compar i ng Agi n' s st at ement of mat er i al f act s wi t h

Dani el s' s t wo st at ement s and deemi ng al l of Agi n' s aver ment s t o be

admi t t ed except where t hese document s conf l i ct ed. Wi t hout

suggest i ng t hat t he bankrupt cy cour t was r equi r ed t o gr ant such an

i ndul gence, we wi l l const r ue the recor d i n t he same manner and

appl y t he same appr oach t o any part of Dani el s' s s t atement of

mat er i al f act s t hat Agi n di d not adequat el y di sput e.

A. Daniels's Retirement Accounts

Wi l l i amDani el s was engaged i n a decr easi ngl y pr of i t abl e

busi ness as a br oker of f i shi ng boat s. He was al so t he t r ust ee,

admi ni st r at or , empl oyer and sol e par t i ci pant i n t he Wi l l i amDani el s

Pr of i t - Shar i ng Pl an ( "Pl an") . The Pl an was a pr ot ot ype pl an

obt ai ned t hr ough MassMut ual Fi nanci al Gr oup. MassMut ual , however ,

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di d not manage t he Pl an or appr ove i t s t r ansact i ons. Fromt i me t o

t i me, MassMut ut al r ecei ved l et t er s f r om t he I nt er nal Revenue

Ser vi ce ( "I RS") opi ni ng t hat t he f or m of t he pr ot ot ype pl an

qual i f i ed i t f or f avor abl e t ax t r eat ment . Not hi ng i n t hose

l et t er s, however , pur por t ed t o bl ess t he manner i n whi ch t he Pl an

was oper at ed.

Bef or e 1988, Dani el s' s wi f e had been the benef i ci ar y of

a t r ust , t he Wal ker Real t y Tr ust ( "Real t y Tr ust ") . Dani el s

mai nt ai ns t hat t he Real t y Trust i s a Massachuset t s nomi nee t r ust ,

and so i s onl y a t i t l ehol di ng devi ce f or i t s benef i ci ar i es.

Dani el s' s wi f e assi gned her benef i ci al i nt er est t o t he Pl an i n

1988. The Pl an pai d f ai r val ue f or t he r eal est at e hel d by t he

Real t y Tr ust .

Si nce 1988, t he Real t y Trust has engaged i n a number of

r eal est at e t r ansact i ons, i ncl udi ng t r ansact i ons wi t h Dani el s' s son

and wi t h t he daught er of Tom Fl orence, a man who had pr ovi ded

ser vi ces f or t he Real t y Tr ust . Al l t r ansact i ons wi t h Mr . Fl or ence

and hi s f ami l y wer e f or f ai r val ue.

Dani el s' s uncl e, Maur i ce Lopes, l i ved wi t h Dani el s and

t he t wo hel d sever al j oi nt account s. J ensen v. Dani el s, 57 Mass.

App. Ct . 811, 813 ( Mass. App. Ct . 2003) . Af t er Lopes di ed i n 1996,

Dani el s wi t hdr ew money f r omt hose account s and pl aced some i nt o t he

Pl an. I d. at 813- 14. Dani el s r epor t ed t he money f r om t he j oi nt

account s t hat he put i nt o t he Pl an as a t ax deduct i on, and aver s

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t hat t he t r ansact i on was never chal l enged "by a t ax aut hor i t y. "

Dani el s' s aunt , as t he execut r i x of Lopes' s est at e, l at er sued

Dani el s and hi s wi f e, al l egi ng t hat t hey wer e not ent i t l ed t o t hose

f unds. The pr obat e cour t ent er ed j udgment agai nst Dani el s and hi s

wi f e. The Massachuset t s Appeal s Cour t af f i r med t he j udgment i n t he

amount of $238, 538. 16, pl us i nt er est , but onl y as t o Dani el s. I d.

at 819- 20. That j udgment was not sat i sf i ed bef or e Dani el s f i l ed

f or bankrupt cy. I ncl udi ng i nt er est , i t tot al ed mor e t han

$440, 000. 00 by 2007.

I n or ar ound Febr uar y 2007, Dani el s t r ansf er r ed $469, 894

f r om t he Pl an i nt o two new MassMut ual I ndi vi dual Ret i r ement

Account s ( I RAs) hel d i n hi s own name.

B. Daniels's Bankruptcy

Appr oxi mat el y si x mont hs l at er , Dani el s f i l ed f or Chapt er

13 bankrupt cy. That bankrupt cy pet i t i on was l at er conver t ed t o a

Chapt er 11 bankr upt cy, and t hen i nt o a Chapt er 7 bankr upt cy.

Bankrupt debt ors must f i l e sever al bankrupt cy schedul es,

i ncl udi ng Schedul e B ( i n whi ch a debt or i dent i f i es hi s per sonal

pr oper t y) and Schedul e C ( i n whi ch he l i st s t he pr oper t y t hat he

cl ai ms i s exempt f r omt he bankrupt cy est at e) . Schedul e B r equi r es

debt or s t o di scl ose any " [ i ] nt er est s i n I RA, ERI SA, Keogh, or ot her

pensi on or pr of i t shar i ng pl ans, " and di r ect s debt or s t o "[ g] i ve

[ p] ar t i cul ar s. " On bot h hi s Schedul es B and C, Dani el s wr ot e: "As

of 8/ 06/ 07: Debt or ' s 401- qual i f i ed pensi on: ' Wi l l i am Dani el s

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Pr of i t - Shar i ng Pl an' ( t ax I D # [ XX- XXX] 2459/ f or med 8/ 15/ 88;

appr oved by I RS 08/ 07/ 01) , hel d by Wal ker Real t y Tr ust , Wm M.

Dani el s, Tr ust ee: i nvent or y and val uat i ons separ at el y

document ed[ . ] " 2 Dani el s f ai l ed t o ment i on t he I RAs on hi s

schedul es. Rat her , he showed al l of t he f unds- - bot h t hose

r emai ni ng i n t he Pl an and moved out of t he Pl an- - as st i l l bei ng

owned by t he Pl an.

Dur i ng hi s bankrupt cy pr oceedi ngs, Dani el s t est i f i ed at

t hr ee cr edi t or s' meet i ngs. At t he Sept ember 25, 2007, meet i ng, he

af f i r med t hat he had r ead t he schedul es bef or e si gni ng t hem. I t

appear s t hat he agai n avoi ded any ment i on of t he t wo I RAs, i nst ead

descri bi ng t he Pl an i t sel f as "an I RA, qual i f i ed ERI SA. "

Pr i or t o anot her credi t or s' meet i ng i n Apr i l 2009,

Dani el s and hi s at t or ney submi t t ed r evi sed f i gur es f or t he pr of i t -

shar i ng pl an t o Tr ust ee Agi n, r epor t i ng a r educed Pl an val ue of

$573, 117. 38. That t ot al amount , as best one can i nf er f r om t he

r ecor d, st i l l i ncl uded t he f unds i n t he I RAs. At t he credi t or s'

meet i ng, Dani el s agai n conf i r med t hat he had si gned t he schedul es,

and t hat t hey were accur ate when f i l ed. When asked where t he

pr oceeds had gone f r omt he sal e of sever al Real t y Tr ust pr oper t i es,

Dani el s r epl i ed t hat t hey wer e " i nvest ed wi t h Mass Mut ual i n

annui t i es. " Asked whet her t he Real t y Trust or t he Pl an owned t he

2 Dani el s si gned t he schedul es, af f i r mi ng under penal t y ofper j ur y t hat t hey wer e t r ue and cor r ect t o t he best of hi sknowl edge.

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annui t i es, he f al sel y cl ai med t hat t he Pl an owned t hem. When asked

about any l i f e i nsurance, he r esponded " I have t he annui t i es i n my

r et i r ement pr ogr am[ , ] " whi ch, he conf i r med, were owned by the Pl an.

Dani el s di d not t ur n over any document s r el at i ng t o t he

t wo I RAs at t hi s meet i ng. 3 Af t er t hat meet i ng, Dani el s pr ovi ded

some document s t o Tr ust ee Agi n, i ncl udi ng account st atement s

i ndi cat i ng t hat t he Pl an hel d t he benef i ci al i nt er est i n t he Real t y

Tr ust and a cash account wi t h $71, 169. 62. Addi t i onal

cor r espondence and document s sent f r om Dani el s' s bankrupt cy

counsel , At t y. Cohen, t o Agi n i n Apr i l and May, 2009, cont ai ned no

di scussi on of t he I RAs.

Dani el s r ecei ved a Chapt er 7 di schar ge on J ul y 1, 2009.

C. The IRS Audit and IRA Rollover

I n 2008- 2009, t he I RS audi t ed t he Pl an' s 2006 t ax ret ur n.

Dur i ng t he audi t , t he I RS r equest ed a var i et y of i nf or mat i on,

i ncl udi ng: document at i on r el at i ng t o t he Pl an' s f or m( i n or der t o

ver i f y i t s "qual i f i cat i on") , i nf or mat i on about t he Pl an' s

r el at i onshi p t o t he Real t y Tr ust , and i nf or mat i on r el at i ng t o a

3 Some of Dani el s' s evi dence suggest s t hat he cl ai med t o havet ur ned over i nf or mat i on r el at i ng t o t he t wo I RAs at t he Apr i l 2009cr edi t or s' meet i ng. I t does not appear , however , t hat Dani el sci t ed t o such evi dence i n opposi ng summar y j udgment . I t i s not t he

cour t ' s j ob t o " f er r et out and ar t i cul at e t he r ecor d evi dencemat er i al t o t he appel l ant ' s cl ai ms. " Bar r y v. Mor an, 661 F. 3d 696,699 n. 3 ( 1st Ci r . 2011) ( quot i ng Tayl or v. Am. Chemi st r y Counci l ,576 F. 3d 16, 32 n. 16 ( 1st Ci r . 2009) ) ( i nt er nal quot at i on mar ksomi t t ed) ; see al so Fed R. Ci v. P. 56( c) ( 3) ( at summar y j udgment ,a cour t need consi der onl y ci t ed mat er i al s, but may consi derothers).

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l oan f r om t he Pl an t o Dani el s' s son. At t he end of t he audi t , t he

I RS sent Dani el s a l et t er t hat st at ed si mpl y: "We have compl et ed

our exami nat i on of your r et ur n( s) f or [ 2006] and have accept ed t he

r et ur n( s) as f i l ed. However , dur i ng t he exami nat i on we not ed

cer t ai n i t ems i ndi cat ed on t he encl osur e, whi ch r equi r e your

at t ent i on. " The encl osur e not ed t hat a l oan t o Dani el s' s son, a

"di squal i f i ed per son, " had occur r ed. I t t hen not ed: "[ t he l ] oan

was cor r ect ed by the f ul l amount bei ng r epai d. The [ 26 U. S. C. ]

4975( a) t ax cal cul ated was demi ni mus and Form 5330 was not

pur sued. " 4 The l et t er expl ai ned t hat "cor r ect ed" meant

undoi ng t he [pr ohi bi t ed] t r ansact i on t o t he ext entpossi bl e, but i n any case pl aci ng t he pl an i n a f i nanci alposi t i on not wor se t han t hat i n whi ch i t woul d be i f t hedi squal i f i ed per son wer e act i ng under t he hi ghestf i duci ar y st andar ds. The l oan has been [ r e] pai d i n f ul l .No f ur t her act i on r equi r ed.

Al so i n 2009, Dani el s r ol l ed one of t he t wo MassMut ual

I RAs over i nt o a new, t hi r d I RA hel d wi t h Pr udent i al .

D. The Turnover and Revocation Actions

I n August and Sept ember , 2009, Trust ee Agi n f i l ed an

obj ect i on t o Dani el s' s cl ai mof exempt i on f or t he Pl an asset s, and

an adver sary compl ai nt seeki ng to have t hose assets t ur ned over t o

t he Trust ee. Agi n ar gued, among other t hi ngs, t hat t he Pl an was

not exempt f r om t he bankr upt cy est ate because Dani el s had engaged

4 For m5330 i s t he I RS' s f or mf or t he "Ret ur n of Exci se TaxesRel at ed t o Empl oyee Benef i t Pl ans. " See I RS Ret ur n of Exci se TaxesRel at ed t o Empl oyee Benef i t Pl ans, avai l abl e atht t p: / / www. i r s. gov/ pub/ i r s- pdf / f 5330. pdf .

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t he Pl an i n t r ansact i ons prohi bi t ed by t he I nt er nal Revenue Code,

i ncl udi ng t r ansact i ons wi t h Dani el s' s f ami l y member s.

On Mar ch 15, 2010, Dani el s sought l eave f r om t he

bankrupt cy cour t t o wi nd- up t he Pl an by, i n l ar ge par t , conver t i ng

Pl an asset s i nt o I RAs. Par t of t hat mot i on st at ed: "Pl an

r egul at i ons cont r ol l i ng act ual r et i r ement begi n t o mandat e a ser i es

of t i mel y and pr opor t i onal act i ons . . . f or exampl e . . . ( b) r e-

al l ocat i on ( al t er i ng t he pr opor t i on of over al l hol di ngs f r om 100%

' pr of i t - shar i ng' f unds t o par t i al pr of i t - shar i ng and par t i al I RA

. . . . [ ) ] " The mot i on di d not di scl ose t hat t he bul k of t he

f or mer Pl an asset s had t hr ee year s ear l i er been moved i nt o t he

undi scl osed I RAs. To t he cont r ar y, i t cl ear l y i mpl i ed t hat no such

t r ansf er had occur r ed, hence t he mot i on. That mot i on was deni ed.

Ther e appear s t o be no di sput e t hat , al so ar ound Mar ch

15, 2010, At t y. Cohen pr oduced t o Agi n' s counsel document s t hat

i ncl uded some account st atement s and document s f or t he I RAs.

Shor t l y ther eaf t er , Agi n' s counsel sent At t y. Cohen an emai l

memor i al i zi ng a r ecent conver sat i on i n whi ch Cohen repor t ed that

Dani el s was wor ki ng on pr ovi di ng i nf or mat i on expl ai ni ng the

r educt i on i n t he val ue of t he Pl an as r ef l ect ed i n t he Pl an' s 2008

t ax r et ur n.

I n Apr i l 2010, At t y. Cohen sent Agi n' s counsel unsi gned

i nt er r ogat or y r esponses. One r esponse, t o a quest i on about what

asset s t he Pl an hel d, i ncl uded a ref er ence t o one of t he MassMut ual

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I RAs. ( That r esponse suggest ed t hat t he Pl an' s val ue was j ust over

$250, 000, pl us t he val ue of a vacant l ot . ) Shor t l y t her eaf t er ,

At t y. Cohen wr ot e t o st r i ke t hat r ef er ence, not i ng ( cor r ect l y) t hat

"[ t ] hi s i s an I RA account and not a par t of t he Debt or ' s Prof i t -

Shar i ng Pl an. "

I n May 2010, Dani el s' s counsel agai n pr ovi ded a

handwr i t t en account of t he Pl an' s 2010 val ue t o the t r ust ee, now

l i st i ng t he t ot al val ue as $103, 814. 08. Ar ound t he same t i me,

Dani el s provi ded Agi n wi t h a sheet ent i t l ed "2009 Wor k Sheet f or

Wi l l i am Dani el s Ret i r ement Pl ans f or J BPW Cor por at i on 5500 For m

Fi l i ng. " 5 On t he one- page worksheet , Dani el s l i st ed by name,

account number , and dol l ar amount hi s annui t i es, i ncl udi ng t he t wo

I ndi vi dual Ret i r ement Annui t i es t hat ar e t he subj ect of t hi s

di sput e ( one of whi ch had, by t hen, been r ol l ed i nt o a Pr udent i al

annui t y) . Beneat h t he annui t i es, t he wor ksheet l i st s a second

cat egor y of asset s, l abel ed "Wi l l i am M. Dani el s Pr of i t Shar i ng

Pl an. " That l i st onl y i ncl uded a vacant l ot and a br oker age

account , wi t h a t ot al combi ned val ue of $107, 267. 33. I n J une,

2010, Dani el s f ai l ed t o appear f or a Rul e 2004 exami nat i on.

I n r esponse, Trust ee Agi n moved t o have the I RAs t ur ned

over t o t he bankr upt cy est ate. That mot i on was deni ed but Agi n was

5 J BPW Cor por at i on appear s t o be an account i ng f i r m t hatpr epar ed t ax r et ur ns f or t he Pl an. For m 5500 i s t he annual r et ur nf or empl oyee benef i t pl ans. See Annual Retur n/ Report of Empl oyeeB e n e f i t P l a n , a v a i l a b l e a tht t p: / / www. i r s. gov/ Ret i r ement - Pl ans/ For m- 5500- Cor ner .

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al l owed t o amend t he or i gi nal t ur nover compl ai nt ( di r ect ed at t he

Pl an assets) t o add t he I RAs, whi ch he di d i n J ul y 2010. Al so i n

J ul y, 2010, t he U. S. Tr ust ee6 f i l ed an adver sary case ( No. 10-

01180) aski ng t hat Dani el s' s bankrupt cy di schar ge be r evoked.

On Mar ch 8, 2011, Agi n moved f or summar y j udgment i n t he

t ur nover act i on. On Apr i l 4, 2011, t hr ough hi s t ax at t or ney ( who

became hi s successor counsel f or t he adver sary act i on) , Dani el s

opposed Agi n' s mot i on f or summary j udgment and cr oss- moved f or

j udgment . Agi n moved t o st r i ke t he cr oss - mot i on, and f i l ed a br i ef

opposi ng Dani el s' s ar gument s.

Af t er or al ar gument , t he bankrupt cy cour t gr ant ed Agi n' s

mot i on on J une 16, 2011. The cour t f ound t hat t he Pl an di d not

qual i f y f or exempt i on f r omt he bankrupt cy est at e, and t hus nei t her

di d t he I RAs, whose f unds der i ved f r om t he Pl an. Al t er nat i vel y,

t he cour t hel d, t he I RAs shoul d be par t of t he est at e because

Dani el s had i nt ent i onal l y conceal ed t hemt hr oughout hi s bankrupt cy

pr oceedi ngs.

Dani el s asked the bankrupt cy cour t t o "al t er , amend and

r econsi der " i t s r ul i ng. He emphasi zed t hat because cer t ai n I RS

manual s pr oved t hat t he Pl an audi t had been br oad, and because t he

onl y i ssue r ai sed by t he I RS ( t he pr ohi bi t ed l oan t o Dani el s' s son)

had been cor r ect ed, t he I RS' s audi t r esul t shoul d be read as a

6 At t he t i me, t he U. S. Tr ust ee was not Appel l ee Har r i ngt on,but an act i ng Tr ust ee. We wi l l r ef er t hr oughout t hi s opi ni onsi mpl y to t he "U. S. Tr ust ee. "

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f i ndi ng t hat t he Pl an was qual i f i ed and t ax- exempt . 7 Regar di ng hi s

i nt ent t o conceal asset s, Dani el s argued t hat he had i nf or med hi s

at t or ney about t he I RAs, di scl osed t he f ul l amount of t he f unds,

and "pr ovi ded evi dence of t he I RAs t o the Tr ust ee at hi s Sect i on

341 meet i ng and i n document ary f orm. " ( Whi ch cr edi t ors' meet i ng,

and what he cl ai med t o pr ovi de, was uncl ear . ) I n an accompanyi ng

af f i davi t , Dani el s swore that he di d not know why t he phr ase "100%

pr of i t - shar i ng" appear ed i n hi s Mar ch, 2010, mot i on seeki ng l eave

t o wi nd up t he Pl an, but t hat he i nt ended no mi sr epr esent at i on and

had not conceal ed anythi ng. Dani el s' s mot i on t o al t er or amend t he

j udgment was deni ed af t er a hear i ng on August 12, 2011. Dani el s

appeal ed t o t he di st r i ct cour t .

I n November , 2011, t he U. S. Tr ust ee moved f or summary

j udgment i n t he r evocat i on act i on based on t he col l at er al est oppel

ef f ect of t he bankr upt cy cour t ' s r ul i ng i n t he t ur nover act i on

r egar di ng Dani el s' s i nt ent t o conceal t he I RAs. Dani el s, t hr ough

hi s successor counsel , opposed t hat mot i on on December 12, 2011.

On December 29, 2011, Dani el s f i l ed a Rul e 60 Mot i on f or

Rel i ef f r om J udgment i n t he t ur nover act i on cl ai mi ng excusabl e

7 Dani el s al so ar gued t hat t he bankrupt cy cour t hadi ncor r ect l y st at ed t hat Dani el s had enr i ched hi s f ami l y and f r i endst hr ough hi s t r ansact i ons, poi nt i ng t o hi s asser t i on t hat al lt r ansact i ons wer e f or f ai r val ue. Dani el s does not pr ess thi spoi nt on appeal .

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negl ect and newl y di scover ed evi dence. 8 He cl ai med t o be

"bl amel ess" f or t he er r or s i n hi s di scl osur es and f i l i ngs, whi ch he

at t r i but ed t o At t y. Cohen' s medi cal st at e. Among ot her t hi ngs,

Dani el s pr of f er ed:

excer pt s f r om hi s December , 2010 deposi t i on, i nwhi ch he di scussed usi ng Pl an f unds t o pur chaseannui t i es;

par t of a f ax he sent t o At t y. Cohen on August 6,2007, suggest i ng cor r ect i ons t o hi s Schedul e B( onl y some of whi ch, ar guabl y, ar e r ef l ect ed i n t heschedul es submi t t ed t o the bankrupt cy cour t ) ; and

a l et t er he sent t o At t y. Cohen, dat ed Mar ch 15,2010, r equest i ng changes t o the mot i on f i l ed ont hat dat e ( whi ch r ef er r ed t o "100%pr of i t - shar i ng, "as di scussed above) . The r equest ed changescl ar i f i ed t hat t wo I RAs had al r eady been pur chased.They wer e not r ef l ect ed i n t he mot i on as f i l ed wi t ht he bankrupt cy cour t .

He ar gued t hat t hi s, al ong wi t h pr evi ous evi dence, pr oved t hat he

had not ef f ect ed any f r aud.

The bankrupt cy cour t deni ed Dani el s' s Rul e 60 mot i on.

The cour t r ej ect ed t he at t empt t o bl ame t he summar y j udgment

f i ndi ng of bad f ai t h on At t y. Cohen because Dani el s had not

expl ai ned why hi s successor counsel had not r ai sed t he i ssue of

At t y. Cohen' s heal t h i n the summary j udgment br i ef i ng and because

par t i es cust omar i l y bear t he bur den of t hei r at t or neys' mi st akes.

The bankrupt cy cour t l i kewi se r ej ect ed t he appeal t o "new"

evi dence, observi ng that t he evi dence had been avai l abl e t o counsel

and/ or Dani el s al l al ong. Fi nal l y, t he cour t not ed, even i f t he

8 Fed. R. Ci v. P. 60 i s made appl i cabl e t o bankrupt cypr oceedi ngs under Fed. R. Bankr . P. 9024.

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evi dence was newl y di scovered, i t arguabl y showed t hat Dani el s had

af f i r med i nf or mat i on t hat he knew t o be i naccur at e.

Dani el s agai n sought r econsi der at i on, st r essi ng At t y.

Cohen' s medi cal condi t i on and of f er i ng more evi dence t o suggest

t hat Cohen was at f aul t f or any appear ance of mi sr epr esent at i on.

That evi dence i ncl uded ( agai n) t he Mar ch 15, 2010, l et t er t o At t y.

Cohen, al ong wi t h an emai l f r om Cohen t o Dani el s, sent t hr ee days

af t er Trust ee Agi n f i l ed hi s mot i on f or summar y j udgment . Cohen

suggest ed i n t hat emai l t hat , due t o hi s own i l l heal t h, Dani el s' s

t ax at t or ney shoul d t ake over t he case.

The bankr upt cy cour t deni ed t he mot i on f or

r econsi der at i on, as wel l as t wo r enewal s of t hat mot i on, one

pur por t i ng t o expl ai n t he di vi si on of l abor bet ween successor

counsel and Cohen. Dani el s agai n appeal ed t o t he di st r i ct cour t .

The bankrupt cy cour t hel d a hear i ng on t he U. S. Tr ust ee' s

mot i on f or summary j udgment on J anuary 13, 2012. The cour t gr ant ed

t he mot i on, hol di ng t hat i t s pr evi ous f i ndi ng of i nt ent i onal

conceal ment ent i t l ed t he U. S. Tr ust ee to j udgment i n t he revocat i on

act i on. Dani el s agai n appeal ed t o t he di st r i ct cour t .

Al l t hr ee appeal s were consol i dated. On Sept ember 30,

2012, t he di st r i ct cour t af f i r med al l t hr ee r ul i ngs. Dani el s' s

r equest f or r ehear i ng was deni ed. Dani el s now appeal s.

II. Jurisdiction and Standard of Review

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Thi s appeal chal l enges deci si ons of t he bankrupt cy cour t

ent er i ng j udgment as a mat t er of l aw under Federal Rul e of

Bankrupt cy Pr ocedur e 7056. Thi s Cour t has j ur i sdi ct i on over t hi s

mat t er under 28 U. S. C. 158( d) ( 1) , whi ch gr ant s us j ur i sdi ct i on t o

hear appeal s of f i nal deci si ons ent er ed by di st r i ct cour t s hear i ng

bankr upt cy appeal s under 28 U. S. C. 158( a) .

As we r ecent l y expl ai ned i n I n r e Moul t onborough Hotel

Gr p. , LLC, 726 F. 3d 1 ( 1st Ci r . 2013) , t he " l egal st andar ds

t r adi t i onal l y appl i cabl e t o mot i ons f or summar y j udgment . . .

appl y wi t hout change i n bankrupt cy pr oceedi ngs. " I d. at 4; see

gener al l y I n r e Var r asso, 37 F. 3d 760, 762- 63 ( 1st Ci r . 1994) .

Accor di ngl y, "our i nqui r y i s whet her any ' genui ne i ssue of mat er i al

f act exi st s' and whet her ' t he movi ng par t y i s ent i t l ed t o j udgment

as a mat t er of l aw. ' " I n r e Moul t onbor ough, 726 F. 3d at 4 ( quot i ng

Sot oRi os v. Banco Popul ar de P. R. , 662 F. 3d 112, 115 ( 1st Ci r .

2011) ) . A di sput e i s genui ne i f a r easonabl e f act f i nder "coul d

r esol ve t he poi nt i n f avor of t he nonmovi ng par t y. " J ohnson v.

Uni v. of P. R. , 714 F. 3d 48, 52 ( 1st Ci r . 2013) ( i nt er nal quot at i on

mar ks omi t t ed) . A f act i s mat er i al i f i t coul d af f ect t he out come

of t he sui t under gover ni ng l aw. Sec. & Exch. Comm' n v. Fi cken,

546 F. 3d 45, 51 ( 1st Ci r . 2008) . I n conduct i ng our i nqui r y, " ' we

cede no speci al def erence t o t he determi nat i ons made by t he

di st r i ct cour t ' and i nst ead ' assess t he bankr upt cy cour t ' s deci si on

di r ect l y. ' " I n r e Moul t onbor ough, 726 F. 3d at 4 ( quot i ng Ci t y

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Sani t at i on, LLC v. Al l i ed Wast e Ser vs. of Mass. , LLC ( I n r e Am.

Car t age, I nc. ) , 656 F. 3d 82, 87 ( 1st Ci r . 2011) ) . And because t he

bankr upt cy cour t ent ered j udgment as a mat t er of l aw, t hat

assessment on appeal i s de novo. I n r e Spookywor l d, I nc. , 346 F. 3d

1, 6 ( 1st Ci r . 2003) .

III. Analysis

We expl ai n f i r st why t he bankrupt cy cour t cor r ect l y r ul ed

on summary j udgment t hat t he Pl an asset s ( i ncl udi ng the f unds

t r ansf er r ed t o t he I RAs) wer e not exempt f r om i ncl usi on i n t he

bankrupt cy est at e, and t her ef or e ar e avai l abl e t o cr edi t or s. We

t hen expl ai n why we agr ee t hat Dani el s s conduct t hr oughout hi s

bankrupt cy pr oceedi ngs i ndi sput abl y demonst r ated at l east a

r eckl ess i ndi f f er ence t o t he t r ut h of mat er i al i nf or mat i on t hat he

pr ovi ded t o t he cour t and t o t he Trust ee.

A. The Plan Assets Are Not Exempt from the Bankruptcy Estate.

Sect i on 522( b) ( 3) ( C) of t he Bankrupt cy Code l et s debt or s

( l i ke Dani el s) who r el y on st ate- l aw bankr upt cy exempt i ons exempt

r et i r ement f unds f r omt hei r bankrupt cy est at e i f t he money i s hel d

i n a f und or account t hat i s exempt f r om t axat i on under sect i on

401 . . . of t he I nt er nal Revenue Code of 1986. 11 U. S. C.

522( b) ( 3) ( C) . 9 ( Sect i on 401 deal s wi t h t r ust s t hat ar e a par t of

9 Dani el s' s or i gi nal Schedul e C l i st ed t he Pl an as exemptunder 29 U. S. C. 1056( d) . The part i es now appear t o agr ee t hat 522( b) ( 3) ( C) det er mi nes whet her t he Pl an i s exempt ; t o the extentt hat Tr ust ee Agi n i nt ended t o ar gue that Dani el s never pr oper l yexempt ed t he Pl an, he has wai ved t hat cl ai m by addr ess i ng i tper f unct or i l y i n a f oot not e. See Sot o- Fonal l edas v. Ri t z- Car l t on

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pr of i t - shar i ng pl ans. See 26 U. S. C. 401( a) . ) The bankrupt cy

cour t f ound t hat Dani el s' s Pl an was not exempt , because t he Pl an' s

oper at i on r epeat edl y vi ol at ed appl i cabl e t ax l aws. The cour t

f ocused i n par t i cul ar on sect i ons 401 and 4975 of t he I nt er nal

Revenue Code ( her ei naf t er , t he "Tax Code") . 26 U. S. C. 401,

4975.

Sect i on 4975 l i mi t s t he sor t s of t r ansact i ons t hat

r et i r ement pl ans may engage i n. I t does so by i mposi ng addi t i onal

t axes, wi t h cer t ai n except i ons, on "pr ohi bi t ed t r ansact i ons" such

as l oans or pr oper t y sal es bet ween a r et i r ement pl an and, f or

exampl e, a pl an f i duci ar y, t he empl oyer , a per son pr ovi di ng

ser vi ces t o t he pl an, or f ami l y member s of ot her di squal i f i ed

per sons. See i d. at 4975 ( a) , ( c) , ( d) , ( e) . Any t r ansact i on

wher eby a pl an f i duci ar y "deal s wi t h" pl an asset s " i n hi s own

i nt er est s or f or hi s own account , " or r ecei ves consi der at i on

connect ed t o a t r ansact i on i nvol vi ng pl an asset s, i s al so

pr ohi bi t ed. I d. at 4975( c)( 1) ( E) , ( F) .

The bankrupt cy cour t f ound t hat t he Pl an had engaged i n

at l east ei ght subst ant i al t r ansact i ons pr ohi bi t ed by sect i on 4975.

I n r e Dani el s, 452 B. R. 335, 349- 50 ( Bankr . D. Mass. 2011) . The

bankrupt cy cour t al so f ound t hat Dani el s vi ol at ed sect i on 401( d) of

t he Tax Code by put t i ng money f r omt he Lopes account i nt o the Pl an

and by al l owi ng t he Pl an t o accept t he ass i gnment of Dani el s' s

San J uan Hot el Spa & Casi no, 640 F. 3d 471, 475 n. 2 ( 1st Ci r . 2011) .

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wi f e' s i nt er est i n t he Real t y Tr ust . 10 I d. at 350. I n l i ght of al l

t hi s, t he bankr upt cy cour t concl uded t hat Dani el s' s management

pr act i ce was t o engage t he Pl an r epeat edl y i n subst ant i al

t r ansact i ons pr ohi bi t ed by the Tax Code.

On appeal , Dani el s does not di r ect l y cr i t i que t hese

f i ndi ngs per se. I nst ead, he ar gues t hat when t he I RS cl osed t he

Pl an' s 2006 audi t wi t hout di squal i f yi ng t he Pl an or i mposi ng

addi t i onal t axes, i t cr eat ed a pr esumpt i on t hat t he Pl an assets ar e

exempt f r om t he bankrupt cy est at e. The st at ut or y basi s f or

Dani el s' s argument i s 11 U. S. C. 522( b) ( 4) , whi ch pr ovi des t hat

f or t he pur poses of sect i on 522( b) ( 3) ( C) :

( A) I f t he r et i r ement f unds are i n a r et i r ement f und t hathas r ecei ved a f avor abl e det er mi nat i on under sect i on 7805of t he [ Tax Code] , and t hat det er mi nat i on i s i n ef f ect asof t he dat e of t he f i l i ng of t he pet i t i on . . . , t hosef unds shal l be pr esumed to be exempt f r om t he est at e.( B) I f t he r et i r ement f unds are i n a r et i r ement f und t hathas not r ecei ved a f avor abl e deter mi nat i on under suchsect i on 7805, t hose f unds are exempt f r om t he est at e i ft he debt or demonst r ates t hat

( i ) no pr i or det er mi nat i on t o t he cont r ar y has beenmade by a cour t or t he I nt ernal Revenue Servi ce;and( i i ) ( I ) t he r et i r ement f und i s i n subst ant i alcompl i ance wi t h t he appl i cabl e r equi r ement s of t he[ Tax Code] ; or ( I I ) t he r et i r ement f und f ai l s t o bei n subst ant i al compl i ance wi t h t he appl i cabl er equi r ement s of t he [ Tax Code] and t he debt or i s

10 Tax Code sect i on 401( d) pr ovi des t hat , t o be qual i f i ed f orf avor abl e t ax t r eat ment , pr of i t - shar i ng pl ans' t r ust s must r est r i ctpl an cont r i but i ons made on behal f of any "owner - empl oyee[ s] " t ot hose made "onl y wi t h respect t o t he earned i ncome of such owner -empl oyee whi ch i s der i ved f r omt he t r ade or busi ness wi t h r espectt o whi ch such pl an i s est abl i shed. " 26 U. S. C. 401( d) .

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not mat er i al l y r esponsi bl e f or t hat f ai l ur e.

11 U. S. C. 522( b) ( 4) . 11

Sect i on 7805 of t he Tax Code, t o whi ch sect i on 522( b)

r ef er s, gener al l y aut hor i zes t he Secr et ar y of t he Tr easur y t o enact

r egul at i ons. Whi l e t he Secr et ar y has est abl i shed pr ocedur es f or

obt ai ni ng det er mi nat i ons t hat t he f or mof t he pl an i s compl i ant , 26

C. F. R. 601. 201, 12 Dani el s poi nt s us t o no r egul at i on pr ovi di ng

t hat t he r esul t s of an audi t coul d be deemed t o be a f avor abl e

determi nat i on wi t hi n t he meani ng of Bankr upt cy Code sect i on

522( b) ( 4) .

Even assumi ng t hat t he resul t s of an audi t can serve as

a f avor abl e det er mi nat i on under sect i on 522( b) ( 4) of t hose mat t er s

exami ned i n t he audi t , we woul d r ej ect Dani el s' s cont ent i on t hat an

audi t cl osur e may be deemed t o be a "f avorabl e determi nat i on" of

f act s or i ssues of whi ch t he I RS was not made aware. 13 See I n r e

11 Dani el s does not ar gue t hat he was not r esponsi bl e i f t hePl an vi ol at ed t he t ax l aws. Nor coul d he r eadi l y do so; he admi t t edt hat he was t he Pl an admi ni st r at or and Trust ee.

12 Dani el s obj ect s t hat t he cour t s bel ow ci t ed I RS Publ i cat i on794 t o est abl i sh t hat a f avor abl e det er mi nat i on l et t er expr essest he I RS' opi ni on about t he qual i f i cat i on of a pl an' s f or m. Becauset he cour t s coul d have f ound t he same i nf or mat i on i n I RS r egul at i onsand our pr evi ous opi ni on, see Fent on v. J ohn Hancock Mut . Li f e I ns.Co. , 400 F. 3d 83, 85 ( 1st Ci r . 2005) , t he er r or , i f any, washarml ess.

13 Dani el s ar gues t hat I RS determi nat i ons ar e pr esumed t o becor r ect , ci t i ng Wel ch v. Hel ver i ng, 290 U. S. 111, 115 ( 1933) amongot her s. We do not quar r el wi t h t he pr i nci pl e, but i t hel ps Dani el sl i t t l e. No one di sput es t hat under sect i on 522, a f avor abl edet er mi nat i on cr eat es a pr esumpt i on of compl i ance. See I n r eDal ey, 717 F. 3d 506, 508- 511 ( 6t h Ci r . 2013) . I n any event , t hi s

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Pl unk, 481 F. 3d 302, 307 ( 5t h Ci r . 2007) ( "The I RS never consi der ed

Pl unk' s abuse of Pl an asset s or audi t ed t he Pl an t o det er mi ne

whet her i t was oper at i onal l y qual i f i ed despi t e Pl unk' s act i ons.

Ther ef or e, t he bankrupt cy cour t . . . [ was] per mi t t ed t o r each an

i ndependent deci si on r egar di ng t he Pl an' s qual i f i ed

s t a t u s . . . . " ) . 14 To accept Dani el s' s ar gument t hat a cl osed

audi t bl esses al l oper at i ons of a pl an woul d be t o r ewar d

conceal ment i n audi t s and t o pr esume t hat al l audi t s are al l -

encompass i ng. 15

Dani el s ar gues t hat t he I RS necessar i l y f ound t he Pl an' s

oper at i onal hi st or y "accept abl e, " because i t l ooked at sever al Pl an

t ax r et ur ns and t r ansact i ons, onl y obj ect ed t o one, and nei t her

di squal i f i ed t he Pl an nor assessed addi t i onal t axes. The pr obl em

case i s unl i ke t hose i n whi ch a par t y chal l enges an act ual I RSr ul i ng or assessment . Cf . , e. g. , Wel ch, 290 U. S. at 115; Host arMar i ne Tr ansp. Sys. , I nc. v. Uni t ed St at es, 592 F. 3d 202, 208 ( 1st

Ci r . 2010) . Her e, Dani el s asks us t o f i nd t hat t he I RS made adet er mi nat i on r egar di ng event s of whi ch i t was by al l appear ancesunaware.

14 Dani el s r el i es heavi l y on Mat t er of Youngbl ood, 29 F. 3d 225( 5t h Ci r . 1994) . Ther e, a bankrupt cy cour t deemed a r et i r ementpl an unqual i f i ed and t hus avai l abl e t o cr edi t or s under Texas l aw,despi t e two f avor abl e det er mi nat i on l et t er s and an audi t wher ei nt he I RS decl i ned t o di squal i f y t he pl an. The Fi f t h Ci r cui tr ever sed. As the Fi f t h Ci r cui t l at er expl ai ned, however , t he I RSi n Youngbl ood had act ual l y consi der ed " t he mi sconduct at i ssue anddeci ded not t o di squal i f y t he pl an. " Pl unk, 481 F. 3d at 306.

Her e, as wi t h t he never - audi t ed pl an i n Pl unk, i t appear s t hat t heI RS was unawar e of at l east some of t he di squal i f yi ng conduct .

15 Because nothi ng i n t he I nt ernal Revenue Manual s ci t ed byDani el s pr oves t hat t he I RS was awar e of al l of t he chal l engedt r ansact i ons, we need not addr ess Trust ee Agi n' s argument sr egar di ng wai ver and t he si gni f i cance of such Manual s.

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i s t hat he i dent i f i es no evi dence t hat t he I RS r evi ewed, or was

even awar e of , at l east f our t r ansact i ons r el i ed on by the

bankr upt cy cour t i n gr ant i ng summary j udgment . 16 These i ncl uded:

( 1) t he l and and l oan t r ansact i ons wi t h Tom Fl or ence' s daught er ;

( 2) a l oan f r om Dani el s' s wi f e' s ot her t r ust , t he BD Real t y Tr ust ,

t o t he Pl an; ( 3) t he Pl an' s i nvest ment i n B. I . T. C. O. , a sal vage

ef f or t i n whi ch Dani el s al so per sonal l y i nvest ed; and ( 4) t he

deposi t of f unds f r om t he Lopes account i nt o t he Pl an. 17 Cf . I n re

Dani el s, 452 B. R. at 350- 51. As not ed above, Dani el s has not

di r ect l y chal l enged t he bankrupt cy cour t ' s r ul i ngs t hat each of

t hese subst ant i al and mat er i al t r ansact i ons was bar r ed by sect i ons

4975 or 401( d) . Nor does he chal l enge t he bankr upt cy cour t ' s

concl usi on t hat pr of i t s f r ompr ohi bi t ed t r ansact i ons ar e not exempt

f r om t he bankrupt cy est at e under sect i on 522( b) ( 3) ( C) , or t hat a

pat t er n of pr ohi bi t ed t r ansact i ons and vi ol at i ons of sect i on 401( d)

const i t ut es mat er i al noncompl i ance wi t h appl i cabl e t ax l aws under

sect i on 522( b) ( 4) .

16 Al t hough Dani el s i ncl uded much, i f not al l , of hi scor r espondence wi t h the I RS i n hi s summary j udgment r esponse, hedi d not i ncl ude al l of t he at t achment s and document at i on t hataccompani ed t hat cor r espondence.

17 Dani el s aver s t hat he r epor t ed t hi s deposi t as a deduct i onon hi s t ax ret ur n, and t hat i t was never chal l enged by any "t axaut hor i t y. " Gi ven t he l ack of i nf or mat i on about what exact l y t heI RS was t ol d, however , we f i nd t hat Dani el s di d not cr eat e an i ssueof f act as t o t he I RS' awar eness of t he det ai l s of t he t r ansact i on.

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These wer e not , mor eover , i nsubst ant i al or i sol at ed

t r ansact i ons. At l east $20, 000 ( but possi bl y $53, 000) went f r oma

r et i r ement account t o pay expenses f or B. I . T. C. O. Dani el s' s

t r ansact i ons wi t h t he daught er of Tom Fl or ence appear t o have

i nvol ved r epeat ed conveyances of a pr oper t y, and a l oan of at l east

$125, 000. Most i mport ant l y, some port i on of t he more t han $238, 000

t hat Dani el s t ook f r om t he Lopes account s went i nt o t he Pl an. See

J ensen v. Dani el s, 57 Mass . App. Ct . 811, 813- 14 ( 2003) . We

t her ef or e f i nd t hat t her e i s no genui ne i ssue of mat er i al f act t hat

t he Pl an di d not subst ant i al l y compl y wi t h appl i cabl e tax l aws.

Havi ng t hus r ej ect ed Dani el s' s sol e chal l enge t o t he

r ul i ng t hat t he Pl an was not i n subst ant i al compl i ance wi t h t he Tax

Code- - t hat t he bankrupt cy cour t ' s concl usi on was precl uded by the

Pl an' s audi t r esul t - - we af f i r m t he j udgment t hat t he Pl an asset s

were not exempt f r omt he bankr upt cy est ate.

B. Daniels Indisputably Demonstrated a Reckless Indifference to

the Truth of Material Information During His Bankruptcy

Proceedings.

Dani el s does not chal l enge t he bankrupt cy cour t ' s

concl usi on t hat t he I RAs pur chased wi t h t he asset s of a

noncompl i ant and nonexempt ed Pl an are t hemsel ves necessar i l y non-

exempt . See I n r e Dani el s, 452 B. R. 335, 351 ( Bankr . D. Mass.

2011) . Or di nar i l y, t hen, we woul d not need t o r each t he bankrupt cy

cour t ' s al t er nat i ve r ul i ng, whi ch bar r ed Dani el s f r omcl ai mi ng t he

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I RAs as exempt because he " i nt ent i onal l y conceal [ ed] or f ai l [ ed] t o

di scl ose est at e pr oper t y" t hr ough "a pat t er n of bad f ai t h

conceal ment [ of t he I RAs] t hat spans t he ent i r e t hr ee and a hal f

year s of [ hi s] bankrupt cy case. " I d. at 351- 52. That al t er nat i ve

hol di ng, however , became t he basi s f or t he ent r y of summary

j udgment i n t he r evocat i on act i on, i t sel f t he subj ect of appeal . 18

We t heref ore t ur n t o t he quest i on of whether t he bankr upt cy cour t

cor r ect l y rul ed on summar y j udgment t hat Dani el s i nt ent i onal l y

conceal ed mat er i al i nf or mat i on about hi s f i nanci al ci r cumst ances.

The bankrupt cy cour t hel d t hat " i f a debtor i ntent i onal l y

conceal s or f ai l s t o di scl ose est at e pr oper t y, " he wi l l be bar r ed

f r om cl ai mi ng t hat pr oper t y as exempt , even i f i t woul d have been

exempt had i t been pr oper l y schedul ed and cl ai med. I d. at 351

( quot i ng I n r e Wood, 291 B. R. 219, 226 ( B. A. P. 1st Ci r . 2003) ) .

Both par t i es pr esume, and hence we need not deci de, t hat t he

bankr upt cy cour t had t he aut hor i t y t o deny an exempt i on ( as opposed

t o a pr oposed amendment of bankr upt cy schedul es) pur el y f or bad

f ai t h by t he debt or . Cf . 11 U. S. C. 522( g) , 4 Col l i er on

Bankr upt cy 522. 08 ( Al an N. Resni ck & Henr y J . Sommer eds. , 16t h

ed. 2013) . Dani el s does cont end, however , t hat t he bankrupt cy

cour t ' s order al l owi ng hi m t o amend hi s Schedul e B pr ecl uded i t s

l at er f i ndi ng of bad f ai t h. We di sagr ee. Under t he ci r cumst ances

18 Dani el s has not ar gued on appeal t hat an al t ernat i vehol di ng may not be gi ven col l at er al est oppel ef f ect . We expr ess noopi ni on on t he mat t er .

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of t hi s case, t he bankrupt cy cour t was ent i t l ed t o gr ant Dani el s

l eave t o amend hi s schedul es whi l e i n ef f ect pr eservi ng t he i ssue

of bad f ai t h f or deci si on at summar y j udgment , f or whi ch br i ef i ng

was al r eady near l y compl ete.

The par t i es each add a r ef i nement t o t he st andar d r eci t ed

by t he bankrupt cy cour t : Dani el s assert s t hat what ever i s conceal ed

must be mat er i al , and Agi n cont ends t hat r eckl ess i ndi f f er ence t o

t he t r ut h i s t ant amount t o i nt ent i onal conceal ment . Cf . I n r e

Tul l y, 818 F. 2d 106, 110- 11 ( 1st Ci r . 1987) ( not i ng t hat di schar ge

can onl y be deni ed under 727( a) ( 4) ( A) i f t he debt or knowi ngl y and

f r audul ent l y made a mat er i al mi sst at ement , and t hat " r eckl ess

i ndi f f er ence t o t he t r ut h" has "consi st ent l y been t r eat ed as t he

f unct i onal equi val ent of f r aud f or pur poses of " t hat subsect i on) .

Nei t her par t y appear s t o obj ect t o t he ot her ' s r ef i nement , and so

we assume bot h to be cor r ect .

1. The Omitted Information Was Material.

Dani el s ar gues t hat because he di scl osed t he t otal amount

of hi s ret i r ement f unds, hi s f ai l ur e t o speci f i cal l y i dent i f y t he

I RA account s was not mat er i al . Ther ef or e, he cl ai ms, t hat f ai l ur e

cannot suppor t a f i ndi ng of i nt ent i onal conceal ment . I nf or mat i on

omi t t ed f r oma bankr upt cy pet i t i on or schedul e i s mat er i al i f i t i s

"per t i nent t o t he di scover y of asset s, i ncl udi ng t he hi st or y of a

bankrupt ' s f i nanci al t r ansact i ons. I n r e Mascol o, 505 F. 2d 274,

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277 ( 1st Ci r . 1974) ( af f i r mi ng a r evocat i on of di schar ge wher e t he

debt or f ai l ed t o di scl ose cl osed account s) .

I t cannot be doubt ed t hat t he cr edi t or s ar e ent i t l ed t oi nqui r e i nt o what pr oper t y has passed t hr ough t he

bankrupt ' s hands dur i ng a per i od pr i or t o hi s bankrupt cy. . . wi de l at i t ude must be accor ded t o such anexami nat i on, and . . . t he mat er i al i t y of [ an al l egedl y]f al se oat h wi l l not depend upon whet her i n f act t hef al sehood has been det r i ment al t o t he cr edi t or s.

I d. at 278 ( quot i ng I n r e Sl ocum, 22 F. 2d 282, 285 ( 2d Ci r . 1927) ) .

Her e, t he f act t hat Dani el s had r ecent l y moved near l y $470, 000 f r om

a pr of i t - shar i ng pl an i nt o two I RA account s hel d i n hi s own name i s

most cer t ai nl y t he t ype of i nf or mat i on about t he nat ur e and hi st or y

of Dani el s' s asset s and t r ansact i ons t hat any t r ust ee or cr edi t or

mi ght wi sh t o exami ne or consi der . As evi denced by t he f act t hat

t he Tr ust ee' s or i gi nal t ur nover r equest cover ed onl y t he asset s i n

t he Pl an, t he f ai l ur e t o l i st t he I RAs coul d have had a huge i mpact

on t he est at e and cr edi t or s had t he I RAs not been l at er i dent i f i ed

and t he t ur nover r equest amended. The I RA i nf ormat i on was

mat er i al .

2. The Record Compels the Conclusion that Daniels was

Recklessly Indifferent to the Truth.

Cour t s use speci al caut i on i n gr ant i ng summary j udgment

as to i nt ent . I nt ent i s of t en pr oved by i nf er ence, af t er al l , and

on a mot i on f or summary j udgment , al l r easonabl e i nf erences must be

drawn i n f avor of t he nonmovi ng par t y. See Sec. & Exch. Comm' n v.

Fi cken, 546 F. 3d 45, 51- 52 (1st Ci r . 2008) ( summary j udgment on

sci ent er i s unusual , but pr oper wher e t he non- movant r el i es on

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concl usor y al l egat i ons or i nsuppor t abl e i nf er ences) . We have

pr evi ousl y consi dered t he quest i on of summary j udgment wi t h r egard

t o a debt or ' s f r audul ent i nt ent i n sever al cases. Two opi ni ons,

t hough ar i si ng i n t he cont ext of denyi ng a Chapt er 7 di schar ge, ar e

par t i cul ar l y hel pf ul her e.

I n I n r e Var r asso, 37 F. 3d 760, 762 ( 1st Ci r . 1994) , we

r evi ewed t he gr ant of summary j udgment bar r i ng a di scharge on the

gr ound t hat t he debt ors had knowi ngl y and f r audul ent l y made a f al se

oat h or account . Ther e was no di sput e t hat t he debt ors had f ai l ed

t o i ncl ude asset s on t hei r bankrupt cy schedul es- - a bank account

wi t h a bal ance of $100, and home f ur ni shi ngs wor t h r oughl y $2, 000- -

whi ch wer e not uncover ed unt i l t hei r cr edi t or s' meet i ng. I d. The

debt or s, however , ar gued t hat t hey had no i nt ent t o hi nder t he

pr oceedi ngs or def r aud any cr edi t or s, and t hei r at t or ney aver r ed

t hat di scl osur e had been made at t he ear l i est possi bl e oppor t uni t y.

I d. We r eversed t he gr ant of summary j udgment agai nst t he debt ors,

not i ng i n par t i cul ar t hat t he "r el at i vel y smal l val ue" of t he

omi t t ed assets cut agai nst an i nf er ence of f r aud. I d. at 764.

Even so, we st r essed t hat i n some cases, summary j udgment on t he

i ssue of i nt ent i s per mi ssi bl e. I d.

We encountered such a case i n I n re Mar r ama, 445 F. 3d 518

( 1st Ci r . 2006) . There, we af f i r med summary j udgment denyi ng t he

debt or a di schar ge on t he gr ounds t hat he had t r ansf er r ed asset s

l ess t han a year bef or e hi s bankrupt cy, i nt endi ng t o hi nder , del ay,

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or def r aud a cr edi t or . See i d. at 521- 22. The debt or had

r ef i nanced hi s vacat i on home, t r ansf er r ed most of t he money t o hi s

gi r l f r i end, and t hen pl aced t he home i n a spendt hr i f t t r ust ( of

whi ch he was t he benef i ci ar y) . I d. at 520.

Mar r ama argued t hat he had proper l y r ecorded t he home

t r ansf er wi t h t he l ocal deeds of f i ce and t hat he had r epor t ed t he

t r ust , i t s hol di ngs, and hi s i nt er est i n i t dur i ng t he bankr upt cy.

I d. at 523- 24. He al so not ed t hat hi s at t or ney swor e t o l eavi ng

i nf or mat i on of f of t he bankrupt cy schedul es by mi st ake. I d. at

523. We r ej ect ed hi s expl anat i ons as i nsuppor t abl e, however . I d.

at 524. Marr amma had admi t t ed t o t r ansf err i ng hi s home " t o pr otect

i t , " and undi sput ed f act s suppor t ed near l y ever y i ndi cat or of f r aud

t hat we use t o assess bankrupt cy- r el at ed pr oper t y t r ansf er s ( f or

exampl e, he t r ansf er r ed hi s asset t o someone cl ose t o hi m, r et ai ned

a benef i ci al i nt er est i n i t , r ecei ved no val uabl e consi der at i on f or

t he t r ansf er , and was f aci ng sei zur e of hi s asset s) . I d. at 522-

24. We t her ef or e f ound t hat t he r ecor d per mi t t ed no i nf er ence but

t hat of f r aud i n t he t r ansf er . I d. at 524.

Whi l e t hi s case di f f er s f r ombot h Var r asso and Mar r amma,

we f i nd i t f al l s i n l i ne mor e wi t h t he l at t er t han t he f or mer .

Dani el s cr eat ed t he I RAs l ess t han seven mont hs bef or e f i l i ng f or

bankrupt cy pr ot ect i on, and i n t he wake of an af f i r mance of a l ar ge

j udgment agai nst hi m. Schedul e B cl ear l y and express l y sol i ci t ed

t he l i st i ng of " i nt er est s i n I RA[ s] " and demanded t he

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"par t i cul ar s. " The f unds moved i nt o t he I RAs repr esent ed per haps

50%of hi s t ot al asset s. I t i s i nconcei vabl e t hat , when compl et i ng

hi s schedul es, Dani el s somehow f orgot t hat he had r ecent l y moved

r oughl y one- hal f mi l l i on dol l ar s ent i r el y out si de hi s Pl an i nt o t wo

I RAs. Hi s suggest i on t hat he t hought i t was okay t o gr oup al l

r et i r ement - t ype f unds under hi s pr of i t - shar i ng pl an because t hat

was how he compl et ed hi s 2007 t ax ret ur n carr i es l i t t l e wei ght

because t hat r et ur n was f i l ed af t er he had f i l l ed out hi s

bankr upt cy schedul e.

Dani el s t hen managed t o avoi d cor r ect l y expl ai ni ng t he

I RAs t hr oughout hi s var i ous cr edi t or s meet i ngs. Ref er r i ng t o t he

Pl an i t sel f as an I RA at hi s 2007 credi t or s meet i ng i s not , as

Dani el s ar gues, an adequat e di scl osur e. And whi l e he r ef er r ed i n

t he Apr i l , 2009 credi t or s meet i ng t o havi ng pur chased MassMut ual

Annui t i es, he st at ed f l at l y and f al sel y t hat t hose annui t i es wer e

hel d by t he pensi on pl an now. Yet , i n f i l l i ng out t he J ul y 2009

r equest t o rol l one of t he I RAs over f r omMassMut ual t o Pr udent i al ,

Dani el s exhi bi t ed no conf usi on about who hel d what - - under "Owner

Name/ Pl an Name, " he t yped "Wi l l i am M[ . ] Dani el s. "

Dani el s f ai l ed t o t ake advant age of sever al ot her

oppor t uni t i es to cl ear up t he st at us of t he I RAs. For exampl e, i n

r espondi ng to an i nt er r ogat or y aski ng what asset s t he Pl an hel d,

Dani el s f or t he f i r st t i me cl ear l y stat ed t hat t he MassMut ual I RA

ment i oned i n t he dr af t i nt er r ogat or y response was not par t of t he

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Pl an. Yet , i n r esponse t o a r equest f or t he det ai l s of ever y

di st r i but i on, l oan, t r ansf er or wi t hdr awal f r om t he Pl an s f unds

or asset s, he st i l l f ai l ed t o pr ovi de any i nf or mat i on r el at i ng t o

t he I RAs or t hei r cr eat i on. Dani el s t hen f ai l ed t o appear f or hi s

Rul e 2004 exami nat i on i n J une, 2010.

Most damni ngl y, Dani el s' s mot i on seeki ng l eave t o

t r ansf er Pl an asset s t o I RAs f or t ax compl i ance cl ear l y i mpl i ed

t hat t her e wer e no I RAs yet . I ndeed, t hat mot i on ( t he gener al gi st

of whi ch was t o expl ai n t hat each Pl an component had t o be sol d or

changed i n ant i ci pat i on of r et i r ement ) f al sel y descr i bed t he Pl an' s

l i qui d "hol di ngs" as "100% pr of i t - shar i ng. "

To be sure, a f ew f act s ar guabl y wei gh i n Dani el s s

f avor . Dani el s appear s t o be cor r ect t hat he f ul l y di scl osed t he

t ot al amount of money i n bot h t he Pl an and t he I RAs on hi s i ni t i al

schedul es, al bei t l i st i ng al l of t he asset s as par t of t he Pl an.

Ther ef or e, t hi s i s not a case i n whi ch t he debtor out - and- out hi d

t he amount of hi s asset s. Fur t her mor e, di scl osi ng t he f ul l amount

up f r ont r endered pr obl emat i c any subsequent at t empt t o avoi d

account i ng f or and t ur ni ng over t he I RA asset s shoul d t he Pl an be

f ound nonexempt . 19 Even so, we have expl ai ned bef ore t hat bad

f ai t h may i ncl ude conduct t hat i s not , i n f act , ent i r el y i n a

19 Of cour se, because t he l i st ed asset s i ncl uded r eal est at e,subst ant i al changes i n t he val ue of t he Pl an mi ght wel l be seen aschanges i n t he val ue of t he r eal est at e, r educi ng t he l i kel i hoodt hat t he t ur nover of Pl an asset s val ued at l ess t han or i gi nal l yl i st ed woul d t r i gger a hunt f or ot her asset s.

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debt or ' s best i nt er est . See I n r e Hanni gan, 409 F. 3d 480, 483 ( 1st

Ci r . 2005) . And debt or s must di scl ose even t hose asset s t hey

bel i eve ar e unavai l abl e t o t he bankrupt cy est at e. I n r e Wood, 291

B. R. at 226 ( ci t i ng I n r e Yoni kus, 974 F. 2d 901, 904 ( 7t h Ci r .

1992) ) . As t he Schedul es' expr ess i nst r uct i ons i ndi cat e, t he

"par t i cul ar s" ar e i ndeed mat er i al ; t he f or m i t sel f woul d be much

shor t er i f onl y concer ned wi t h t he amount , r at her t han t he f or mand

l ocat i on, of asset s.

I t i s al so t r ue t hat , i n r esponse t o di scover y r equest s

i n t he adver sar y act i on r egar di ng t he Pl an, Dani el s di d event ual l y

t ur n over bot h t he st at ement s f or t he i ndi vi dual I RAs and a

wor ksheet breaki ng down by name and account number t he Pl an

component s and Dani el s' s ot her I RAs. Al l t hi s shows, t hough, i s

t hat when t he Tr ust ee was consci ent i ous enough t o pr ess agai n f or

det ai l , Dani el s event ual l y became mor e f or t hcomi ng. 20

Dani el s al so cl ai ms t hat he r el i ed on t he advi ce of hi s

l awyer and account ant . He poi nt s, t hough, t o no af f i davi t f r om a

l awyer or account ant who cl ai ms t o have t ol d hi mt hat he coul d omi t

ment i on of t he I RAs. Mor e i mpor t ant l y, r el yi ng on t he advi ce of

one' s f ul l y- i nf or med at t or ney i n r epor t i ng asset s may negat e an

i nf er ence of f r aud or i nt ent i onal conceal ment , but onl y i f i t i s

20 As noted above, Dani el s pr ovi ded some evi dence suggest i ngt hat he gave Agi n st at ement s f or t he I RAs i n quest i on at t he 2009credi t or s' meet i ng. He di d not , however , i dent i f y i t i n br i ef i ngor ci t e t o i t i n hi s st at ement of f act s, and so we need notconsi der i t . Fed. R. Ci v. P. 56( c)( 3) .

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not " t r anspar ent l y pl ai n t hat t he pr oper t y [ i n quest i on] shoul d be

schedul ed. " I n r e Mascol o, 505 F. 2d 274, 277 & n. 4 ( 1st Ci r .

1974) . Cf . I n r e Mar r ama, 445 F. 3d at 523- 24. Havi ng cr eat ed t he

I RAs i n hi s own name onl y mont hs bef or e f i l i ng f or bankrupt cy, i t

shoul d have been apparent t o Dani el s and any advi sor t hat he must

separ at el y account f or t he I RAs and t he Pl an. Si mpl y put , gi ven

t hat t he f or m expr essl y r equest ed t he l i st i ng of I RAs, gi ven t hat

Dani el s hi msel f had r ecent l y creat ed and f unded t he I RAs, and gi ven

t hat he knew he owned t hem, i t i s har d t o concei ve of any

l egi t i mat e r eason t o deci de not t o l i st t hem.

Based on t hese f act s, Dani el s f ai l s t o cr eat e any

r easonabl e basi s f or avoi di ng t he concl usi on t hat he act ed, at

best , wi t h r eckl ess di sr egar d f or t he t r ut h of t he mat er i al

i nf or mat i on he suppl i ed dur i ng hi s bankrupt cy pr oceedi ngs. Cf . I n

r e Tul l y, 818 F. 2d 106, 112 ( 1st Ci r . 1987) ( not i ng t hat " r eckl ess

i ndi f f er ence t o" t he t r ut h i s t r eat ed as t he "f unct i onal equi val ent

of f r aud f or t he pur poses of [ denyi ng di schar ge t o a debt or under

11 U. S. C. ] 727( a) ( 4) ( A) . " ) ; I n r e Donahue, BAP NH 11- 026, 2011 WL

6737074, at *11- 14 ( B. A. P. 1st Ci r . Dec. 20, 2011) ( af f i r mi ng

summary j udgment denyi ng a di scharge under 727( a) ( 4) ( A) wher e

debt or s made mi sst at ement s and di d not r epor t a pr e- pet i t i on

pr oper t y t r ansf er or ongoi ng i ncome t her ef r om, but deni ed i nt endi ng

t o decei ve anyone, had pr oduced some r el evant document s ami dst

hundr eds of ot her s, and bl amed t hei r omi ssi ons on counsel ) . The

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f ew poi nt s ar guabl y runni ng i n Dani el s s f avor si mpl y cannot cr eat e

a t r i abl e i ssue of f act i n t he f ace of t he r at her st unni ng

i mpr eci si on and i naccur acy of Dani el s' s sever al st at ement s

r egar di ng al most hal f of hi s asset s. The amount s i nvol ved her e

r ender r eckl ess er r or s t hat arguabl y may have been onl y negl i gent

i f t hey had concer ned l ess si gni f i cant i t ems. We t her ef or e af f i r m

t he bankr upt cy cour t ' s ent r y of summary j udgment on t he i ssue of

Dani el s' s i nt ent i onal or r eckl ess conceal ment .

C. The Bankruptcy Court Did Not Abuse Its Discretion in Denying

Daniels's Rule 60(b) Motion.

As noted above, i n December, 2011, Dani el s sought r el i ef

f r omt he tur nover j udgment , cl ai mi ng newl y di scover ed evi dence and

excusabl e negl ect . See Fed. R. Bankr . P. 9024; Fed. R. Ci v. P. 60

( b) ( 1) , ( 2) . Essent i al l y, he bl amed hi s er r oneous stat ement s and

f i l i ngs on At t y. Cohen' s i l l heal t h, ar gui ng t hat he had gi ven

Cohen al l of t he r el evant i nf or mat i on. For suppor t , Dani el sof f er ed a var i et y of document s, i ncl udi ng af f i davi t s cl ai mi ng t hat

he had not underst ood t hat Cohen was t oo si ck t o repr esent hi m

ef f ect i vel y and that some of hi s r equest ed changes t o document s i n

t he l i t i gat i on wer e never made. As not ed above, he of f er ed a copy

of hi s r equest f or changes t o hi s dr af t bankrupt cy schedul es, such

as t he addi t i on of a r i f l e and $2, 000 wor t h of wear i ng appar el and

updat i ng t he I RAs and pr of i t shar i ng pl an i nf or mat i on t o mat ch t he

For m 5500 and ot her unspeci f i ed "cur r ent i nf o. " Most of t hose

changes wer e ref l ect ed i n some f or m on t he schedul es t hat Dani el s

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si gned. Dani el s al so of f er ed a f ax t o Cohen r equest i ng changes t o

t he dr af t Mar ch 15, 2010 mot i on, i ncl udi ng a not e t hat t wo I RAs had

al r eady been pur chased. The March 15, 2010 mot i on Dani el s' s

counsel f i l ed wi t h t he bankrupt cy cour t di d not r ef l ect t hose

changes.

Af t er hi s mot i on was deni ed, Dani el s sought

r econsi der at i on, and i ncl uded ( among ot her t hi ngs) t he emai l f r om

Cohen t o Dani el s and hi s successor counsel , suggest i ng t hat

successor counsel t ake over t he case due t o Cohen s heal t h. The

mot i on was deni ed. Two r enewal s of t hat mot i on, one pur port i ng t o

expl ai n t he respect i ve r ol es of Cohen and successor counsel i n t he

summar y j udgment br i ef i ng, were si mi l ar l y deni ed.

We revi ew t he deni al of a Rul e 60( b) mot i on f or abuse of

di scr et i on, whi ch amount s t o "de novo revi ew of st r i ct l y l egal

det er mi nat i ons and def er ence t o t he extent t hat t he deni al t ur ns on

f act ual or j udgment al det er mi nat i ons. " Capabi l i t y Gr p. v. Am. Exp.

Tr avel Rel at ed Ser vs. Co. I nc. , 658 F. 3d 75, 79 ( 1st Ci r . 2011) .

[ R] el i ef under Rul e 60( b) i s ext r aor di nar y i n nat ur e and mot i ons

i nvoki ng t hat r ul e shoul d be gr ant ed spar i ngl y. Nansamba v. N.

Shor e Med. Ct r . , I nc. , 727 F. 3d 33, 37 ( 1st Ci r . 2013) ( quot i ng

Kar ak v. Bur saw Oi l Cor p. , 288 F. 3d 15, 19 ( 1st Ci r . 2002) ) .

1. Relief Was Not Warranted on New Evidence Grounds.

Rel i ef under Rul e 60( b) s new evi dence pr ong i s

appr opr i ate where: " ( 1) new evi dence has been di scover ed si nce t he

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[ j udgment ] ; ( 2) [ i t ] coul d not by due di l i gence have been

di scover ed ear l i er by t he movant ; ( 3) [ i t ] i s not mer el y cumul at i ve

or i mpeachi ng; and ( 4) [ i t ] i s of such a nat ur e t hat i t woul d

pr obabl y change t he r esul t wer e a new t r i al t o be gr ant ed. " Mor n-

Bar r adas v. Dept . of Educ. of Com. of P. R. , 488 F. 3d 472, 482 ( 1st

Ci r . 2007) ( quot i ng U. S. St eel v. M. DeMat t eo Const r . Co. , 315 F. 3d

43, 52 ( 1st Ci r . 2002) ) . Wher e t he evi dence was avai l abl e t o t he

par t y bef ore summary j udgment , absent some convi nci ng expl anat i on,

denyi ng r el i ef i s not an abuse of di scret i on. I d.

We f i nd not hi ng appr oachi ng an abuse of di scr et i on i n t he

bankrupt cy cour t s r ej ect i on of Dani el s s appeal t o new evi dence.

As t he cour t cor r ect l y not ed, t he pr of f er ed evi dence had been

avai l abl e t o Dani el s and/ or hi s successor counsel al l al ong.

Si mi l ar l y, most of t he evi dence and ar gument of f er ed i n t he

subsequent mot i ons f or r econsi der at i on wer e avai l abl e bef or e

j udgment was ent er ed, and cer t ai nl y when t he f i r st Rul e 60( b)

mot i on was f i l ed. Fur t her mor e, as t he bankrupt cy cour t not ed, some

of t hat evi dence act ual l y suggest s t hat Dani el s si gned hi s

schedul es, knowi ng t hemt o be i naccur at e. We t her ef or e af f i r mt he

bankrupt cy cour t ' s r ef usal t o r el i eve Dani el s of t he j udgment based

on hi s l at e- pr of f er ed evi dence.

2. Relief Was Not Warranted on Excusable Neglect

Grounds.

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As used i n Rul e 60( b) , excusabl e negl ect can encompass

or di nar y negl i gence or car el essness. See Pi oneer I nv. Ser vs. Co.

v. Br unswi ck Assocs. Lt d. P' shi p, 507 U. S. 380, 394- 95 ( 1993) .

Whet her r el i ef i s war r ant ed i s essent i al l y an equi t abl e i nqui r y,

and t akes i nt o consi der at i on al l of t he r el evant ci r cumst ances.

Cf . i d. at 395 ( di scussi ng Fed. R. Bankr . P. 9006) . Par t i cul ar l y

wher e a par t y f ai l ed t o pr esent avai l abl e evi dence bef ore j udgment ,

t hey must of f er a convi nci ng r eason why thei r negl ect shoul d be

excused. Nansamba, 727 F. 3d at 38- 39. I n ci vi l cases, i nadequat e

r epr esent at i on i s nor mal l y a mat t er bet ween t he at t or ney and hi s

cl i ent , but may j ust i f y Rul e 60( b) r el i ef i n unusual cases.

Capabi l i t y Gr p. , 658 F. 3d at 82. [ A] t a mi ni mum[ , such a cl ai m]

woul d r equi r e bot h i ncompet ent per f or mance t hat t he cl i ent coul d

not have f or est al l ed and a showi ng of l i kel y pr ej udi ce. " I d.

The bankrupt cy cour t not ed t hat par t i es usual l y bear t he

bur den of t hei r at t or neys' mi st akes, and r ej ect ed Dani el s s at t empt

t o bl ame t he f i ndi ng of bad f ai t h on Cohen s excusabl e negl ect

absent an expl anat i on why successor counsel had not r ai sed t he

i ssue at summary j udgment . Al t hough t he bankr upt cy cour t mi ght

have j ust i f i abl y r eached t he opposi t e concl usi on, we see no abuse

of di scr et i on her e. Dani el s s mot i on adequat el y expl ai ned nei t her

hi s own f ai l ur e t o accur at el y di scuss t he I RAs despi t e many chances

t o do so, nor why hi s cl ai m r egar di ng Cohen s al l eged f ai l i ngs was

not made f ul l y and cl ear l y ear l i er . Even assumi ng t hat Cohen was

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ser i ousl y compr omi sed, Dani el s and hi s second l awyer knew t hat f act

no l ater t han March 11, 2011- - when Cohen suggest ed wi t hdr awi ng f or

medi cal r easons- - wel l bef ore t he summary j udgment r esponse was

f i l ed i n Apr i l . 21 Ther ef or e, even i f Dani el s coul d not r eadi l y have

pr event ed the ear l i er mi sst eps ( whi ch we need not deci de) Dani el s

and successor counsel coul d r eadi l y have t aken st eps t o f or est al l

t he ext ent t o whi ch t hose f ai l i ngs cont r i but ed t o t he bad- f ai t h

j udgment . Ther e was no abuse of di scr et i on, and we af f i r m t he

deni al of Rul e 60( b) r el i ef .

D. The Bankruptcy Court Properly Granted Summary Judgment in the

Revocation Action

Fi nal l y, Dani el s appeal s t he bankrupt cy cour t ' s gr ant of

summary j udgment t o t he U. S. Trust ee i n t he r evocat i on act i on. That

j udgment was based on t he col l at er al est oppel ef f ect of t he bad

f ai t h hol di ng i n t he t ur nover act i on. 22 We r evi ew t he appl i cat i on

of col l at er al est oppel de novo. See Keyst one Shi ppi ng Co. v. New

Eng. Power Co. , 109 F. 3d 46, 50 ( 1st Ci r . 1997) . Because t he

i ni t i al j udgment was t hat of a bankrupt cy cour t appl yi ng f eder al

21 We al so not e t hat Cohen r ef er enced hi s medi cal condi t i oni n t he March 24, 2011 mot i on seeki ng more t i me f or Dani el s t or espond t o t he summar y j udgment mot i on.

22 Al t hough we af f i r med t he under l yi ng summar y j udgment on t he

gr ounds of r eckl ess di sr egar d f or t he t r ut h, r at her t hani nt ent i onal bad f ai t h, r eckl ess di sregar d f or t he t r ut h sat i sf i est he sci ent er r equi r ement s f or bot h of t he gr ounds t he U. S. Tr ust eeci t ed f or r evoki ng Dani el s s di schar ge. See I n r e Tul l y, 818 F. 2d106, 111 ( 1st Ci r . 1987) ( r eckl ess i ndi f f er ence sat i sf i es 11 U. S. C. 727( a) ( 4) ( A) ) ; I n r e Vi l l ani , 478 B. R. 51, 61 ( B. A. P. 1st Ci r .2012) ( r eckl ess di sr egar d can sat i sf y 727( a) ( 2) ) .

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l aw, t he appl i cat i on of col l at er al est oppel i s l i kewi se gover ned by

f eder al l aw. Monar ch Li f e I ns. Co. v. Ropes & Gr ay, 65 F. 3d 973,

978 ( 1st Ci r . 1995) . Col l at er al est oppel appl i es when:

( 1) t he i ssue sought t o be pr ecl uded i n t he l at er act i oni s t he same as t hat i nvol ved i n t he ear l i er act i on; ( 2)t he i ssue was act ual l y l i t i gat ed; ( 3) t he i ssue wasdet er mi ned by a val i d and bi ndi ng f i nal j udgment ; and ( 4)t he det er mi nat i on of t he i ssue was essent i al t o t hej udgment .

Lat i n Am. Musi c Co. I nc. v. Medi a Power Gr p. , I nc. , 705 F. 3d 34,

42 ( 1st Ci r . 2013) ( quot i ng Mer cadoSal i nas v. Bar t Ent er s. I nt ' l ,

Ltd. , 671 F. 3d 12, 2122 ( 1st Ci r . 2011) ) .

Dani el s l aunches t hr ee at t acks on t hat j udgment : ( 1)

t hat t he f act s her e cannot suppor t a f r aud- based r evocat i on,

because he onl y omi t t ed i mmat er i al i nf or mat i on f r omhi s schedul es,

( 2) t hat a debt or shoul d not be deni ed a di schar ge wher e he rel i ed

on t he advi ce of counsel i n pr epar i ng hi s bankr upt cy schedul es, and

( 3) t hat col l at er al est oppel does not appl y "as t he i ssue her e i s

not i dent i cal t o t he Bankr upt cy Cour t ' s pr i or hol di ng. "

Hi s f i r st t wo obj ect i ons are easy t o di spat ch; we have

al r eady expl ai ned, above, why Dani el s' s omi ss i ons and mi sst at ement s

ar e mat er i al and why hi s cl ai mof r el i ance on counsel f ai l s. 23 Nor

can Dani el s use t he r evocat i on act i on t o f or ce addi t i onal evi dence

of Cohen' s al l eged mi sf easance i nt o t he r ecor d. "Al t hough changes

23 Dani el s s ci t ed cases do not hel p hi m as t hey do notconsi der t he i ssue of col l at er al est oppel .

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i n f act s essent i al t o a j udgment wi l l r ender col l at er al est oppel

i nappl i cabl e i n a subsequent act i on r ai si ng t he same i ssues, a

par t y cannot ci r cumvent t he doct r i ne' s pr ecl usi ve ef f ect mer el y by

pr esent i ng addi t i onal evi dence t hat was avai l abl e t o i t at t he t i me

of t he f i r st act i on. " Lat i n Am. Musi c Co. , 705 F. 3d at

42 ( ci t at i ons and i nt er nal quot at i on mar ks omi t t ed) .

Fi nal l y, Dani el s has wai ved hi s t hi r d ar gument by f ai l i ng

t o suggest how t he t wo i ssues i n t he t wo pr oceedi ngs di f f er ed. See

Uni t ed St at es v. Zanni no, 895 F. 2d 1, 17 ( 1st Ci r . 1990)

( per f unct or y cl ai ms ar e wai ved) ; Fed. R. App. P. 28( a) ( 9) .

IV. Conclusion

For t he f or egoi ng r easons, t he j udgment s subj ect t o t hi s

appeal ar e af f i r med.

daniels v. agin, 1st cir. (2013)

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