Sometimes bad facts can lead to good law, and the debtor who appears neither honest nor unfortunate can nonetheless raise a good legal point. In this case, the First Circuit, in a colorful opinion alluding to Whack-a-Mole and haunting specters, found that the district court abused its discretion when it dismissed the debtor’s appeal under the fugitive disentitlement doctrine, where the order on appeal was not affected by the debtor’s flight. In re Kupperstein, Nos. 18-2248, 18-2249 (1st Cir. Nov. 15, 2019).
The case arose when attorney, Donald Kupperstein, and his cohort “helped” a homeowner resolve a $3,379.13 local tax liability by purchasing her home for less than $100 and the payment of the outstanding taxes. The homeowner had inherited the home from her father, and, in addition to the tax liability, it was encumbered by a lien held by the Massachusetts Office of Health and Human Services (MassHealth) for a debt owed by the father’s estate of more than $191,000. The state court reversed the sale of the property as illegal, but Kupperstein continued to possess it and collect rents in defiance of courts orders to release the property and turn over the collected rents.
A tangle of state court judgments, arrest warrants, and contempt sanctions ensued and Kupperstein sought refuge in bankruptcy. After the bankruptcy court lifted the automatic stay to allow MassHealth to pursue its state remedies, Kupperstein disappeared. His bankruptcy attorney filed an appeal of the relief from stay order. When Kupperstein continued to skip probate court dates, MassHealth and the father’s estate moved the district court to dismiss the appeal under the “fugitive disentitlement doctrine.” When Kupperstein then missed yet another state hearing, the district court dismissed the case for the reasons sought in the motion. This appeal followed.
Essentially, the fugitive disentitlement doctrine permits a court to dismiss appeals by litigants who have fled the judgments they are appealing. The doctrine is in answer to an appellant seeking to benefit from the legal system while avoiding any possible punishment under its operation, and is rooted in the court’s inherent power to protect its proceedings and judgments. Where an appeal involves a civil judgment, courts may apply the fugitive disentitlement doctrine to “(1) avoid rendering an unenforceable judgment and (2) prevent unfairness to the other party resulting from the appellant’s fugitive status.” Appeal of a dismissal under the doctrine is subject to an abuse of discretion standard.
The court turned to Kupperstein’s arguments, beginning with his assertion that the district court erred in its finding that he was, in fact, a fugitive. The court found the district court’s factual conclusion was supported by Kupperstein’s failure to appear at required judicial proceedings in the state court and the sheriff’s testimony that his house was closed up and appeared to be abandoned.
As to Kupperstein’s argument that the fugitive disentitlement doctrine applies only to criminal cases, the court found that, while that may have been a winning stance at one time, the doctrine has more recently been applied to civil appeals where the fugitive’s conduct has been particularly egregious, is intended to frustrate enforcement of civil judgment, and where the appeal itself is a further attempt to delay and frustrate the orderly process of law.
It was Kupperstein’s third argument that won the day. He argued that the district court appeal addressed a bankruptcy court issue—lifting of the automatic stay and his motion for contempt against MassHealth—rather than the state court judgments from which he was fleeing. Therefore, when the district court applied the fugitive disentitlement doctrine it did so to respond to the debtor’s failure to comply with state court orders rather than any order arising out of the bankruptcy case. The court harkened back to the underlying justification for the fugitive disentitlement doctrine, which is to allow a court to enforce its own orders. Courts have declined to apply the doctrine when the fugitive’s flight does not impact that court’s proceedings or limit its options for resolution. Here, the circuit court found that while Kupperstein’s flight hobbled the probate case, it did not delay or hinder the bankruptcy appeal or affect the application of the automatic stay.
In fact, the court recognized that Kupperstein’s argument in the bankruptcy court—that the automatic stay should have prevented further action by the state probate court—had a basis in law and was worthy of consideration. The court also noted that the district court’s dismissal of the appeal essentially rid the court of the issue of whether Kupperstein was required to pay his state court judgments for the very reason that he had not paid those judgments.
Mindful of Kupperstein’s continued contumacious conduct, the court noted that the state court had remedies to deal with it, such as possible imposition of criminal contempt. Likewise, the bankruptcy court could take that conduct under consideration and take action under the Code including dismissing “for cause.” Notwithstanding the frustrating history of the case, the came down to the circuit court’s conclusion that the district court was not enforcing its own orders when it dismissed under the fugitive disentitlement doctrine and, for that reason, the dismissal was an abuse of discretion.
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