John Glacken

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
IN RE: 	:
:
JOHN B. GLACKEN, 	: 	Case No. 08-23852PM
: 	Chapter 7
Alleged Debtor. 	: 	(Involuntary)
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MEMORANDUM OF DECISION
Before the court is the “Alleged Debtor’s Motion to Dismiss Involuntary Petition” filed
by John B. Glacken (“Glacken”) and the Oppositions filed by VIS Pennsylvania Avenue
Associates, LLC (“VIS”), 6315 Seabrook, LLC (“Seabrook”) and The Adams National Bank
(“Adams Bank”) (collectively, “the Petitioning Creditors”). The Petitioning Creditors
commenced this involuntary case against Glacken on October 24, 2008. The issue before the
court is whether each of the three Petitioning Creditors is eligible to file this involuntary petition
against Glacken.
Section 303(b)(1) of the Bankruptcy Code provides, in pertinent part, that:
(b) An involuntary case against a person is commenced by the filing with the bankruptcy
court of a petition under chapter 7 or 11 of this title –
(1) by three or more entities, each of which is either a holder of a claim
against such person that is not contingent as to liability or the subject of a
bona fide dispute as to liability or amount, or an indenture trustee representing
such a holder, if such noncontingent, undisputed claims aggregate at least $13,475
more than the value of any lien on property of the debtor securing such claims
held by the holders of such claims[.] (emphasis added)
Date signed February 20, 2009
Entered: February 23, 2009 Case 08-23852 Doc 31 Filed 02/23/09 Page 1 of 6

1 The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”)
inserted the phrase “as to liability or amount” after “bona fide dispute” in § 303(b)(1). Earlier
cases must be read with this change in mind. Before BAPCPA, while some of the claim may
have been disputed, the holder of a claim would be an eligible petitioner if at least a portion was
not in dispute in an amount that exceeded the jurisdictional amount required by§ 303(b)(1). IBM
Credit Corp. v. Compuhouse Systems, Inc., 179 B.R. 474, 479 (W.D. Pa. 1995); Voicesmart
Corp. V. Sprint Comm. Co, LP (In re Voicesmart Corp.), 1998 WL 34064618 (D. N.J. Oct. 30,
1998).
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If any one of the Petitioning Creditors’ claims is “the subject of a bona fide dispute as to liability
or amount,” that bona fide dispute renders the Petitioning Creditors ineligible to commence the
involuntary filing against Glacken and justifies dismissal.
The court’s analysis is complicated by the Bankruptcy Code’s omission of a definition
for “bona fide dispute.” However, the court is guided by the pre-BAPCPA decision of
Schlossberg v. Byrd (In re Byrd), 357 F.3d 433 (CA4 2004). 1 The Fourth Circuit in Byrd
adopted the objective standard for assessing the validity of debt – a standard utilized by the
Second, Third, Fifth, Sixth, Seventh and Eighth Circuits.
Thus a bona fide dispute exists only when there are substantial factual or legal
questions that bear upon the debtor’s liability. (citations omitted) The
bankruptcy court need not resolve the merits of the bona fide dispute, but simply
determine whether one exists. (citations omitted)
Byrd at 437. Further guidance is found in Collier on Bankruptcy, ¶ 303.03[2][b] (15th ed. 2008).
The application of the objective standard has presented courts with considerable
difficulty, some of which may diminish with the [BAPCPA] added language “as
to liability or amount.” Affirmative defenses to a creditor’s claim suggest that a
bona fide dispute exists, but the debtor’s assertion of a counterclaim that does not
go to the merits of the creditor’s claim does not necessarily demonstrate a bona
fide dispute. Prior to the 2005 amendments, some courts took the position that a
debtor’s counterclaim disputing the amount of a creditor’s claim, and not the
legitimacy or the existence of such claim, did not make the creditor’s claim the
subject of a bona fide dispute. For some courts, the 2005 amendments may
change this because it is possible to read the amendment to mean any dispute as to
any amount will disqualify the creditor. Not all courts read the amendment that
way. (footnotes omitted).
The Petitioning Creditors have the initial burden of establishing that no prima facie disputes
exist as to their claims. Byrd at 437.
Case 08-23852 Doc 31 Filed 02/23/09 Page 2 of 6

2 Mary Rose Nicol and Frank E. Nicol also guaranteed the loan. The Nicols are debtors
in a Chapter 7 case pending in this court, Case No. 08-11555PM.
3 Maryland law complicated the Adams Bank/Glacken dispute as no counterclaim may
be asserted by the Glackens against Adams Bank until the confessed judgment is vacated. See
Boyce v. Plitt, 335 A.2d 101, 104 (Md. 1975). Thus, the Glackens initiated a separate
proceeding against Adams Bank on October 20, 2008, based on their counterclaims. That three-
count complaint, also filed in the Montgomery County Circuit Court, Case No. 302779-V,
asserted causes based on fraudulent misrepresentation, negligent misrepresentation and breach of
covenant of good faith and fair dealing. Adams Bank removed the Glackens’ state court action
to the United States District Court for the District of Maryland, DKC 08-CV-2928, and answered
the complaint. The Glackens then filed a motion to remand the matter to the state court. Adams
Bank opposed the motion, which was later withdrawn by the Glackens on January 14, 2009.
4 The petition states that the amount of the VIS claim is $700,000.00.
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The court starts with the claim of Adams Bank. Adams Bank and Hilltop Development
Group, LLC entered into a loan agreement in 2005 to fund a construction project. Glacken and
others guaranteed the $8,000,000.00 loan.2 In 2007, the group entered into a confessed judgment
forbearance agreement. In 2008, Adams Bank foreclosed on its interest. Adams Bank filed the
confessed judgment, dated August 15, 2008, against Glacken and his wife (“the Glackens”) in an
approximate deficiency amount of $6,200,000.00. The Glackens attacked the confessed
judgment by filing a motion to vacate that is pending before the Montgomery County Circuit
Court, Case No. 299157-V. The Glackens assert that they did not confess to judgment as to the
alleged default; that the alleged confession was obtained through misrepresentation and fraud;
and that the Glackens have a meritorious defense to the confessed judgment through
counterclaims against Adams Bank.3 One could infer the lack of merit to the counterclaims from
the fact that it was not raised until after the property was sold at foreclosure, and Adams Bank
sought to collect the resulting deficiency.
VIS filed a nine-count complaint in the Montgomery County Circuit Court, Case No.
295778-V, against the Glackens and the Pennsylvania Avenue Group, LLC (“PAG”), an entity
allegedly in the business of developing property. Seven of the nine counts were asserted against
Glacken (violation of the Maryland Securities Act, breach of fiduciary duty, constructive fraud,
unjust enrichment, injunctive relief and fraud in the inducement). As to Glacken, VIS seeks
compensatory damages in the amount of $500,000.00 plus interest, costs and attorney’s fees and
requested a trial by jury.4 The crux of the complaint is that Glacken, as representative of PAG,
Case 08-23852 Doc 31 Filed 02/23/09 Page 3 of 6

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fraudulently induced VIS into investing $500,000.00 in PAG to redevelop property. One
example of the alleged misrepresentations made by Glacken is with respect to a “Class A”
membership in PAG – an exclusive interest that VIS allegedly purchased for $500,000.00. The
Glackens’ allegedly concealed their pre-sale “Class A” membership in PAG from VIS, which
would have, according to VIS, prevented it from investing. Glacken generally denied the
material allegations of the complaint.
Seabrook’s claim was best described in the testimony of its managing member, Battista
Orcino (“Orcino”). Orcino testified that Seabrook was solicited by Glacken at their daughters’
soccer game. Orcino explained that Glacken represented that permits for this development
project were in hand and that construction would be completed inside of 18 months. These
representations did not come to fruition. Orcino testified that Seabrook made the $500,000.00
investment based on Glacken’s representations and would not have done so had Glacken been
forthright as to permitting and planning. Orcino also testified that Glacken became increasingly
difficult to contact and unresponsive to inquiries. Seabrook did not file a lawsuit as the members
of the group did not have the wherewithal to pursue legal action.
The court was not impressed by Glacken’s testimony. He suffered from a lack of
memory of important matters (such as whether he advised representatives of Seabrook of the
need for revisions to the plans of the project that was the subject of its investment). The
testimony of Orcino on this point was far more credible. This discrepancy in credibility also
appeared in the conflicting testimony with respect to how the transaction with Orcino came
about and Glacken’s active role throughout. Likewise, the court found Glacken’s testimony that
his connection with PAG was tangential at best was belied by the testimony of the counter-party,
Eddie Trujillo. Glacken’s explanation as to how he came about to have a “Class A” membership
interest in PAG holds as much water as a sieve.
Yet, there is no question that Glacken disputes the Petitioning Creditors’ claims as to
liability and amount – Glacken’s countersuit against Adams Bank and the attack on the
confessed judgment based on the forbearance agreement; his position with respect to the amount
of damages attributable to the VIS cause of action; and the damages aspects of Seabrook’s claim
in that, among other defenses, delay is inherent in construction projects.
As reminded by the Byrd court, this court need not resolve the merits of a bona fide
dispute but simply determine whether one exists. As to all three of the Petitioning Creditors’
Case 08-23852 Doc 31 Filed 02/23/09 Page 4 of 6

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claims, bona fide disputes as to liability and amount may exist. The court finds itself faced with
the realization that its decision is inextricably intertwined with the resolution of the claims
themselves. See Byrd at 438, n. 1 (“Substantial questions as to a debtor’s liability are unlikely to
remain where a debtor has ceased, or can no longer continue, contesting his liability.” ). As
stated by Collier on Bankruptcy, ¶ 303.03[2][b], “[C]ongress wanted creditors to settle disputed
claims outside of bankruptcy, given the serious adverse impact of an involuntary petition on an
alleged debtor.” The court finds that the parties would best be served were the court to abstain
from the exercise of jurisdiction to allow the parties to settle their claim outside of bankruptcy.
Keeping these four state law disputes in this court benefits no one in the long run. The parties
have the right to trial by jury on many of the issues presented. The court finds that the record is
sufficiently developed and the underlying issues sufficiently argued to enable this court to make
this determination under 11 U.S.C. § 305(a). In re Kujawa, 224 B.R. 104, 107-8 (E.D. Mo.
1998).
An appropriate order will be entered.
cc: 	John B. Glacken
10213 Ridgemoor Drive
Silver Spring, MD 20901
Tracey Michelle Ohm
Stinson Morrison Hecker LLP
1150 18th Street NW
Suite 800
Washington, DC 20036
VIS Pennsylvania Avenue Associates, LLC
c/o Craig Palik
6411 Ivy Lane
Suite 200
Greenbelt, MD 20770
Case 08-23852 Doc 31 Filed 02/23/09 Page 5 of 6

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Craig Palik
6411 Ivy Lane
Suite 200
Greenbelt, MD 20770
Daniel J. Collins
McNamee Hosea
6411 Ivy Lane
Suite 200
Greenbelt, MD 20770
James Greenan
6411 Ivy Lane
Suite 200
Greenbelt, MD 20770
6315 Seabrook, LLC
c/o James M. Greenan
McNamee Hosea, et. al.
6411 Ivy Lane
Suite 200
Greenbelt, MD 20770
Adams National Bank
c/o Robert E. Greenberg
Friedlander Misler
1101 17th St., NW
Suite 700
Washington, DC 20036
Robert E. Greenberg
Friedlander, Misler et al.
1101 Seventeenth St., NW
Ste. 700
Washington, DC 20036-3919
End of Memorandum of Decision
Case 08-23852 Doc 31 Filed 02/23/09 Page 6 of 6