Braunstein v. Hajjar et al

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UNITED STATES BANKRUPTCY COURT
FOR THE
DISTRICT OF MASSACHUSETTS
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In re
JOSEPH C. HAJJAR, d/b/a JOE’S PUB & GRUB 	Chapter 7
Debtor 	Case No. 07-12068-JNF
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
JOSEPH BRAUNSTEIN, CHAPTER 7
TRUSTEE,
Plaintiff
v. 	Adv. P. No. 07-1371
JOSEPH C. HAJJAR, BARBARA A.
NILES; and LORRAINE M.
CARLSON,
Defendants
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
MEMORANDUM
I. INTRODUCTION
The matters before the Court are Cross-Motions for Summary Judgment with
respect to the Trustee’s Complaint for Authority to Conduct Sale Pursuant to 11 U.S.C. §
363(h) of Debtor’s Real Property. The Debtor brought the Complaint against Joseph C.
Hajjar (the “Debtor”) and his two sisters, Barbara A. Niles (“Niles”), and Lorraine M.
Carlson (“Carlson”)(collectively, the “Defendants”). The Court heard the Cross-Motions
on January 23, 2008 and took the matters under advisement.
There are no genuine issues of material fact, and the Motions are ripe for summary
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See Lassman v. Tosi (In re Tosi), __ B.R. __, 2008 WL 467664 (Bankr. D. Mass.1
Feb.22, 2008), in which the court stated:
“It is apodictic that summary judgment should be bestowed only when no
genuine issue of material fact exists and the movant has successfully
demonstrated an entitlement to judgment as a matter of law. See
Fed.R.Civ.P. 56(c). As to issues on which the movant, at trial, would be
obliged to carry the burden of proof, he initially must proffer materials of
evidentiary or quasi-evidentiary quality-say, affidavits or depositions-that
support his position. This means, of course, that summary judgment is
inappropriate if inferences are necessary for the judgment and those
inferences are not mandated by the record.
Id. at *6 (citing Desmond v. Varrasso (In re Varrasso), 37 F.3d 760,763 (1st
Cir.1994)(citations omitted, footnote omitted).
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judgment. See Fed. R. Civ. P. 56, made applicable to this proceeding by Fed. R. Bankr. P.
7056. 	The issues presented include whether Niles has a valid life estate in real property,1
a two-family home, located at 82 Edinboro Road, Quincy, Massachusetts (the “Property”),
and whether the Trustee is empowered to sell the Property under § 363(h). 	The Court
answers the first question in the affirmative and the second question in the negative, with
the caveat that the Trustee is authorized to sell the Debtor’s remainder interest in the
Property pursuant to 11 U.S.C. § 363(b).
II. FACTS
The Debtor filed a voluntary Chapter 7 petition on April 6, 2007. On Schedule A-
Real Property, the Debtor listed ownership interests in two properties as follows:
a remainderman interest in 82 Edinboro Road, Quincy, MA, subject to a life
estate of a 54 year old woman, the debtor’s sister. The property is worth
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approximately $450,000; [and]
a remainderman interest in 86 Edinboro Road, Quincy, MA which is the
debtor’s personal residence and he has a homestead exemption.
The Debtor valued his one-third remainder interest in the Property at $6,000 and his one-
third remainder interest in 86 Edinboro Road at $330,000. 	On Schedule D-Secured
Creditors, the Debtor did not list any mortgagees or other liens affecting the Property or
the adjacent property at 86 Edinboro Road. On Schedule F-Creditors Holding Unsecured
Nonpriority Claims, the Debtor listed approximately $54,000 in credit card debt.
On August 15, 2007, the Court entered an order of discharge under 11 U.S.C. §
727(a). 	Approximately six weeks later, the Chapter 7 Trustee commenced the above-
captioned adversary proceeding seeking authority to conduct a sale of the Property
pursuant to 11 U.S.C. § 363(h).
In his Complaint, the Trustee alleged that the Debtor acquired title to the Property
on October 31, 1952. 	Forty-eight years later on May 16, 2000, by Quitclaim Deed, the
Debtor “for consideration paid, and in full consideration of one dollar ($1.000), grant[ed]
to Joseph C. Hajjar, Barbara A. Niles, and Lorraine M. Carlson as tenants in common with
quitclaim covenants the land in that part of Quincy, Norfolk County, Massachusetts, called
Welling Park.” Following a metes and bounds description of the Property, the deed then
provided:
The grantor hereby grants to Barbara A. Niles the right to the use and
enjoyment of the above-described premises for and during her lifetime or as
long as she so desires with the provision that said life tenant shall be
responsible for the payment of taxes and maintenance of said premises using
the period of said occupancy, specifically denying any right by the grantor
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to partition.
At the hearing, counsel to the Debtor made an offer of proof that both the Debtor
and the attorney who drafted the deed intended that the Debtor grant his sister, Niles, a
life estate. The Trustee did not rebut the offer of proof and did not argue that the offer of
proof raised a genuine issue of material fact.
II. DISCUSSION
“Deeds should be ‘construed as to give effect to the intent of the parties, unless
inconsistent with some law or repugnant to the terms of the grant.’” Commercial Wharf
E. Condominium Assn. v. Waterfront Parking Corp., 407 Mass. 123, 131, 552 N.E.2d 66
(1990)(quoting Harrison v. Marcus, 396 Mass. 424, 429, 486 N.E.2d 710 (1985), and Bass
River Sav. Bank v. Nickerson, 303 Mass. 332, 334, 21 N.E.2d 717 (1939)). See also Dedrick v.
Commissioner of Div. of Med. Assistance, 65 Mass. App. Ct. 1120, 2006 WL 473846 at * 2
(2006).
In the Quitclaim Deed executed by the Debtor, the Debtor purports to convey the
Property to himself and his sisters as tenants in common. Subsequently, he purports to
grant a life tenancy to his sister, Barbara Niles. In Dedrick, the court interpreted a deed
with a similar problem. It stated:
Dedrick claims that the warranty deed conveyed the subject property in fee
simple absolute to the Trust, leaving her without any legal interest in the
subject property to which a lien may attach. In support of her claim, Dedrick
argues that the granting clause did not refer to a “life estate.” Rather, that
phrase is located at the bottom of the deed, away from the granting clause.
We note, however, that the description of the boundaries of the property
follow the granting clause in different font than that of the granting clause,
but 	that 	the 	phrase 	“life 	estate 	as 	more 	fully 	described 	in 	the
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contemporaneously executed . . . Trust” returns to the same font and style as
the granting clause. If, at the time the deed was executed, the Dedricks
intended to convey a fee simple absolute to the Trust, they would not have
referred to a “life estate” in a different portion of the deed.
Although the Trustee’s position that the Debtor created a tenancy in common for the entire
Property as opposed to a tenancy in common with respect to the remainder interests
subject to the life estate is not frivolous and supports his ability to sell the Property under
section 363(h), the Court finds that the language purporting to grant Niles “the right to the
use and enjoyment” of the Property and the reference to her as a “life tenant” must have
independent meaning. That language, coupled with the reference to Niles’s obligation to
pay taxes and to maintain the Property and the Debtor’s relinquishment of a right to
partition, compels the conclusion that the Debtor intended to, and did, create a life estate
in favor of Niles.
In Bernat v. Kivior, 22 Mass. App. Ct. 957 (1986), the court was required to
determine whether a valid life estate existed in the context of a petition for partition. The
court framed the issue as follows with reference to the deed:
Whatever interest Helen has, she acquired under a deed dated May 10, 1963,
from Walter Kivior. We proceed to analyze that instrument. Harrison v.
Marcus, 396 Mass. 424, 428, 486 N.E.2d 710 (1985). The deed conveyed 207
acres and a dilapidated residence to Alice E. Hadala, Frances Varno, Celia L.
Bernat, and Mildred D. Lagowski as joint tenants. Following a metes and
bounds description of the property, record references, and statement that the
consideration 	was 	less 	than 	$100, 	the 	deed 	contained 	the 	following
one-sentence paragraph:
“Said premises are conveyed subject to the rights of Helen V.
Kivior to occupy the granted premises for the rest of her life.”
22 Mass. App. Ct. at 957-58(footnote omitted). The court began its analysis by observing
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that the deed was inartfully drafted, suggesting “[a] deed with a granting clause conveying
to “Helen V. Kivior for life, the remainder to Alice E. Hadala, Frances Varno, Celia L.
Bernat and Mildred D. Lagowski, as joint tenants” would have been a clearer manifestation
of intent.” Id. at 958. The court found, however, that “the reservation of “rights . . . to
occupy the granted premises for the rest of her life” conferred a life estate.” Id. (citing
Thayer v. Shorey, 287 Mass. 76, 78 (1934), and Langlois v. Langlois, 326 Mass. 85, 86-87
(1950)). The court then dismissed the petition for partition because Helen had an exclusive
possessory interest conferred by the life estate, and, thus, there was no present, possessory
interest in Helen’s siblings to support the petition for partition. Id. at 958. Although the
language employed in the deed examined by the court in Bernat is substantially similar to
the language employed by the Debtor, the instant case is distinguishable from Bernat v.
Kivior in that the Debtor conveyed the Property to himself and both of his sisters as tenants
in common, rather than to himself and Lorraine only, either as tenants in common, or, more
accurately, as remainderman. 	Nevertheless, the decision lends support to Defendants’
position.
In Hershman-Tcherepnin v. Tcherepnin, 70 Mass. App. Ct. 218 (2007), the court
analyzed a will in which the testator “bequeathed one-fifth of the family home and ‘the
right to remain there for as long as she desires’ to his friend and recent bride,” as well as
one-fifth of the family home to each of his children by an earlier marriage. 70 Mass. App.
Ct at 218. 	In addressing the children’s argument that all five devisees had a present
possessory interest, the court observed that the will was not the work of an “accomplished
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The court in Tcherepnin, discussed two Supreme Judicial Court cases, stating:2
In Wilmarth v. Bridges, 113 Mass. 407, 408, 410 (1873), the testator
bequeathed to his daughter, “in view of her misfortunes, present
circumstances, and her attention to and care of her parents, the use and
improvement of all my real estate . . . so long as she chooses personally to
occupy and improve the same; on condition of her keeping the building in
repair and paying the taxes and cost of insurance . . . .” The Supreme
Judicial Court, without elaboration, interpreted this bequest to provide a
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conveyancer” and that the testator did not use “the classic formulation of a life estate.” Id.
at 222. It also observed:
The testator gave one-fifth of the property to the petitioner and each of the
four children. These bequests were not described as remainder interests.
They appear to make a present transfer of the property to the five devisees.
This would ordinarily make them tenants in common, with the right to use
and occupy the property subject to the equal rights of the other tenants. See
G.L. c. 184, § 7 (“A conveyance or devise of land to two or more persons ...
shall create an estate in common”). See also Tucci v. DiGregorio, 358 Mass. at
497, 265 N.E.2d 570; Brady v. City Council of Gloucester, 59 Mass.App.Ct.
691, 695, 797 N.E.2d 479 (2003). The question is how these provisions are
affected by the additional language allowing the petitioner to remain in the
home so long as she desires. The petitioner contends that this additional
clause provides her with a life estate and thereby renders the other bequests
only remainder interests.
Id. In a well-reasoned and thorough decision, the court in Tcherepnin examined cases
from Massachusetts and other jurisdictions in which language similar to that employed by
the testator was construed as providing either a limited right of occupancy or a defeasible
life estate. 	The court determined that the language used by the testator (“the right to
remain there for as long as she desires”) did not create a life estate and provided the
petitioner with only a one-fifth present possessory interest as a tenant in common with the
testator’s children. Id. at 225. 	It reasoned: “Unlike the situation in Wilmarth v. Bridges,2
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life estate defeasible by termination of occupancy or death. In Hesseltine
v. Partridge, 236 Mass. 77, 79, 81, 127 N.E. 429 (1920), however, the
testator’s devise to his widow of “ ‘the use and occupation’ of his house in
Melrose, ‘so long as she shall desire to reside therein,’ ” was described as
“an interest in real estate of an unascertained, and probably
indeterminate, value.”
70 Mass. App. Ct. at 223.
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113 Mass. at 408, the testator here did not provide the petitioner with the responsibility of
maintenance and the payment of taxes and insurance. Thus, the will does not demonstrate
an intention to provide the petitioner with control over and responsibility for the
property.” Id. at 226 (footnote omitted, citations omitted). 	The court reinforced its
determination with its view that the testator intended to provide equally for his wife and
children because one child was living in the family home at the time of his death.
In contrast to the situation in Tcherepnin, neither the Debtor nor Carlson live in the
Property. Rather, the Property is Niles’s home. The Court finds that like the situation in
Tcherepnin, the language used in the deed was not precise. 	The Court, however,
determines that the intent to create a defeasible life estate is clear. As noted above, not only
was Niles referred to as a life tenant, she was charged with the responsibility of paying the
taxes and maintaining the premises, as was the case in Wilmarth. Moreover, the Debtor
denied himself the right to partition the Property which is consistent with an intention to
create a life estate in favor of his sister, Niles, but not with an intention to create a tenancy
in common with both sisters. The Court finds that the Debtor intended to give Niles a
defeasible life estate. 	In the event Niles were to cease occupancy, ownership of the
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Property would revert to the remainderman, the Debtor and Carlson, together with Niles,
as tenants in common.
Having determined that Niles has a life estate, the Court turns to section 363(h) of
the Bankruptcy Code, which provides:
Notwithstanding subsection (f) of this section, the trustee may sell both the
estate’s interest, under subsection (b) or (c) of this section, and the interest of
any co-owner in property in which the debtor had, at the time of the
commencement of the case, an undivided interest as a tenant in common, joint
tenant, or tenant by the entirety, only if–
(1) partition in kind of such property among the estate and
such co-owners is impracticable;
(2) sale of the estate's undivided interest in such property
would realize significantly less for the estate than sale of such
property free of the interests of such co-owners;
(3) the benefit to the estate of a sale of such property free of the
interests of co-owners outweighs the detriment, if any, to such
co-owners; and
(4) such property is not used in the production, transmission,
or distribution, for sale, of electric energy or of natural or
synthetic gas for heat, light, or power.
11 U.S.C. § 363(h). The Trustee has the burden of establishing all four elements required
under § 363(h). 	Kovacs v. Sargent (In re Sargent), 337 B.R. 661, 666 (Bankr. N.D. Ohio
2006).
Section 363(h) identifies three forms of co-ownership: tenancies in common, joint
tenancies and tenancies by the entirety. “This plain language forces the conclusion that the
three cotenancies are the only three in which the co-owner’s interest may be sold without
his consent.” Geddes v. Livingston (In re Livingston), 804 F.3d 1219, 1223 (11th Cir. 1986).
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See also Rubin v. Burns (Matter of Burns), 73 B.R. 13, 15 (Bankr. W.D. Mo. 1986). Because
a life tenancy is outside the scope of § 363(h), the Trustee has failed in his burden and may
not sell the Property.
Although the Debtor does not have a present possessory interest, and the Trustee
may not sell the Property under § 363(h), the Debtor owns a one-third remainder interest
in the Property which is property of the estate. See 11 U.S.C. § 541(a)(the bankruptcy estate
is comprised of “all legal or equitable interests of the debtor in property as of the
commencement of the case.”). See also Sargent, 337 B.R. at 665 (“It is . . . well-established
that encompassed within estate property will be a debtor’s vested remainder interest in a
life estate, thereby making the Debtor’s remainderman interest in her mother’s property
subject to administration by the Trustee.”); Weddle v. Nunley (In re Weddle), 43 B.R. 415
(Bankr. W.D. Va. 1984)(“A vested remainder is subject to liability for the remainderman’s
debts. The court may decree that the vested interests be sold in order to satisfy debts.”).
The Trustee argues that the unique circumstances of this case, namely that the
Property is a two-family home, warrant deviation from the language of the Bankruptcy
Code and the holding in Sargent. 	While the Court appreciates the Trustee’s efforts on
behalf of the Debtor’s creditors, the Court is not persuaded that “unique circumstances”
justify the relief requested in view of the language utilized by Congress.
The Trustee also argues that he may sell the interest of the Debtor free and clear of
the interest of a third party in order to provide value to the estate and satisfy the claims of
creditors pursuant to 11 U.S.C. § 363(f)(4), citing In re Rose, 113 B.R. 534 (W.D. Mo. 1990),
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Specifically, the court cited R.S.Mo. § 528.010, which provides that property3
subject to a life estate can be sold if it can be shown that “the life or other estate of
immediate enjoyment is burdensome and unprofitable for [sic] that the cost of paying
the taxes and assessments thereon and holding, maintaining, caring for and preserving
the lands from waste, or injury, and deterioration, exceeds the reasonable value of the
rents and profits thereof. . . .” The Trustee cited no comparable Massachusetts statute,
and, in Massachusetts, a petition for partition cannot be maintained by a
remainderman. See Francis T. Talty, Patricia Sullivan, Alan L. Braunstein, Person Not
Entitled to Partition, 5 Mass. Prac. § 16:4 (4th ed.)(citing Johnson v. Johnson, 89 Mass. 196
(1863)).
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a case in which parents, Frank and Irene Rose, deeded a farm to their son and his spouse,
debtors Donald and Donna Rose, “reserving ‘a life estate in the . . . property for and during
the natural life of each, together with the power to exchange, mortgage, sell and convey the
fee.’” Id. at 536. The debtors lived on the farm and had done so for at least thirty years.
On the same day the debtors filed their bankruptcy petition, Irene Rose (her husband had
died) recorded a deed transferring title to the farm to her grandchildren in violation of the
automatic stay. The trustee filed a complaint seeking partition. The district court affirmed
the bankruptcy court’s ruling permitting partition, finding that under 11 U.S.C. § 363(f)(1),
“‘applicable nonbankruptcy law’” in the form of a statute permitted the sale of such
property free and clear of appellant’s interest. Id. at 538. 	The court also relied upon 113
U.S.C. § 363(f)(4) without any discussion of its applicability.
The Court finds the cases cited by the Trustee to be distinguishable. Significantly,
after review of the case law in Massachusetts, the Court finds that the existence of the life
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estate is not in bona fide dispute. Thus, the trustee is entitled to sell the Debtor’s in the
Property subject to the other interests.
III. CONCLUSION
In accordance with the foregoing, the Court shall enter an order granting the Motion
for Summary Judgment filed by the Debtor and Niles and denying the Motion for
Summary Judgment filed by the Chapter 13 Trustee.
By the Court,
Joan N. Feeney
United States Bankruptcy Judge
Dated: April 8, 2008
cc: Peter Sutton, Esq., Anthony P. Alessi, Esq., MaRjorie A. Adams, Esq.
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