In Re Eser et al

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
)
IN RE SUZANNE ESER, 	) 	Chapter 7
) 	Case No. 24-bk-10976-JEB
Debtor, 	) 	(Bankruptcy Court)
________________________________________ 	)
)
SUZANNE ESER, 	)
)
Appellant, 	)
)
v. 	)
) 	No. 1:25-cv-10505-JEK
DONALD LASSMAN, Chapter 7 Trustee, 	) 	(District Court)
and MASSACHUSETTS INSTITUTE OF 	)
TECHNOLOGY FEDERAL CREDIT UNION, 	)
)
Appellees. 	)
)
MEMORANDUM AND ORDER
KOBICK, J.
This appeal of an order of the United States Bankruptcy Court for the District of
Massachusetts arises out of a dispute among the debtor, appellant Suzanne Eser; the trustee,
appellee Donald Lassman; and a creditor, appellee Massachusetts Institute of Technology Federal
Credit Union (the “Credit Union”). After Eser defaulted on her mortgage in 2020, the Credit Union
foreclosed on her home in 2023. When it learned that the proceeds from the foreclosure sale were
greater than the debt Eser owed, the Credit Union initiated an interpleader action in Massachusetts
Superior Court in April 2024 to determine how to allocate the surplus funds.
Through various filings in Massachusetts state courts over the past three years, Eser has
attempted to stop the foreclosure and her resulting eviction from her home. After those avenues
failed, Eser petitioned for bankruptcy protection pursuant to Chapter 7 of the U.S. Bankruptcy
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Code in May 2024. Lassman was named trustee of the estate. Soon after the bankruptcy
proceedings commenced, the Credit Union and another creditor, non-party Larkin Corp., filed
proofs of claim to the estate. Following these filings, Lassman and the Credit Union reached a
settlement agreement in connection with the interpleader action. Pursuant to the agreement, the
Credit Union would transfer the surplus funds from the foreclosure to Lassman, who, as trustee,
would pay the Credit Union and Larkin in full satisfaction of their respective proofs of claim. The
settling parties anticipated that, after these payments were made, surplus funds would go to Eser.
The agreement also required the Credit Union and Lassman to, upon completion of all payments,
jointly move for dismissal of the interpleader action on the basis of mootness.
The Bankruptcy Court granted Lassman’s motion for approval of the settlement agreement.
Eser, proceeding pro se, appealed that decision to this Court. Although Eser’s brief raises a host
of issues, the only question properly before this Court is whether the Bankruptcy Court erred in
approving the settlement agreement submitted by the Trustee. Concluding that the Bankruptcy
Court did not abuse its discretion in determining that the agreement fell within the bounds of
reasonableness, this Court will affirm the Bankruptcy Court’s order granting Lassman’s motion.
BACKGROUND
The following facts are recounted based on the record provided on appeal and official
documents, the authenticity of which are not disputed by the parties.1
1 Pursuant to Fed. R. Bankr. P. 8018(b)(1), Eser, as the appellant, was responsible for preparing
and filing an appendix. Because she did not do so, the Trustee, as appellee, filed one with his brief
pursuant to Rule 8018(b)(2). See ECF 29-1. The Court relies on that appendix and, where
necessary, the full Bankruptcy Court Record, ECF 4, and the dockets from other cases implicated
by this appeal.
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I. 	Foreclosure and Eviction Proceedings.
Eser purchased residential real property at 24 Endicott Street in Peabody, Massachusetts in
May 1998 (“the Property”). ECF 29-1, at 18, 118. On July 6, 2006, Eser executed a mortgage on
the Property with Members Mortgage Company, Inc., which in turn assigned the mortgage to the
Credit Union the following day. Id. at 18, 98-119. On November 6, 2019, Eser executed two
additional mortgages on the Property with Larkin. Id. at 18; see ECF 28, at 26, ¶ 16.
On February 14, 2020, the Credit Union sent Eser a notice of default, which, she alleges,
failed to timely reach her. ECF 28, at 20, ¶ 1; see also April 14, 2023 Order, Eser v. Mass. Inst. of
Tech. Fed. Credit Union, No. 2377CV00356 (Mass. Super. Ct.). On March 11, 2023, she received
from the Credit Union a notice of their intention to foreclose on the Property. ECF 28 at 21, ¶ 3;
see Complaint, Eser, No. 2377CV00356. The foreclosure was scheduled to occur on or after April
14, 2023. Complaint, Eser, No. 2377CV00356. On April 12, 2023, Eser filed a motion in Essex
Superior Court seeking a temporary restraining order to stop the foreclosure from proceeding. Id.
Her motion argued that “[t]he lender MIT Federal Credit Union has not served the Notice of
Foreclosure under the statutes of the law and has not lawfully held the note on my property.” Id.
On April 14, 2023, after holding a hearing at which both parties were present, the Superior
Court denied Eser’s motion on the basis that she had not shown a reasonable likelihood of success
on the merits and that any irreparable harm had “been brought on by her own actions or inaction.”
April 14, 2023 Order, Eser, No. 2377CV00356. That day, the Credit Union hosted a foreclosure
auction on the Property. ECF 28, at 22, ¶ 4; ECF 29-1, at 91, ¶ 8. The Superior Court granted
Eser’s motion to voluntarily dismiss her case without prejudice six days later. April 20, 2023
Order, Eser, No. 2377CV00356.
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On May 16, 2023, the Credit Union recorded the foreclosure sale of the Property to
Vitavera Realty LLC for the price of $563,000. ECF 29-1, at 18; ECF 28, at 25, ¶ 14. Vitavera
served Eser with a 14-day notice to quit and a summary process summons on May 19 and June 8,
2023, respectively. Vitavera filed those documents and its complaint in the Massachusetts Housing
Court on June 20, 2023. See Dkt. No. 1, Vitavera Realty Llc vs. Eser, No. 23H77SP003218 (Mass.
Hous. Ct.). The Housing Court scheduled a summary process trial for September 1, 2023. August
14, 2023 Order, Vitavera, No. 23H77SP003218. The day before trial, Eser moved to continue the
trial. The Housing Court denied Eser’s motion and, because Eser was not present at trial, entered
default judgment awarding Vitavera possession of the Property. September 27, 2023 Order,
Vitavera, No. 23H77SP003218. On March 29, 2024, the Housing Court issued an order that,
among other things, denied Eser’s motion for a temporary restraining order or preliminary
injunction barring her eviction, affirmed that Eser was required to pay Vitavera for her use and
occupancy of the Property, and stayed the eviction pending her compliance with that requirement.
Dkt. No. 66, at 7-9, Vitavera, No. 23H77SP003218. On May 6, 2024, the Housing Court issued
judgment permitting Vitavera to evict Eser from the Property. Dkt. No. 79, Vitavera, No.
23H77SP003218.
On May 13, 2024, Vitavera informed Eser that it intended to evict her from the Property
the following week, on May 20, 2024. ECF 29-1, at 92, ¶ 17. After an emergency hearing, the
Housing Court denied Eser’s motion to stop the eviction. Dkt. Nos. 81, 84, Vitavera, No.
23H77SP003218. Eser again moved to stay the eviction on July 25, 2024, citing procedural defects
with the eviction process. Dkt. No. 90, Vitavera, No. 23H77SP003218. After the Housing Court
denied her motion, Eser was eventually evicted from the Property. ECF 28, at 32.
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II. 	Interpleader Action.
Separately, on April 16, 2024, the Credit Union brought an interpleader action in Essex
Superior Court regarding surplus funds from the foreclosure sale of the Property. ECF 29-1, at 18;
No. 3, Mass. Inst. of Tech. Fed. Credit Union vs. Holtjer, No. 2477CV00371 (Mass. Super. Ct.).
The debt owed to the Credit Union on the obligation secured by the mortgage at the time of the
foreclosure sale was $382,308.54. ECF 29-1, at 18 and 24, ¶ 3. The $563,000 sale of the Property
therefore left surplus funds of $180,691.46 to be distributed among other eligible creditors and, if
applicable, to Eser. Id. Larkin filed an answer asserting that it was owed a portion of the surplus
funds. Id. at 18; Dkt. No. 15, Holtjer, No. 2477CV00371. Eser also filed an answer that alleged
various procedural defects with the foreclosure of the Property and contended that “the surplus
funds are incorrect as it [was a] void sale by foreclosure.” Dkt. No. 16, at 4-10, Holtjer, No.
2477CV00371. Eser did not file, and has not filed, any counterclaims in that action. The
interpleader case has otherwise been paused during the pendency of the federal bankruptcy action.
III. 	Bankruptcy Proceedings and the Settlement Agreement.
On May 20, 2024—the day of her anticipated eviction—Eser filed for bankruptcy
protection pursuant to Chapter 7, initiating an automatic stay barring creditors from pursuing their
claims against her. ECF 2, at 1. Lassman was appointed trustee for Eser’s estate. Id. at 3, ¶ 22.
On July 2, 2024, the Bankruptcy Court lifted the automatic stay barring Vitavera from
exercising rights to the Property. Id. at 7, ¶ 72.2 Later that month, the Trustee filed an objection to
Eser’s use of the Homestead Exemption on the Property. Id. at 8, ¶ 83.3 The Bankruptcy Court
2 Eser appealed that order to this Court on July 16, 2024. After Eser failed to pay the filing fee,
this Court dismissed the appeal. ECF 5, In re Ezer, No. 24-cv-11829-LTS (D. Mass.).
3 The Homestead Exemption can, when properly applied, protect a debtor’s home from certain
creditors.
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sustained the objection. Id. at 10-11, ¶ 109.4 Larkin later filed a proof of claim to $24,035.76 plus
interest, and the Credit Union filed a proof of claim to $5,177.10 in legal fees from the foreclosure
sale. ECF 29-1, at 19; ECF 130, Eser, No. 24-bk-10976 (U.S. Bankr. Ct., Mass.) (claims register).
On December 26, 2024, the Trustee moved for the Bankruptcy Court’s approval of a
settlement agreement between him, as trustee, and the Credit Union in connection with the
interpleader action (the “Settlement Agreement”). ECF 2, at 12, ¶ 131; ECF 29-1, at 23-27.
Pursuant to that Agreement, the Credit Union would turn over to the Trustee the $180,691.46
surplus funds, plus any interest accrued, from the foreclosure sale. ECF 29-1, at 20, ¶ 2. The
Trustee would then pay $5,177.10 and $24,035.76, plus applicable interest, to the Credit Union
and Larkin, respectively, in full satisfaction of their proofs of claim and any other claims they may
have in the bankruptcy case or the interpleader action. Id. ¶¶ 3-4. The Trustee would also join in
the Credit Union’s motion to dismiss the interpleader action as moot. Id. ¶ 5.
On February 19, 2025, after a hearing, the Bankruptcy Court granted the Trustee’s motion
and approved the Settlement Agreement. ECF 2, at 14, ¶ 151; ECF 29-1, at 3, 16. The court found
the Agreement to be within the range of reasonableness because it would resolve the disputed
issues in the interpleader action without further litigation. ECF 29-1, at 16. Noting that Eser had
not raised a counterclaim in the interpleader action concerning the validity of the foreclosure, the
court concluded that Eser’s arguments about the lawfulness of the foreclosure were not properly
before it on the narrow question of whether to approve the Settlement Agreement. Id.
4 Eser’s appeal of that order was dismissed by this Court for lack of prosecution. ECF 5, In re
Eser, No. 24-cv-12428-MJJ (D. Mass.). Eser appealed that ruling to the First Circuit, but the appeal
was also dismissed for lack of prosecution. See January 7, 2025 Order, Eser v. Vita Vera Realty
LLC, No. 24-2120 (1st Cir.).
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Eser appealed the order approving the Trustee’s proposed Settlement Agreement to this
Court. ECF 1. After receiving the parties’ briefs, the Court held a hearing and took the appeal
under advisement. ECF 28, 29, 34.
JURISDICTION AND STANDARD OF REVIEW
“Generally, a bankruptcy court’s order approving a settlement or compromise is a final
order.” In re Marmarinos, 464 B.R. 498, 500 (B.A.P. 1st Cir. 2012). This Court therefore has
jurisdiction under 28 U.S.C. § 158(a) to consider Eser’s appeal of the Bankruptcy Court’s order
granting the Trustee’s motion for approval of his settlement agreement with the Credit Union. See
28 U.S.C. § 158(a)(1) (giving district courts jurisdiction to hear appeals from “final judgments,
orders, and decrees” of bankruptcy courts).
On appeal to a district court, “[b]ankruptcy court orders endorsing settlements are reviewed
for manifest abuse of discretion.” In re Yacovi, 411 F. App’x 342, 346 (1st Cir. 2011) (quotation
marks omitted); see also In re Am. Cartage, Inc., 656 F.3d 82, 91 (1st Cir. 2011) (“The authority
to approve or disapprove a settlement lies within the sound discretion of the bankruptcy court, and
we will overturn the exercise of that discretion only upon a showing of abuse.”). “In such
situations, appellate review operates with the background understanding that settlements are
looked upon with favor in bankruptcy proceedings.” In re Am. Cartage, 656 F.3d at 91. “The task
of both the bankruptcy court and any reviewing court is to canvass the issues and see whether the
settlement falls below the lowest point in the range of reasonableness.” Id. (quotation marks
omitted).
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DISCUSSION
The question before this Court is whether the Bankruptcy Court abused its discretion in
approving the Settlement Agreement between the Trustee and the Credit Union.5 In determining
whether to approve a settlement agreement, a bankruptcy court must “assess and balance the value
of the claim that is being compromised against the value to the estate of the acceptance of the
compromise proposal.” Jeffrey v. Desmond, 70 F.3d 183, 185 (1st Cir. 1995) (quotation marks
omitted). In so doing, it may consider factors such as “the probability of success in the litigation
being compromised”; “the difficulties, if any, to be encountered in the matter of collection”; “the
complexity of the litigation involved, and the expense, inconvenience and delay attending it”; and
“the paramount interest of the creditors.” Id.; accord In re Am. Cartage, 656 F.3d at 92.
The Bankruptcy Court did not abuse its discretion in balancing these factors and approving
the Settlement Agreement between the Trustee and Credit Union. It considered the value to the
estate of the efficient transfer of the surplus funds to the Trustee, noting that the agreement avoids
procedural difficulties, expenses, and delays that might attend ongoing litigation in the interpleader
5 “Under the Bankruptcy Code, standing to appeal from a final bankruptcy court order is
accorded only to a ‘person aggrieved.’” Spenlinhauer v. O’Donnell, 261 F.3d 113, 117 (1st Cir.
2001). “The ‘person aggrieved’ paradigm, which delimits appellate jurisdiction even more
stringently than the doctrine of Article III standing, . . . bestows standing only where the
challenged order directly and adversely affects an appellant’s pecuniary interests.” Id. at 117-18.
In Chapter 7 cases, the trustee alone, not the debtor, normally has standing to appeal from
bankruptcy orders affecting the property of the estate. Id. at 118; In re Karamoussayan, 658 B.R.
221, 227 (B.A.P. 1st Cir. 2024). There are, however, exceptions to this general rule. As relevant
here, a Chapter 7 debtor “may establish standing by adducing sufficient evidence to demonstrate
that a successful appeal by the debtor would generate assets in excess of liabilities, entitling the
debtor to a distribution of surplus once the bankruptcy case is closed.” In re Karamoussayan, 658
B.R. at 227 (quotation marks omitted). While this appeal concerns the surplus funds from the
foreclosure sale, it is not obvious that Eser’s success in this appeal would affect the amount of
surplus. But the Court need not decide whether Eser has standing to appeal, because Eser’s appeal
can be resolved on the merits and the Court can “assume arguendo that [Eser] has standing.” In re
Am. Cartage, 656 F.3d at 86 n.2.
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action. The Agreement, the Bankruptcy Court added, advances the interest of the creditors in
transferring the surplus funds to the Trustee for distribution, but does not affect the viability of any
future claims by the Trustee or Eser concerning the foreclosure. In concluding that the Trustee’s
balancing of the Settlement Agreement against alternatives fell within the range of reasonableness,
the Bankruptcy Court acted well within its discretion.
Eser advances several arguments for overturning the Bankruptcy Court’s approval of the
Settlement Agreement. Foremost among these is her repeated contention that the foreclosure of
the Property was “null and void” due to a series of statutory violations, and that the Bankruptcy
Court erred in approving an agreement that allocates proceeds from that invalid foreclosure sale.
ECF 28, at 12-13. Eser similarly argues that, in negotiating the Settlement Agreement, the Trustee
engaged in misconduct and breached his fiduciary duties. In her view, the Agreement represents
an improper attempt to “bypass the Superior Court Interpleader case . . . without Eser being heard
on her claims” regarding the foreclosure. Id. at 44.6
None of these arguments warrants disturbing the Bankruptcy Court’s approval of the
Settlement Agreement. As the court found, and as the Trustee argues here, the Settlement
Agreement concerns only the disposition of the surplus funds at issue in the interpleader action. It
does not foreclose challenges that might be available to the Trustee or, conceivably, Eser
concerning the propriety of the foreclosure. And it does not even resolve the interpleader action.
The Trustee and Credit Union agreed to jointly move to dismiss that case on the basis of mootness,
but it would be for the Superior Court to determine whether, notwithstanding the Settlement
6 Eser also raises numerous alleged defects with the Bankruptcy Court’s rationale for denying
her motion to proceed in forma pauperis in this appeal. See e.g., ECF 28, at 29, 42. But the
Bankruptcy Court’s denial of Eser’s motion is not before this Court and has no bearing on this
Court’s assessment of the merits of her appeal.
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Agreement, Eser had preserved a challenge to the foreclosure through her answer in that case.
Contrary to Eser’s belief, the Bankruptcy Court was not required to “assess whether there has been
an adjudication by an evidentiary hearing or trial of all matters by the parties for a legal transfer of
a valid title to have occurred.” Id. at 39. Its duty was merely to “canvass the issues and see whether
the settlement falls below the lowest point in the range of reasonableness.” In re Am. Cartage, 656
F.3d at 91 (quotation marks omitted); see In re Servisense.com, Inc., 382 F.3d 68, 71-72 (1st Cir.
2004) (“[T]he responsibility of the bankruptcy judge, and [of this Court] on review, is not to decide
the numerous questions of law and fact raised by appellants but rather to canvass the issues and
see whether the settlement falls below the lowest point in the range of reasonableness.” (quotation
marks omitted)).7
Having reviewed all of Eser’s arguments on appeal, the Court finds no manifest abuse of
discretion by the Bankruptcy Court.8 Accordingly, the Court will affirm the Bankruptcy Court’s
conclusion that the Settlement Agreement was within the range of reasonableness and fit for
approval.
7 To the extent Eser seeks and has standing to challenge the creditors’ proofs of claim filed in
Bankruptcy Court, see ECF 28, at 33, she failed to file proper objections pursuant to Fed. R. Bank.
P. 3007(a). That rule requires, among other things, that “an objection to a claim and a notice of the
objection be filed and served.” Fed. R. Bank. P. 3007(a)(1). Nothing in the record indicates that
Eser has complied with this rule. See generally ECF 2 (Docket in Eser, No. 24-bk-10976 (U.S.
Bankr. Ct., Mass.)). Accordingly, any arguments based on Eser’s opposition to the proofs of claim
filed by the Credit Union or Larkin are not properly before this Court.
8 To the extent Eser seeks to assert a breach of fiduciary duty or similar claim against the
Trustee in connection with this appeal, see ECF 28, at 45, there is no indication in the record that
she has sought and been granted leave from the Bankruptcy Court to pursue such claims. See
Hutchins v. Shatz, Schwartz & Fentin, P.C., 494 B.R. 108, 115 (D. Mass. 2013) (“In light of the
important role of a trustee in the administration of a bankruptcy estate and the fact that bankruptcy
courts appoint trustees, an individual who wishes to pursue an action against a trustee for acts done
in his or her official capacity must first seek leave from the court which appointed the trustee.”
(citing Muratore v. Darr, 375 F.3d 140, 143 (1st Cir. 2004))).
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CONCLUSION
For the foregoing reasons, the Bankruptcy Court’s order approving the Trustee’s proposed
Settlement Agreement is AFFIRMED.
SO ORDERED.
/s/ Julia E. Kobick
JULIA E. KOBICK
UNITED STATES DISTRICT JUDGE
Dated: March 2, 2026
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