Cox v. Villani (Villani)
478 B.R. 51
| 1st Cir. BAP | 2012Background
- Cox appeals a bankruptcy court judgment favoring Villani on Cox’s discharge objection under § 727(a)(2)(A).
- Cox and others owed Villani-related entities a $300,000 promissory note; no payments were ever made.
- State court granted injunctions and security for Cox’s benefit; bankruptcy followed with Cox listing a disputed claim and later filing an adversary proceeding.
- Adversary proceeding alleged Villani transferred and concealed funds post-injunction to hinder creditors, including deposits into non-attachment payroll accounts and a MetLife withdrawal.
- Trial in 2011 focused on whether Villani acted with intent to hinder, delay, or defraud; the court found no such intent, and the Judgment was entered for Villani.
- The First Circuit reverses, holding the record supports intent to hinder, delay, or defraud and remands to deny Villani’s discharge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Villani have intent to hinder, delay, or defraud a creditor? | Cox argues Marrama badges prove intent. | Villani contends transfers were not intended to defraud and were in distress. | Yes; the discharge should be denied. |
| Are Marrama’s objective indicia controlling for § 727(a)(2)(A) intent in this case? | Cox relies on all Marrama badges to show intent. | Villani argues insufficient indicia individually and credibility issues. | Indicia support intent when viewed collectively. |
Key Cases Cited
- In re Marrama, 445 F.3d 518 (1st Cir. 2006) (totality of circumstances with Marrama badges supports intent to defraud)
- In re Barry, 451 B.R. 658 (1st Cir. BAP 2010) (multiple factors and pattern of transfers indicate intent)
- In re Lang, 246 B.R. 463 (D. Mass. 2000) (liberal construction of discharge objections; burden of proof)
- In re Burgess, 955 F.2d 134 (1st Cir. 1992) (deference to finder of fact in fraud intent determinations)