Furlong v. Donarumo (In Re Furlong)
450 B.R. 263
D. Mass.2011Background
- Furlongs filed Chapter 7 petitions for themselves and Drew's Plumbing; the bankruptcy trustee handled the cases.
- The Furlongs alleged claims against Donarumo arising from the purchase of Drew's Plumbing & Heating, Inc. II, including contract and tort theories.
- The trustee discussed the claims with the Furlongs and considered abandoning them to permit suit by the Furlongs; Schedule B listed the claims as 'Claims for Breach of Contract (Andrew Donarumo et al.).'
- A November 6, 2007 Notice of Intent to Abandon was filed in the personal case; the corporate case closed with no objection filed by Donarumo.
- Gem Plumbing later acquired assets and assigned rights to Drew's Plumbing; the Furlongs, via a board action, assigned Drew's Plumbing's claims to themselves personally.
- Bankruptcy Court held the claims were abandoned under § 554 and stock in Drew's Plumbing remained property of the personal estate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether corporate abandonment occurred under §554(c). | Furlongs' Schedule B sufficed to inform trustee of all related claims. | Only breach-of-contract claims were scheduled; deprivation of other claims remained estate property. | Yes; scheduled breach claim plus trustee awareness abandoned related claims under §554(c). |
| Whether personal abandonment occurred under §554(a). | Trustee's Notice to Abandon clearly intended to abandon all claims against Donarumo. | Notice was unclear and failed to unambiguously abandon estate property. | Yes; intent to abandon all related claims was clear. |
| Whether the transfer of Drew's Plumbing claims to the Furlongs violated the automatic stay. | Transfer involved control of estate property (stock) and required trustee consent. | Transfer occurred via board action, not using estate stock; stay not violated. | No; transfer by the board did not violate the automatic stay. |
| Whether Drew's Plumbing stock remains property of the personal estate amid abandonment rulings. | Trustee intended to abandon all rights, including stock interests. | Stock was never abandoned; remains personal estate property. | Remains property of the personal estate; abandonment of claims did not extinguish stock ownership. |
Key Cases Cited
- Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d 116 (2d Cir. 2008) (broad view of § 541 includes all interests and requires scheduled disclosures)
- Jeffrey v. Desmond, 70 F.3d 183 (1st Cir. 1995) (unambiguous scheduling required for abandonment; lack thereof defeats abandonment)
- Cusano v. Klein, 264 F.3d 936 (9th Cir. 2001) (trustee must have information to investigate when determining abandonment)
- Yonikus v. Yonikus, 996 F.2d 866 (7th Cir. 1993) (every conceivable debtor interest within §541; implied abandonment considerations)
- Kreisler v. Goldberg, 478 F.3d 209 (4th Cir. 2007) (automatic stay does not extend to corporate assets when debtor has estate interest)