Harrington v. MVP Home Solutions, LLC (In re Nina)
562 B.R. 585
Bankr. E.D.N.Y.2016Background
- MVP Home Solutions (MVP) recruited distressed homeowners for a “Stop the Sale Date” program and contracted with Silverstein & Wolf (S & W) (or an entity of similar name) to file skeletal Chapter 13 petitions to stall foreclosures; MVP received fees from debtors.
- Amal Balmacoon (sole owner of S & W) received referrals and payments from MVP and directed John Nelson (a paralegal/independent contractor) to prepare and file 30 handwritten skeletal Chapter 13 petitions for 29 debtors; debtors did not sign those petitions.
- Petitions contained false in‑district addresses (to invoke venue) and omitted petition‑preparer disclosures (names, addresses, SSNs, BPP Notice/Declaration, Form B‑280), and the preparers did not provide petition copies or contact debtors before filing.
- MVP used the word “legal” in advertising materials claiming a "legal team" would stay foreclosures; none of the defendants were attorneys or law firms.
- The U.S. Trustee moved for summary judgment seeking forfeiture of fees, treble fines under 11 U.S.C. § 110, and an injunction barring the defendants from acting as bankruptcy petition preparers; the court granted summary judgment for the U.S. Trustee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants qualify as bankruptcy petition preparers under § 110(a) | Defendants prepared/filed petitions for compensation (directly or via payments) and thus are BPPs | S & W contends it wasn’t the contracting entity or was not used; Balmacoon claims he acted individually; Nelson claims independent‑contractor role | All defendants are BPPs; entity misnaming and timing of incorporation do not create genuine disputes; ratification and performance bind S & W and Balmacoon |
| Whether defendants violated § 110 disclosure and procedural requirements (b),(c),(d),(g),(h)(2) | Failed to file BPP Notice/Declaration, omitted name/address/SSN, didn’t provide petition copies, accepted/handled fees for filing, didn’t file Form B‑280 | Defendants argue limited/no direct contact with debtors and payments handled indirectly, reducing culpability | Violations established as undisputed; defendants failed to comply with each cited provision |
| Whether MVP’s advertising violated § 110(f) by using the term “legal” | MVP advertised a "legal team" and legal services though not attorneys | MVP did not contest being non‑lawyers but argued other defenses to liability | MVP violated § 110(f) by using prohibited language in advertising |
| Remedies: forfeiture, fines (including trebling), injunction under § 110(h),(i),(j) | Forfeiture of all fees, $500 fines per violation trebled due to severity, and injunction to prevent future BPP activity | Defendants sought to limit liability arguing secondary/indirect roles, lack of direct payments, and that some actions were individual (not corporate) | Court ordered disgorgement of all fees received, imposed treble fines for each violation, and enjoined defendants from acting as bankruptcy petition preparers |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Weinstock v. Columbia Univ., 224 F.3d 33 (assessing evidence in summary judgment)
- In re Jolly, 313 B.R. 295 (BPP definition and duties)
- In re Ali, 230 B.R. 477 (BPP liability despite lack of § 110 knowledge)
- In re France, 271 B.R. 748 (skeletal petitions to thwart foreclosure as abusive conduct)
- In re Gaftick, 333 B.R. 177 (liability when preparer receives fees indirectly)
- Property Asset Mgmt., Inc. v. Chicago Title Ins. Co., 173 F.3d 84 (assignment and requirement of manifest act/words)
- Cortlandt St. Recovery Corp. v. Hellas Telecommunications S.à.r.l., 790 F.3d 411 (intent and assignment principles)
- Spanierman Gallery, PSP v. Love, 320 F.Supp.2d 108 (misnaming party to a contract does not invalidate it)