Mary Buscone v. Ann Botelho, 634 B.R. 152

Background

Botelho and Buscone were partners in T & M Desserts (FroYo To Go). After the partnership ended, Botelho filed Chapter 7 in 2014 but did not list any claim against Buscone; she received a discharge.
Botelho later obtained a state-court default judgment against Buscone for roughly $91,673 and recorded a lien; that prompted Buscone to file Chapter 7 and list Botelho as a judgment creditor.
Botelho filed an adversary proceeding seeking a determination that the debt was nondischargeable under 11 U.S.C. § 523(a)(2)(A) and (a)(4); Buscone moved to dismiss on judicial estoppel grounds (arguing Botelho’s earlier nondisclosure barred the claim).
The court converted the motion to one for summary judgment but denied it, accepting Botelho’s affidavit that the omission was inadvertent and noting unsettled aspects of judicial estoppel in the First Circuit.
A protracted discovery fight followed: missed deposition, evasive interrogatory answers, and failure to comply with court orders. The court granted motions to compel, awarded fees, found counsel responsible for failures, and ultimately entered default judgment as a discovery sanction excepting the $91,673 debt from discharge.
On appeal the BAP affirmed denial of summary judgment, affirmed the default judgment and denial of reconsideration, and dismissed appeals of sanctions against Buscone’s attorney for lack of standing.

Issues

Issue	Plaintiff's Argument (Botelho)	Defendant's Argument (Buscone)	Held
Whether judicial estoppel barred Botelho’s nondischargeability suit due to her earlier failure to disclose the claim	Omission was inadvertent; she lacked knowledge/motive to conceal so estoppel should not apply	Omission was a prior inconsistent position that warrants judicial estoppel and dismissal	Denied application of judicial estoppel; court did not abuse discretion in crediting Botelho and noting the doctrine’s contours in the First Circuit are unsettled (summary judgment denial affirmed)
Whether default judgment was appropriate as a discovery sanction under Rule 37	Sanctions warranted: repeated noncompliance, prejudice, and counsel’s conduct justified default and fee awards	Noncompliance excused by confusion/misnumbering; lesser sanctions would suffice	Default judgment affirmed — multiple violations, warnings, evasive answers, counsel’s admissions, and lesser sanctions inadequate
Whether the bankruptcy court had jurisdiction / needed an evidentiary hearing to fix the amount of the nondischargeable debt	Amount established by state default judgment and Buscone’s own schedules; sum-certain so no hearing required	Cites Cambio for limited jurisdiction argument; says bankruptcy court should not enter money judgment without hearing	Court held it had jurisdiction and could enter sum-certain judgment relying on state judgment and debtor’s schedules; no hearing required
Whether reconsideration under Rule 59(e)/Bankruptcy Rule 9023 should have been granted	Reconsideration not warranted; original rulings correct	Iqbal and other filings sufficed; omission of specific rule citations should not be fatal	Denied — motion treated under Rule 59(e); Buscone failed to show manifest error or new evidence; arguments were repetitive/untimely

Key Cases Cited

Guay v. Burack, 677 F.3d 10 (1st Cir. 2012) (discusses judicial estoppel and leaves open good-faith exception where omission may be innocent)
AngioDynamics, Inc. v. Biolitec AG, 780 F.3d 429 (1st Cir. 2015) (identifies factors and procedural safeguards for Rule 37 discovery sanctions)
Hooper-Haas v. Ziegler Holdings, LLC, 690 F.3d 34 (1st Cir. 2012) (default sanction review and totality-of-circumstances approach)
Companion Health Servs., Inc. v. Kurtz, 675 F.3d 75 (1st Cir. 2012) (Rule 37 sanctions and availability of default/dismissal)
New Hampshire v. Maine, 532 U.S. 742 (2001) (foundational statement of judicial estoppel as equitable doctrine)
In re Varrasso, 37 F.3d 760 (1st Cir. 1994) (summary judgment standards in bankruptcy practice)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (standard for materiality and genuine dispute on summary judgment)
Boudreau v. United States (In re Boudreau), 622 B.R. 817 (B.A.P. 1st Cir. 2020) (jurisdictional discussion on bankruptcy court determining amounts in dischargeability context)