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In re Zizza

United States Court of Appeals, First Circuit

November 15, 2017

IN RE: KIMBERLY ANN ZIZZA, Debtor.
v.
WILLIAM K. HARRINGTON, UNITED STATES TRUSTEE FOR REGION, Appellee. KIMBERLY ANN ZIZZA, Appellant,

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Indira Talwani, U.S. District Judge]

          David G. Baker, on brief for appellant.

          Eric K. Bradford, Stephen E. Meunier, and John Postulka, Trial Attorneys for the Office of the U.S. Trustee, on brief for appellee.

          Before Lynch, Stahl, and Barron, Circuit Judges.

          STAHL, Circuit Judge.

         Kimberly Ann Zizza appeals an order from the bankruptcy court denying her Chapter 7 discharge on the grounds that she made material, knowing, and fraudulent false oaths in the course of her bankruptcy proceedings. 11 U.S.C. § 727(a)(4). The bankruptcy court found that Zizza had failed to disclose in her schedules and at her first creditors' meeting, with reckless indifference to the truth, two lawsuits to which she was a party. After careful consideration, we affirm.

         I.

         Zizza is a licensed attorney in Massachusetts. In 2007 and 2008, she was involved in two separate automobile accidents in which she claims she sustained injuries. On November 23, 2010, she filed suit against the driver in the first accident in Essex Superior Court in Lawrence ("the Duffy action"). On February 11, 2011, she filed suit against the driver in the second accident in Essex Superior Court in Salem ("the Sapienza action"). On February 25, 2011, the Superior Court dismissed the Duffy action for failing to meet the court's $25, 000 jurisdictional threshold.

         On March 6, 2011, Zizza filed a voluntary bankruptcy petition under Chapter 13, retaining Anthony Rozzi as her attorney for the bankruptcy case. In her initial Statement of Financial Affairs, Zizza was asked to identify all suits to which she was a party within one year of filing her bankruptcy case. In her filed schedules, she did not disclose either the Duffy or Sapienza actions.

         At the first meeting with her creditors on April 8, 2011, Zizza, accompanied by Attorney Rozzi, testified under oath and when asked whether there were any changes she wanted to make to her initial filings, she said "No." Attorney Rozzi stepped in and stated that "[t]here are lawsuits . . . [t]hat need to be added . . . both lawsuits that Ms. Zizza or Attorney Zizza has out. And, uh, and she also has a personal injury claim." Later at the meeting, Attorney Rozzi said that he was "going to add any lawsuits that are important" in an amended filing. Finally, when the Chapter 13 trustee asked about a $20, 000 payment listed in the plan, Zizza responded that she had "several judgments right now" and was "anticipating that one of those judgments would come through by the end of the plan." Four days after the creditors' meeting, Zizza appeared in Essex Superior Court to argue a motion to reinstate the Duffy action.

         Attorney Rozzi filed amended schedules on Zizza's behalf on September 23, 2011, which added several accounts receivable and money judgments, but did not list either the still pending Duffy or Sapienza actions. In September of 2012, Zizza settled the Sapienza action for $20, 000, but she did not seek bankruptcy court approval for the settlement. On October 5, 2012, the Chapter 13 trustee, still unaware of the two lawsuits or the settlement, filed a motion to dismiss Zizza's bankruptcy case for failure to make plan payments. In response, on October 30, 2012, Zizza again amended her filings, finally disclosing the Duffy and Sapienza actions, as well as the settlement in Sapienza.

         In light of Zizza's failure to disclose the Duffy and Sapienza actions in a timely manner, the Chapter 13 trustee moved to convert Zizza's Chapter 13 petition to a Chapter 7 petition. At the hearing on the trustee's motion, Attorney Rozzi argued that Zizza had not disclosed the lawsuits earlier because she did not believe they were viable. Attorney Rozzi further claimed that Zizza had not told him that the two lawsuits were active until October 2012.

         The bankruptcy judge granted the motion to convert the case to a Chapter 7 petition, concluding that Zizza's failure to disclose the lawsuits indicated that she had not filed her bankruptcy case in good faith. The United States Bankruptcy Appellate Panel for the First Circuit affirmed the bankruptcy judge's decision. Zizza v. Pappalardo (In re Zizza), 500 B.R. 288 (B.A.P. 1st Cir. 2013).

         Thereafter, on September 30, 2014, William Harrington, the United States Trustee for Region One, commenced an action seeking to deny Zizza's discharge on the grounds that she had made false oaths within the meaning of 11 U.S.C. § 727(a)(4), or alternatively, that she had concealed property of the estate within the meaning of 11 U.S.C. § 727(a)(2)(B) by failing to disclose the two lawsuits. After a trial, the bankruptcy judge denied Zizza's discharge under 11 U.S.C. § 727(a)(4), concluding that she had acted with reckless indifference to the truth by failing to disclose ...


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