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Morrissey v. Lunn

United States District Court, D. Massachusetts

April 2, 2018




         This matter is before the Court on plaintiff Christine Morrissey's motion to have this Court set aside a 2002 stipulation and release approved by the Bankruptcy Court for the District of Massachusetts. Docket No. 44.[1] For the following reasons, this Court recommends that the District Judge assigned to this case deny the motion and dismiss this case.


         In this action, Morrissey brings claims for breach of contract, promissory estoppel, conversion, unjust enrichment, fraud, and violations of the RICO statute. Docket No. 1. She alleges that Lunn obtained two million dollars from Morrissey through breach of contract and fraud resulting from Lunn's termination of the parties' business venture and the conversion and concealment of the assets of the business outside of the United States. See id. Morrissey's claims are based on alleged oral representations Lunn made to her during the 1980s and 1990s.

         Morrissey had previously initiated a civil action against Lunn in Massachusetts Superior Court on February 9, 1998. Docket No. 44 at 1; see also Complaint at ¶ 42. In 2001, Lunn filed personal and corporate bankruptcies in the Bankruptcy Court for the District of Massachusetts. In re Cyril Gordon Lunn, No. 01-46312 (Bankr. D. Mass.); In re CY Realty Corporation, No. 01-45240 (Bankr. D. Mass.). The Superior Court matter was stayed as a result of Lunn's bankruptcy filings. Docket No. 44 at 1.

         Morrissey continued to press her claims against Lunn in Bankruptcy Court. On or about January 7, 2002, Morrissey filed an adversary proceeding against Lunn in the Bankruptcy Court for the District of Massachusetts. Morrissey v. Lunn, No. 02-04004 (Bankr. D. Mass.) (the “Adversary Proceeding”). Among other things, Morrissey alleged that Lunn had fraudulently transferred assets to Canada to which she claimed an interest in violation of a lien granted to her by the Superior Court. Adversary Proceeding at Docket No. 1.

         Morrissey reached a settlement with Lunn, which resolved all of her claims against him. Docket No. 44-2. On October 29, 2002, the Bankruptcy Court approved the parties' Stipulation and Agreed Order for Dismissal of Adversary Proceeding and Settlement of Other Claims (the “Bankruptcy Judgment”). Id. Among other things, the parties agreed to:

[R]elease one another from all claims existing as of the date of this Stipulation, including without limitation any claims that Mr. Lunn or Mr. Morrissey may have in the Superior Court Action and the Bankruptcy Court Action. All claims brought by Mr. Lunn and Ms. Morrissey in the Superior Court action shall be withdrawn and released and Mr. Lunn and Ms. Morrissey shall file the appropriate pleadings to effect the dismissal of all claims in the Superior Court action with prejudice and without costs or attorney fees.

Docket No. 44-2 at 4.

         Lunn knowingly concealed assets from the Bankruptcy Court. As a result, on May 18, 2006, the Bankruptcy Court revoked Lunn's discharge. See In re Lunn, No. 01-46312 at Docket No. 82. In addition, on September 14, 2006, a federal grand jury returned an indictment charging Lunn with two counts of bankruptcy fraud in violation of 18 U.S.C. §§ 152(1) & (3). United States v. Cyril Gordon Lunn, No. 4:06-cr-40030-TSH (D. Mass.).

         The indictment was unsealed on August 14, 2014. Id. at Docket No. 8. Lunn pled guilty to the charges on January 30, 2017. Id. at Docket No. 39. He was sentenced to eighteen months in prison on July 12, 2017. Id. at Docket Nos. 48, 49. The District Court also ordered him to pay restitution in the amount of $6, 339.17. Id. Morrissey had sought restitution in the criminal case. Id. at Docket No. 47, page 5. However, the government declined to seek restitution for Morrissey's claims. Id. at p. 5-6, n. 4. In so doing, the government noted the settlement between Morrissey and Lunn and the Bankruptcy Judgment, which resolved all of Morrissey's claims against Lunn. Id. The government further noted the fact that it appeared that, at the time of the settlement, Morrissey was aware that Lunn had transferred some assets to Canada, as evidenced by allegations she had made in the Adversary Proceeding. Id. at 5, n. 4.

         Morrissey filed her complaint in this action on January 26, 2017. Docket No. 1. Lunn appears pro se. At a status conference on January 3, 2018, this Court inquired about the effect of the Bankruptcy Judgment on this case. The Court ordered plaintiff to file a copy of the Bankruptcy Judgment, Docket No. 40, which she did on January 26, 2018. Docket No. 43.

         On January 29, 2018, Morrissey filed the instant motion seeking an order setting aside the Bankruptcy Judgment. Docket No. 44. On February 7, 2018, this Court ordered Morrissey to file a supplemental memorandum of law in support of her motion to set aside the Bankruptcy Judgment addressing the following issues: (1) whether the District Court has jurisdiction to set aside the Bankruptcy Judgment particularly where Morrissey never appealed that judgment or otherwise sought to set it aside; and (2) whether any claims in this action would survive even if the Bankruptcy Judgment is not vacated. Docket No. 50. The Court allowed Lunn the opportunity to file a response within four weeks after service of the supplemental memorandum of law.

         On February 20, 2018, Morrissey filed a supplemental memorandum of law. Docket ...

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