Case Explained: MOLLY COSEL v. GEOFFREY C. WENDT, as Trustee of the William G. Wendt 2022 Family Trust WILLIAM H. WENDT; DALIA K. WENDT

Court: United States Court of Appeals for the First Circuit Filed: 2026-08-11 The first-circuit affirmed in part, reversed in part, vacated in part, and remanded a diversity action concerning real property owned by Molly Cosel and her former husband as tenants by the entirety. The court held that the district court erred by granting summary judgment to Cosel based on an unsettled question of Massachusetts law regarding whether a divorce decree extinguishes a creditor’s interest in a tenancy by the entirety when the non-debtor spouse is awarded the property. Because there remained genuine disputes of material fact regarding the validity of the promissory note underlying the creditor’s judgment lien—specifically whether the funds were a sham intended to encumber marital assets—the appellate court vacated that portion of the district court’s order and remanded for factual findings on the loan’s bona fides. The court further ruled that Cosel, as a non-party to the prior state court default judgment, was not precluded from challenging the validity of the debt under Massachusetts law or the Restatement (Second) of Judgments § 76, as she was not in privity with the parties to that suit. Additionally, the court rejected the Trust’s argument that the property ceased to be Cosel’s principal residence during her temporary absence, affirming the district court’s conclusion that she intended to return. Regarding the Trust’s counterclaims, the court held that the domestic relations exception did not bar federal jurisdiction over claims by a third-party creditor against a non-debtor spouse. Finally, the court reversed the grant of summary judgment on the “necessaries” issue under Massachusetts General Laws chapter 209, § 1, finding genuine disputes of material fact regarding whether the disputed funds were spent on necessaries based on the couple’s social station and means. On remand, the district court must first determine whether the loan is valid as to Cosel. If the loan is found invalid, Cosel prevails. If the loan is valid, the court must resolve factual disputes regarding whether the funds were spent on necessaries; if that issue does not resolve the Trust’s interest in the property, the court may then address or certify the unsettled legal question concerning the effect of the divorce on the creditor’s interest in the tenancy by the entirety. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.