in re: jim slemons hawaii, inc., 9th cir. bap (2013)

7/25/2019 In re: Jim Slemons Hawaii, Inc., 9th Cir. BAP (2013)

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* Thi s di sposi t i on i s not appr opr i at e f or publ i cat i on.Al t hough i t may be ci t ed f or what ever per suasi ve val ue i t mayhave ( see Fed. R. App. P. 32. 1) , i t has no pr ecedent i al val ue.See 9t h Ci r . BAP Rul e 8013- 1.

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UNI TED STATES BANKRUPTCY APPELLATE PANEL

OF THE NI NTH CI RCUI TI n r e: ) BAP No. HI - 11- 1464- J uMkTa

) BAP No. HI - 11- 1468- J uMkTaJ I M SLEMONS HAWAI I , I NC. , ) BAP No. HI - 11- 1475- J uMkTa

) ( cr oss- appeal s)Debt or . )

______________________________) Bk. No. 09- 01802J I M SLEMONS HAWAI I , I NC. , )

)Appel l ant / Cr oss- Appel l ee, )

)v. ) M E M O R A N D U M*

)CONTI NENTAL I NVESTMENT )COMPANY, LTD. , )

)Appel l ee/ Cr oss- Appel l ant , )

)v. )

)U. S. Tr ust ee; SHM, I NC. , dba )Car St ereo Expr ess; TONY )HAWAI I CORP. , )

)Appel l ees. )

______________________________)Ar gued and Submi t t ed on Febr uar y 21, 2013

at Pasadena, Cal i f or ni a

Fi l ed - Mar ch 13, 2013

Appeal f r om t he Uni t ed St at es Bankrupt cy Cour tf or t he Di st r i ct of Hawai i

Honor abl e Ll oyd Ki ng, Bankrupt cy J udge, Pr esi di ng._______________________

Appear ances: Ant hony P. Locri cchi o, Esq. , ar gued f or Appel l antJ i m Sl emons Hawai i , I nc. ; J er r ol d K. Guben, Esq. ,of O Connor Pl aydon & Guben LLP, argued f orAppel l ee Cont i nent al I nvest ment Company, Lt d.

_________________________

FILED

MAR 13 2013

SUSAN M SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT


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Bef ore: J URY, MARKELL and TAYLOR, Bankr upt cy J udges.

These cr oss - appeal s ar i se f r om debtor J i m Sl emons Hawai i ,

I nc. s second mot i on t o r ecuse bankrupt cy J udge Rober t J . Far i s

( Second Recusal Mot i on) f r om pr esi di ng over i t s bankrupt cy case.On Oct ober 12, 2011, t hi s Panel af f i r med J udge Ki ng s order

denyi ng debt or s f i r st mot i on t o r ecuse J udge Far i s ( Fi r st

Recusal Mot i on) i n J i m Sl emons Haw. , I nc. v. Of f i ce of t he U. S.

Tr . , et al . ( I n r e J i m Sl emons Haw. , I nc. ) , BAP No. HI - 10- 1284.

A f ew mont hs pr i or t o our r ul i ng, on J une 20, 2011, debt or f i l ed

i t s Second Recusal Mot i on. J udge Ki ng agai n deci ded t he mat t er

and deni ed debt or s mot i on by or der ent ered August 3, 2011

( Recusal Or der #2) . One day bef or e t he i ssuance of t hat or der ,

debt or f i l ed an ex part e mot i on t o reopen t he Second Recusal

Mot i on asser t i ng, among ot her t hi ngs, t hat new mat t er s had

ar i sen. J udge Ki ng deni ed debt or s mot i on t o r eopen by or der

ent ered August 3, 2011. Debt or now appeal s t hese orders ( BAP

No. 11- 1464) .Cont i nent al I nvest ment Co. , Lt d. ( CI C) cr oss- appeal s t he

bankrupt cy cour t s r ul i ng wi t h r espect t o Recusal Or der #2 ( BAP

No. 11- 1475) . CI C al so appeal s f r om t he bankrupt cy cour t s

or der denyi ng CI C s mot i on f or r econsi der at i on of por t i ons of

J udge Ki ng s Memor andum Deci si on r el at ed t o Recusal Or der #2

( BAP No. 11- 1468) . For t he r easons st ated bel ow, we DI SMI SS

CI C s cr oss appeal wi t h r espect t o Recusal Or der #2 f or l ack of

j ur i sdi ct i on and AFFI RM t he bankrupt cy cour t s deci si ons i n al l

r espect s.


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1 Some of t hese f act s ar e t aken f r omour Memorandum Deci si oni n I n r e J i m Sl emons Haw. , I nc. , BAP No. HI - 10- 1284.

2 Unl ess ot her wi se i ndi cat ed, al l chapt er , sect i on and r ul er ef er ences ar e t o t he Bankrupt cy Code, 11 U. S. C. 101- 1532.

Rul e r ef er ences ar e t o t he Feder al Rul es of Bankrupt cyPr ocedur e and Ci vi l Rul e r ef er ences are t o t he Feder al Rul es ofCi vi l Pr ocedur e.

3 I n r esponse t o t he UST s obj ect i ons, Locr i cchi o sent al et t er t o t he UST t hr eat eni ng Rul e 9011 sanct i ons. At t heOct ober 19, 2009 hear i ng on Locr i cchi o s empl oyment , UST Terr iDi di on t ol d t he bankrupt cy cour t t hat she had sear ched

( cont i nued. . . )

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I. FACTS1AND PROCEDURAL BACKGROUND

Set f or t h bel ow i s a hi st or y of t he r el evant f act s r el at ed

t o debt or s chapt er 112 case and a summary of debtor s t wo

mot i ons f or r ecusal and i t s al l egat i ons agai nst J udge Far i s.Debt or f i l ed i t s chapt er 11 pet i t i on on August 10, 2009.

Debt or was t he l essee of sever al l eases and sub- l eases ( Lease)

wi t h CI C, t he l essor and f ee owner of t he under l yi ng r eal

pr oper t y. The Lease was debt or s pr i mar y asset . The r eal

pr oper t y was expected t o be condemned, i n part , by t he Ci t y and

Count y of Honol ul u i n connect i on wi t h t he ri ght of way f or i t s

new l i ght r ai l syst em. Debt or , hopi ng t o r eap a pr of i t f r om t he

condemnat i on act i on, l i st ed a condemnat i on cl ai m agai nst t he

Ci t y of Honol ul u i n t he est i mat ed amount of $750, 000 i n

Schedul e B.

A. Employment of Debtors Attorney

On Sept ember 28, 2009, Ant hony P. Locr i cchi o, f i l ed an

appl i cat i on t o be empl oyed as debt or s at t or ney. Af t erobj ect i ons by the Uni t ed St at es Trustee s ( UST) of f i ce wer e

r esol ved, 3 t he cour t appr oved Locr i cchi o s empl oyment as


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3( . . . cont i nued)Locr i cchi o s bankrupt cy exper i ence t hr ough dat abases i n Mi chi gan,Cal i f or ni a and Hawai i . Di di on r epor t ed t hat she f ound t wo casest hat he worked on, one of whi ch was t he i nst ant case. Accordi ng

t o Di di on, her obj ect i on t o t he empl oyment of Locr i cchi o based onhi s l ack exper i ence was f ounded on good f ai t h and af t er ar easonabl e i nqui r y. She al so not ed t hat Cur t i s Chi ng, t heAss i st ant UST, r esponded t o t he empl oyment appl i cat i on becauseshe was on vacat i on when t he appl i cat i on came i n. Di di on t ol dt he j udge t hat she was, however , t he t r i al at t or ney assi gned t ot he case. Hr g Tr . 10/ 19/ 09 at 14- 15. Locr i cchi o has i dent i f i edhi msel f as an exper t i n condemnat i on cases. Hr g Tr . 7/ 28/ 11 at45: 1- 3.

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debt or s gener al counsel by or der ent er ed on J anuar y 1, 2010.

B. Postpetition Rent: The November 9, 2009 Order

Shor t l y af t er t he bankrupt cy f i l i ng, on August 25, 2009,

CI C moved f or t he t i mel y payment of post pet i t i on r ent under 365( d) ( 3) ( Post pet i t i on Rent Mot i on) . On Oct ober 8, 2009,

debt or opposed the mot i on on t he gr ound that CI C l acked st andi ng

t o br i ng t he mot i on because t he mot i on and memorandum i n suppor t

occasi onal l y r ef er r ed t o CI C as Consol i dat ed I nvest ment Company,

Lt d. Debt or made no other argument s i n opposi t i on.

On t he morni ng of Oct ober 19, 2009 - t he day of t he hear i ng

on CI C s mot i on - debt or f i l ed a pl eadi ng l abel ed as a mot i on

( Rent Of f set Mot i on) wi t hout not i ce of a hear i ng dat e. I n t he

mot i on, debt or sought t o ( 1) obt ai n a $85, 000 cr edi t agai nst

r ent payment s due CI C f or t he remai nder of August and al l of

Sept ember ; ( 2) pay the Oct ober r ent ; and ( 3) set an evi dent i ar y

hear i ng f or t he r esol ut i on of var i ous di sput es bet ween debt or ,

CI C and ot her s.At t he Oct ober 19, 2009 hear i ng, t he bankr upt cy cour t

i nf or med Locr i cchi o t hat i t had not r ead debt or s paper s whi ch


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wer e f i l ed t hat mor ni ng because t hey wer e unt i mel y. I n gr ant i ng

CI C s Post pet i t i on Rent Mot i on, t he bankrupt cy cour t st at ed:

Wi t h r egar d t o t he mot i on f or payment of r ent , I m I m goi ng t o gr ant t hat mot i on and l eave f or anot her

day the quest i on of I under st and t he Oct ober r ent sgoi ng t o be pai d pr ompt l y, and I l l l eave f or anot herday t he t he quest i on of whether t he August andSept ember r ent s have t o be pai d, and i f t hey r e notwhat consequences the non- payment woul d have. Hr gTr . 10/ 19/ 09 16: 24- 25; 17: 1- 4.

The cour t grant ed CI C s mot i on by or der ent er ed on November 9,

2009 ( November 9 Or der ) . The or der st at ed i n r el evant par t :

I T I S FURTHER ORDERED ADJ UDGED AND DECREED t hat J i m

Sl emons Hawai i , I nc. i s di r ect ed t o t i mel y pay themont hl y r ent or a pr o rated amount of mont hl y r ent f ort he post - pet i t i on per i od f r om t he pet i t i on dat e,August 10, 2009, t o t he pr esent and cont i nue to makepayment s pur suant t o Sect i on 365( d) ( 3) , unt i l f ur t herOr der of t hi s Cour t .

The or der i ncl uded si gnat ure l i nes f or Locr i cchi o and Di di on,

t he UST, t o i ndi cat e t hei r appr oval as t o t he f or m of t he or der .

The si gnat ure l i nes wer e bl ank when t he bankrupt cy cour t si gned

and ent er ed t he or der . The BNC Cer t i f i cat e of Ser vi ce showedt hat af t er ent r y of t he or der i t was served on debt or and

Locr i cchi o. Debt or di d not appeal t he November 9 Or der and i t

became a f i nal or der i n t he case. As f ur t her di scussed bel ow,

t hi s order f or ms t he cr ux of t he di sput e wi t h r espect t o

debt or s Second Recusal Mot i on.

C. CICs Motion to Terminate The Lease

Under 365( d) ( 4) ( A) and ( B) , t he deadl i ne f or debt or t o

assume t he Lease or move f or an extensi on of t i me t o assume was

ear l y December 2009. Debt or nei t her f i l ed a mot i on t o assume

t he Lease nor di d i t move t o ext end t he t i me t o assume the Lease

wi t hi n t he st at ut or y t i me per i od.


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On Febr uar y 22, 2010, bef or e t he f i l i ng of CI C s r epl y, t he

bankrupt cy cour t i ssued a Memor andum Deci si on, f i ndi ng t hat t he

Lease was r ej ect ed on December 9, 2009, by operat i on of l aw

under 365( d) ( 4) . The bankrupt cy cour t r ej ect ed debt or sar gument t hat i t s Rent Of f set Mot i on const i t ut ed a pr oper l y

not i ced and t i mel y mot i on t o assume t he Lease. The cour t al so

obser ved t hat a debt or must pay post pet i t i on r ent under

365( d) ( 3) even i f i t l at er deci ded t o r ej ect t he l ease.

Fi nal l y, because debt or had ment i oned i n i t s paper s t hat i t

i nt ended t o f i l e a mot i on f or r ecusal , t he bankrupt cy j udge

addr essed the i ssue i n t he Memor andum Deci si on, concl udi ng ther e

was no basi s f or hi s di squal i f i cat i on.

The cour t ent er ed j udgment f or CI C on Mar ch 3, 2010

( Ter mi nat i on J udgment ) .

D. Debtors First Recusal Motion

On Febr uar y 23, 2010 one day af t er t he cour t i ssued i t s

Memor andum Deci si on t er mi nat i ng debt or s Lease debt or f i l edi t s Fi r st Recusal Mot i on t o di squal i f y J udge Far i s. Debt or

al l eged t hat t he j udge over l ooked CI C s pr ocedur al

i r r egul ar i t i es and consi der ed pl eadi ngs i t shoul d have st r i cken.

Speci f i cal l y, debt or asser t ed t hat t he cour t shoul d have

st r i cken CI C s Lease Ter mi nat i on Mot i on because of t he

i nsuf f i ci ent not i ce ( t went y- seven days i nst ead of t went y- ei ght ) .

Debt or al so al l eged t hat CI C s counsel was par t of a bankrupt cy

cl ub, whi ch was a soci al l uncheon gat her i ng of bankrupt cy

at t or neys t hat t he bankrupt cy j udge r egul ar l y at t ended and whi ch

excl uded some at t or neys f r om at t endi ng. Fi nal l y, debt or al l eged

t hat t he cour t r ushed out i t s Febr uary 22 Memorandum on CI C s


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5 A f eder al j udge who i s t he subj ect of a recusal mot i on mayhear t hat mot i on hi msel f . Uni t ed St at es v. Si bl a, 624 F. 2d 864,867- 68 ( 9t h Ci r . 1980) . To avoi d any appear ance of conf l i ct orbi as, some di st r i ct s or di vi si ons use a pr ocedur e t hat has adi f f er ent j udge r ul e on a r ecusal mot i on. The Di st r i ct of Hawai iused t hi s opt i onal pr ocedur e.

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Lease Ter mi nat i on Mot i on due to the possi bl e del ay caused by

debt or s not i ce of i t s yet - t o- be- f i l ed r ecusal mot i on.

Debt or s Fi r st Recusal Mot i on was set f or hear i ng on

Apr i l 26, 2010, bef or e J udge Ki ng.5

On Apr i l 7, 2010, debt orf i l ed an ex par t e mot i on t o st ay the hear i ng so that i t coul d

conduct an i nvest i gat i on i nt o the cour t s i nt er nal pr ocedur es.

The i nvest i gat i on woul d supposedl y uncover whether J udge Far i s

had i mpr oper l y back- dated hi s Memorandum Deci si on f r om

Febr uary 24 to Febr uary 22 due t o debt or s pendi ng recusal

mot i on. J udge Ki ng deni ed debt or s ex part e mot i on by

Memorandum Deci si on and an or der ent ered Apr i l 9, 2010.

At t he Apr i l 26, 2010 hear i ng, J udge Ki ng deni ed debt or s

Fi r st Recusal Mot i on.

On May 5, 2010, J udge Ki ng i ssued a Memor andum Deci si on,

f i ndi ng t hat ( 1) Locr i cchi o had not of f er ed any evi dence t hat i f

l uncheon meet i ngs wer e hel d and J udge Far i s part i ci pat ed, t he

at t endees pr ecl uded hi m, or any ot her at t or ney, f r om at t endi ng;( 2) al t hough debt or had i nsuf f i ci ent not i ce of CI C s mot i on t o

t er mi nat e t he Lease, t he not i ce def i ci ency r esul t ed i n no

pr ej udi ce t o debt or because J udge Far i s gave debt or t he

oppor t uni t y t o f i l e a suppl ement al pl eadi ng; ( 3) debt or f ai l ed

t o ci t e any case l aw t hat woul d r equi r e a cour t t o deny a mot i on

( ver sus cont i nui ng i t ) due t o i nsuf f i ci ent not i ce; and ( 4) J udge


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6 J udge Ki ng comment ed t hat debt or s or i gi nal andsuppl ement al memor anda i n suppor t of i t s Fi r st Recusal Mot i on di dnot cont ai n a si ngl e ci t at i on t o a st at ut e, r ul e, or r epor t edcase.

7

On Oct ober 18, 2010, debt or f i l ed a mot i on f orr econsi der at i on of t he or der denyi ng debt or s Fi r st RecusalMot i on. The bankr upt cy cour t deni ed t he mot i on by order ent eredon Oct ober 29, 2010. Debt or appeal ed t hat deci si on onNovember 30, 2010 ( BAP No. 10- 1469) . The Panel ent ered an orderdi smi ss i ng t he appeal as unt i mel y on Febr uary 1, 2011.

8 Debt or has s i nce appeal ed our deci si on t o t he Ni nt hCi rcui t .

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Far i s di d not er r by i ssui ng hi s Memor andum Deci si on gr ant i ng

CI C s mot i on t o ter mi nat e the Lease pr i or t o t he hear i ng on

debt or s mot i on t o di squal i f y hi m. J udge Ki ng concl uded by

st at i ng t hat debt or s al l egat i ons of bi as agai nst J udge Far i sl acked f act ual and l egal suppor t . 6

The bankrupt cy cour t ent er ed t he or der denyi ng debtor s

Fi r st Recusal Mot i on on May 5, 2010. 7

Debt or appeal ed t he r ul i ng t o t hi s Panel . The Panel

summar i l y af f i r med J udge Ki ng s deci si on denyi ng debt or s Fi r st

Recusal Mot i on i n I n r e J i m Sl emons Haw. , I nc. , BAP No. 10- 1284,

f i l ed on Oct ober 12, 2011. 8

E. The May 24, 2010 Ambush Hearing

Meanwhi l e, Locr i cchi o, debt or , CI C and t he UST f i l ed

var i ous mot i ons.

On Febr uar y 4, 2010, Locr i cchi o f i l ed an appl i cat i on f or

i nt er i m f ees, r equest i ng $39, 647. 40 f or hi s ser vi ces ( Fee

Appl i cat i on) . On Febr uar y 25, 2010, t he UST obj ect ed on t hegr ounds t hat Locr i cchi o f ai l ed t o f ol l ow t he UST s gui del i nes

f or f ee appl i cat i ons or di scuss any of t he f act or s i n 330( a)


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9 On J anuar y 12, 2010, debt or f i l ed a not i ce t hat t he RentOf f set Mot i on woul d be hear d on Febr uary 16, 2010. Theref ore, byt he t i me debt or not i ced t he hear i ng, t he dat e f or assumi ng t heLease December 8, 2009 had passed. The hear i ng f or t he RentOf f set Mot i on was cont i nued f r omFebr uary 16 t o May 24, 2010.

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t o assi st t he cour t i n det er mi ni ng t he reasonabl eness of t he

f ees. CI C al so obj ect ed, ar gui ng t hat i t s post pet i t i on r ent had

admi ni st r at i ve pr i or i t y over debt or s counsel s f ees.

On Apr i l 5, 2010, debt or moved t o set asi de the Ter mi nat i onJ udgment under Rul e 9023 ( Set Asi de Mot i on) . Debt or s mot i on

essent i al l y rehashed t he same ar gument s i t made i n i t s Fi r st

Recusal Mot i on. I n ot her wor ds, t he bankrupt cy j udge s al l eged

bi as was debt or s sol e ar gument f or set t i ng asi de t he

Termi nat i on J udgment .

On Apr i l 7, 2010, CI C moved f or payment of admi ni st r at i ve

r ent f or t he per i od August 10, 2009 ( t he pet i t i on dat e) , t o

December 9, 2009 ( t he r ej ect i on dat e) ( Admi ni st r at i ve Rent

Mot i on) . Debt or di d not oppose t he mot i on.

On Apr i l 26, 2010, t he UST moved t o di smi ss debt or s case

under 1112( b) f or cause (Di smi ssal Mot i on) . The UST

asser t ed t hat debt or had no possi bi l i t y of a successf ul

r eor gani zat i on wi t hout t he Lease. Debt or r esponded by st at i ngt hat i t woul d not oppose t he mot i on.

These mot i ons, al ong wi t h debtor s Rent Of f set Mot i on

f i l ed on Oct ober 19, 2009, 9 were not i ced f or a hear i ng on May

24, 2010. On appeal , debt or r ef er s t o t hi s hear i ng as t he

ambush hear i ng.

On May 20, 2010, t he bankr upt cy cour t i ssued a t ent at i ve

deci si on r egar di ng t he var i ous mot i ons. The t ent at i ve st at ed


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t he cour t woul d gr ant t he UST s Di smi ssal Mot i on on t he gr ound

t hat debt or coul d not r eor gani ze wi t hout t he Lease, i t s pr i mar y

asset . I t f ur t her st at ed t hat t he cour t was i ncl i ned t o deny

al l ot her pendi ng mot i ons as moot due to i t s deci si on t o di smi sst he bankrupt cy case.

At t he May 24, 2010 hear i ng, t he bankr upt cy cour t gr ant ed

t he UST s Di smi ssal Mot i on. But t hen t he cour t al so deci ded

t hat i t needed t o rul e on debt or s Set Asi de Mot i on and f ound i t

unt i mel y. The cour t r equest ed t hat t he par t i es f ocus t hei r

argument s on whether t he r emai ni ng mot i ons ( t he Fee Appl i cat i on,

Rent Of f set Mot i on, and Admi ni st r at i ve Rent Mot i on) shoul d be

addr essed by t he bankrupt cy cour t or l i t i gat ed i n st at e cour t .

Debt or argued t hat t he r emai ni ng mot i ons shoul d be

l i t i gat ed i n st at e cour t . CI C ar gued t hat t he mat t er of

Locr i cchi o s Fee Appl i cat i on and i t s r equest f or admi ni st r at i ve

r ent under 365( d) ( 3) wer e wi t hi n t he bankrupt cy cour t s

excl usi ve j ur i sdi ct i on. The UST ar gued f or di smi ssal wi t h t her ent i ssue deci ded by t he st at e cour t . The cour t t ook t he

mat t ers under advi sement .

I n a May 27, 2010 Memorandum Deci si on, t he bankrupt cy court

deni ed debt or s Set Asi de Mot i on on t he gr ounds t hat i t was

unt i mel y and di d not meet t he st andards f or al t er i ng or amendi ng

a j udgment ; i . e. , t he debt or di d not demonst r ate a mani f est

er r or of l aw or f act or pr oduce any newl y di scover ed evi dence.

Ci t i ng Pavel i ch v. McCor mi ck, Bar st ow ( I n r e Pavel i ch) , 229 B. R.

777, 780- 81 ( 9t h Ci r . BAP 1999) , t he bankrupt cy cour t al so f ound

t hat i t had j ur i sdi ct i on post - di smi ssal over i t s own or der s and

t o di spose of anci l l ar y mat t er s t hat wer e ot her wi se not moot .


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- 12-

However , t he cour t st at ed t hat i t di d not vi ew i t s j ur i sdi ct i on

over t he amount of t he r ent due under t he Lease or compensat i on

due debt or s at t or ney as excl usi ve. Nonet hel ess, t he cour t

f ound i t woul d be unf ai r t o avoi d deci di ng t he pendi ng mot i onsbecause debt or was hol di ng $95, 000 cash t hat , wi t hout a rul i ng,

i t coul d f r eel y use af t er t he di smi ssal of i t s case t o t he

det r i ment of CI C. Accor di ngl y, t he cour t exer ci sed i t s

di scr et i on t o deci de t he r emai ni ng mot i ons.

Fi r st , t he cour t deni ed Locri cchi o s Fee Appl i cat i on i n i t s

ent i r et y. The bankrupt cy cour t f ound t hat Locr i cchi o s ser vi ces

wer e not benef i ci al t o t he est at e because he mi ssed t he deadl i ne

f or assumpt i on of t he Lease under 365( d) ( 4) and, as a r esul t ,

debt or l ost i t s most val uabl e asset . The bankrupt cy cour t al so

deni ed t he appl i cat i on on t he al t er nat i ve gr ound t hat i t l acked

i nf ormat i on r equi r ed by Rul e 2016 and, al t hough the UST had

poi nt ed out t he def i ci enci es, Locr i cchi o made no ef f or t t o

cor r ect t hem.Next , t he cour t deni ed debt or s Rent Of f set Mot i on whi ch

al l eged CI C s mi sconduct and i nt er f er ence wi t h i t s busi ness

r el at i onshi ps was gr ounds f or r el i evi ng debt or f r om t he

st at ut or y r equi r ement under 365( d) ( 3) of payi ng post pet i t i on

r ent f or t he mont hs of August and Sept ember . The cour t obser ved

t hat i n r esponse t o debt or s al l egat i on t hat CI C had wr ongf ul l y

col l ect ed r ent f r om Tony Honda, CI C had pr oduced a 1998 l et t er

agr eement t hat aut hor i zed t hose payment s. The cour t f ound t hat

debtor had never of f ered any r eason why t he agr eement mi ght be

i nval i d. Thus, t he cour t concl uded t hat t her e was no l egi t i mat e

di sput e that debt or owed t he f ul l amount of t he rent due under


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10 I n r esponse, debt or f i l ed an i nt er pl eader act i on i n t heHawai i Di st r i ct Cour t .

11 Debt or al so appeal ed our deci si on on t hose mat t ers t o theNi nt h Ci r cui t .

- 13-

t he Lease, mi nus any amounts whi ch t he subt enant s pai d to CI C.

Thi r d, t he cour t granted CI C s Admi ni st r at i ve Rent Mot i on.

The cour t not ed t hat debtor f i l ed no opposi t i on t o t hi s mot i on.

The cour t f ur t her f ound t hat debtor f ai l ed t o compl y wi t h i t sNovember 9 Or der , whi ch requi r ed debt or t o t i mel y pay al l

post pet i t i on r ent s unt i l f ur t her or der . Ther ef or e, t he cour t

di r ect ed debt or and i t s counsel t o r emi t al l of t he est at e s

cash t o CI C i n par t i al sat i sf act i on of CI C s admi ni st r at i ve

cl ai m and r eser ved j ur i sdi ct i on t o enf or ce t hi s r equi r ement . 10

The bankrupt cy cour t ent er ed t he or der denyi ng Locr i cchi o s

Fee Appl i cat i on on J une 29, 2010. The cour t ent er ed t he or der s

denyi ng debt or s Set Asi de Mot i on and Rent Of f set Mot i on on

J ul y 13, 2010, and t he cor r espondi ng j udgment s on J ul y 26, 2010.

The cour t ent er ed t he or der grant i ng CI C s Admi ni st r at i ve Rent

Mot i on on J ul y 13, 2010, and cor r espondi ng j udgment on J ul y 26,

2010. Fi nal l y, t he bankrupt cy cour t ent er ed t he or der gr ant i ng

t he UST s Di smi ssal Mot i on on J ul y 13, 2010.Debt or t i mel y appeal ed each of t he or ders, whi ch we

af f i r med i n I n r e J i m Sl emons Haw. , I nc. , BAP Nos. 10- 1403,

10- 1404, 10- 1405, f i l ed Oct ober 12, 2011. 11

F. Debtors Second Recusal Motion

On J une 20, 2011, debt or f i l ed i t s Second Recusal Mot i on,

t he subj ect of t hese cr oss- appeal s. The over al l t one of

debt or s mot i on showed t hat i t was unhappy about l osi ng t he


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12 Of cour se debt or over l ooks t he f act t hat i t never assumedt he Lease wi t hi n t he t i me l i mi t s under 365( d) ( 4) .

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Lease, whi ch, i n t ur n, caused i t t o al l egedl y l ose over one

mi l l i on dol l ar s due t o t he pendi ng condemnat i on act i on. Thi s

l oss, debt or suggest ed, occur r ed due to the mi sconduct of

Mr . Guben, CI C s at t or ney, and Cur t i s Chi ng, t he Assi st ant UST.That mi sconduct , debtor ar gued, was over l ooked by J udge Far i s

because Guben, Chi ng and J udge Far i s ar e al l par t of an Ol d

Boys Net wor k. Thus, accordi ng t o debt or , J udge Far i s showed

f avor i t i sm t owar ds Guben and Chi ng and t hi s caused t he J udge t o

t ake t he st eps t hat he di d.

I n i t s mot i on, debt or pl aced t he pr opr i et y of t he

November 9 Or der at i ssue. Debt or al l eged t hat Guben

i nt ent i onal l y al t er ed t he November 9 Or der t o i ncl ude August and

Sept ember r ent s even t hough t he bankr upt cy cour t had not ordered

t hose r ent s t o be pai d. Debt or ar gued t hat CI C di d not send

copi es of t he pr oposed secret or der t o debt or or t he UST s

of f i ce i n vi ol at i on of LBR 9072( d) ( 2) . Debt or t hen al l eged t hat

t he cour t i n cooper at i on wi t h or i n der el i ct i on of dut yappr oved t he f al se secur ed or der absent si gnat ur es as t o f or m of

t he or der . . . . I n t he end, debt or ar gued t hat t he f r audul ent

or der caused debt or t o def aul t under t he l ease whi ch vi r t ual l y

ended the bankrupt cy. 12

Af t er debt or f i l ed t he mot i on, J udge Ki ng di r ect ed CI C and

i t s counsel t o f i l e a r esponsi ve pl eadi ng t o debt or s mot i on by

an or der dat ed J une 23, 2011. CI C f i l ed i t s r esponse on J ul y 7,

2011. On J ul y 13, 2011, J udge Ki ng i ssued an Or der f or


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Suppl ement al Memorandum di r ect i ng CI C t o f i l e a suppl ement al

r esponse speci f i cal l y addr essi ng t he cont ent s and pr opr i et y of

t he [November 9 Or der ] and t he ci r cumst ances sur r oundi ng t he

submi ssi on t o t he cour t of t he pr oposed or der . . . . On J ul y 20, 2011, Chi ng f i l ed hi s decl ar at i on wi t h t he

bankrupt cy cour t . Chi ng decl ar ed t hat he at t ended t he

Oct ober 19, 2009 hear i ng on CI C s mot i on f or t he payment of

post pet i t i on r ent , t hat t he UST di d not t ake a posi t i on on t he

mot i on, and t hat on Oct ober 21, 2009, he r ecei ved an emai l f r om

CI C wi t h t he pr oposed f orm of t he November 9 Or der , whi ch was

al so sent t o debt or s counsel . Chi ng decl ar ed t hat he di d not

oppose t he pr oposed November 9 Or der .

On J ul y 21, 2011, CI C f i l ed i t s suppl ement al memorandum.

I n t hat pl eadi ng, CI C addr essed, among ot her t hi ngs, t he

pr ocedur es sur r oundi ng t he ent r y of t he November 9 Or der . CI C

di d not expl ai n why i t submi t t ed an or der t o t he bankrupt cy

cour t whi ch was appar ent l y i nconsi st ent wi t h J udge Far i s or alr ul i ng at t he Oct ober 19, 2009 hear i ng. On t he same day, CI C

f i l ed Guben s decl ar at i ons. At t ached t o one decl ar at i on wer e

emai l s f r om Guben s of f i ce t o t he UST and Locr i cchi o wi t h t he

pr oposed or der and t he l et t er t o J udge Far i s r egar di ng t he

ci r cul at i on of t he pr oposed or der t o Locr i cchi o and UST Di di on.

Guben s second decl ar at i on set f or t h t he chr onol ogi cal event s i n

t he bankr upt cy case, whi ch al so r ef erenced Guben s handl i ng and

ci r cul at i on of t he pr oposed November 9 Or der .

On J ul y 26, 2011, debt or r esponded. Debt or agai n al l eged

t hat Chi ng, al ong wi t h Guben and J udge Far i s, par t i ci pat ed i n

t he ent r y of t he f r audul ent November 9 Or der . Debt or r ai sed


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13 I ndeed, J udge Ki ng l at er st ates i n hi s Memor andumDeci si on t hat Locr i cchi o never f i l ed such a mot i on nor wer e we


- 16-

numer ous exampl es of al l eged i mpr opr i et y and bi as, i ncl udi ng:

( 1) Guben sent t he pr oposed November 9 Or der t o Chi ng, i nst ead

of Di di on, who was t he UST assi gned t o t he case; ( 2) J udge Far i s

appr oved t he f r audul ent order t hat was submi t t ed wi t hout anysi gnat ur e of appr oval of t he f or m of t he or der ; and ( 3) t her e

was no evi dence t hat Guben served t he proposed or der on

Locri cchi o. I n addi t i on, debt or pr ovi ded a l i st of t hi r t y

f act s t hat were al l egedl y admi t t ed by Guben and Chi ng t hat

demonst r at ed t hei r mi sconduct . These f act s wer e r ei t er at i ons of

t he t hr ee poi nt s out l i ned above.

The Hearing

On J ul y 28, 2011, t he bankrupt cy cour t hear d t he mat t er .

The t r anscr i pt shows t hat t he J udge Ki ng pat i ent l y l i st ened t o

Locr i cchi o s ar gument s r egar di ng Guben and Chi ng s al l eged

mi sconduct sur r oundi ng t he ent r y of t he November 9 Or der .

Near t he begi nni ng of t he hear i ng, Locr i cchi o st at ed on t he

r ecor d t hat he di d not get t he or der ( r ef er r i ng t o t heNovember 9 Or der ) . Hr g Tr . 7/ 28/ 11 5: 21- 22, 6: 1- 14, 20- 21.

Locr i cchi o al so ar gued at l engt h about Guben submi t t i ng t he

proposed November 9 Or der t o Chi ng, r at her t han Di di on who was

not , i n hi s opi ni on, a member of t he Ol d Boys Net wor k. I d. at

9: 14- 15. Locr i cchi o ar gued t hat Chi ng had no aut hor i t y t o

oppose t he or der . He had been speci f i cal l y excl uded. I d. at

21: 21- 24. At anot her poi nt , Locr i cchi o st at ed t hat he had f i l ed

a mot i on t o r emove Mr . Chi ng. 13 That pr obl em was sol ved on t he


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13( . . . cont i nued)abl e t o l ocat e one on t he docket .

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r ecor d by Ms. Di di on st at i ng t hat she was the at t or ney. I d. at

39: 4- 8.

J udge Ki ng, i n t urn, quest i oned Locr i cchi o about when he

l ear ned about t he di scr epancy i n the or der r egar di ng the Augustand Sept ember r ent s and whet her he ever moved f or an order f or

r econsi derat i on or appeal ed t he November 9 Or der . The

t r anscr i pt shows t hat Locr i cchi o never di r ect l y answer ed t he

J udge s quest i on about when he l earned about t he di scr epancy.

Fur t her , Locr i cchi o st at ed t hat he di d not f i l e a mot i on f or

r econsi der at i on because of J udge Far i s bi as st at i ng: Wi se

at t or ney pr act i ce says never f i l e a mot i on t o reconsi der when

you know t he j udge i s goi ng t o r ul e agai nst you. I d. at

15: 12- 13.

Fi nal l y, al t hough Locr i cchi o never f i l ed an appeal of t he

November 9 Or der , he al l udes at t he hear i ng t hat he had i n f act

done so. I d. at 11- 14, 30- 32, 43. Af t er a l engt hy di scussi on

about t hese t hi ngs, Locr i cchi o agai n st at ed t hat t he or der di dnot come t o me per i od. I d. at 28: 16- 17. However , he l at er

admi t t ed t hat he di d get t he or der af t er i t was ent er ed. I d. at

29: 13. At t hat poi nt , t he cour t advi sed Locr i cchi o t hat he

shoul d have done somet hi ng t o get t he or der corr ect ed. I d. at

29: 21- 25.

The hear i ng on t he Second Recusal Mot i on al so cover ed

numer ous ot her subj ect s r el at ed t o Locr i cchi o s conduct dur i ng

t he case. Locr i cchi o admi t t ed on t he r ecor d t hat he was


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r epr esent i ng bot h J i m Sl emons and J i m Sl emons Hawai i , I nc.

dur i ng t he bankrupt cy case, but t hat f act was never di scl osed t o

t he cour t . I d. at 17: 3- 14. I t al so came out t hat Mr . Sl emons

was maki ng unaut hor i zed l oans t o t he debt or . I d. at 18.Locr i cchi o sent a check f r om hi s cl i ent t r ust account t o pay

CI C s r ent , but CI C ul t i mat el y r et ur ned t hat money t o

Locr i cchi o. Locr i cchi o ar gued t hat t he money was Mr . Sl emons ,

not t he debt or s. Al t hough J udge Far i s or der ed Locr i cchi o t o

r et ur n t he f unds, Locr i cchi o f i l ed i nst ead an i nt er pl eader

act i on i n t he Hawai i Di st r i ct Cour t . I d. at 18, 53- 54.

Locr i cchi o al so accused J udge Far i s of bei ng bi ased when he

deni ed Locri cchi o s appl i cat i on f or f ees i n i t s ent i r et y.

Locr i cchi o cl ai med t hat he di d not act t o adopt t he l ease I

knew my cl i ent coul dn t pay so i t was r i di cul ous t hat J udge

Far i s deni ed Locr i cchi o s f ees on t he gr ound t hat hi s ser vi ces

wer e not benef i ci al t o t he est at e because he mi ssed t he deadl i ne

f or assumi ng t he l ease. I d. at 48. Locr i cchi o al so poi nt ed t oJ udge Far i s f ai l ure t o hol d a hear i ng on t he Rent Of f set Mot i on

as a f ur t her exampl e of hi s bi as. I d.

Guben t hen argued about t he pr ocedur es sur r oundi ng the

ent r y of t he November 9 Or der . He mai nt ai ned t hat i t was sent

by emai l t o Locr i cchi o and Chi ng f or t hei r comment s. He st at ed

t hat i t went t o Chi ng because Chi ng appear ed at t he Oct ober 19,

2009 hear i ng. Guben poi nt ed out t hat t he t r anscr i pt f r om t he

Oct ober 19, 2009 hear i ng, whi ch hi s f i r m or der ed, was l odged

wi t h t he cour t on Oct ober 22, 2009. I d. at 66. Guben

mai nt ai ned t hat he sent a l et t er on Oct ober 26, 2009, t o J udge

Far i s t hat at t ached t he pr oposed f or m of or der he was goi ng t o


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14 Locr i cchi o ar gued at t he hear i ng t hat t he r eput ed servi ceon hi m by ECF was f al se because he was not an ECF f i l er .However , Guben never asser t ed t hat Locr i cchi o was served by ECF;he sai d by emai l and/ or f acsi mi l e.

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l odge pur suant t o LBR 9021- 1( a) and ( b) . The l et t er and or der

went t o Di di on by emai l and t o Locr i cchi o, not onl y by emai l but

al so f acsi mi l e. 14

J udge Ki ng t hen quest i oned Guben on why t he November 9Or der was i nconsi st ent wi t h t he J udge Far i s ver bal r ul i ng. I d.

at 66. Guben st ated t hat he t hought t he order was consi st ent

wi t h t he j udge s r ul i ng. I d. at 67: 6- 8. Guben r ei t er at ed t hat

Chi ng, Locr i cchi o, Di di on and t he j udge al l had an oppor t uni t y

t o r evi ew t he t r anscr i pt and t he or der . I d. at 67: 16- 22.

Fi nal l y, Di di on ar gued t hat Chi ng s decl ar at i on was

submi t t ed t o the cour t so t hat t he cour t woul d know t hat t he

or der was emai l ed t o t he of f i ce of t he UST. I d. at 71: 6- 8. The

cour t t hen t ook t he mat t er under submi ss i on.

The August 3, 2011 Memorandum Decision

I n hi s August 3, 2011 Memorandum Deci si on, J udge Ki ng f ound

t hat debt or s Second Recusal Mot i on di d not meet t he st andard

f or di squal i f i cat i on under 28 U. S. C. 455 and appl i cabl e Ni nt hCi r cui t case l aw because debt or di d not come f orward wi t h any

ext r aj udi ci al sour ces evi denci ng bi as. J udge Ki ng al so

concl uded t hat debt or s ar gument s i n i t s paper s and at or al

argument had no mer i t . J udge Ki ng f ound t hat ( 1) t here was no

evi dence that t he November 9 Or der was ent ered f r audul ent l y, i n

secr ecy, or wi t h any bi as agai nst debt or ; ( 2) t her e was no

r equi r ement under t he appl i cabl e l ocal r ul e t hat t he or der


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cont ai n si gnat ur es of counsel f or t he debt or or t he UST; ( 3) t he

Oct ober 26, 2009 l et t er t r ansmi t t i ng t he pr oposed or der t o J udge

Far i s i ndi cat ed t hat copi es had been pr ovi ded t o counsel f or t he

debt or and counsel f or t he UST; ( 4) J udge Far i s wai t ed anaddi t i onal per i od of t i me t o see i f t her e wer e any obj ect i ons t o

t he pr oposed or der ; and ( 5) t her e wer e no obj ect i ons and t he

order was event ual l y ent ered on November 9, 2009.

J udge Ki ng al so not ed t hat CI C st at ed i n a swor n

decl ar at i on t hat i t compl i ed wi t h t he l ocal bankr upt cy r ul es i n

pr epar i ng and ci r cul at i ng a pr oposed or der . The UST al so

submi t t ed a swor n decl ar at i on by Chi ng st at i ng t hat i t r ecei ved

t he pr oposed order sent by counsel f or CI C and made no

obj ect i ons. The exhi bi t , a copy of t he emai l cor r espondence

sent by counsel f or CI C at t ached t o t he UST s decl ar at i on,

i dent i f i ed Locr i cchi o t o be a r eci pi ent of t he emai l

cor r espondence and pr oposed order . I n t he end, J udge Ki ng di d

not bel i eve Locr i cchi o had not r ecei ved t he f i l ed November 9Or der when t he BNC Cer t i f i cat e of Ser vi ce and t he Cl er k of t he

Cour t bot h i ndi cat ed t hat t he debt or and Locr i cchi o r ecei ved

not i ce of t he ent r y of t he November 9 Or der .

Tel l i ngl y, J udge Ki ng concl uded t hat Locr i cchi o provi ded no

r easonabl e excuse as t o why he wai t ed t o advi se t he cour t of t he

pr obl ems wi t h t he t ext of t he November 9 Or der unt i l 18 mont hs

af t er i t s ent r y. The best expl anat i on Locr i cchi o gave was t hat

i t woul d have been a wast e of t i me to seek t o have the or der

cor r ect ed, gi ven t he bi as of t he pr esi di ng j udge agai nst

debt or s counsel . The cour t f ound t hi s expl anat i on whol l y

unsat i sf act or y. I n shor t , J udge Ki ng f ound Locr i cchi o had i t


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i n hi s power t o have thi s mat t er pr ompt l y addr essed and

cor r ect ed, but he f ai l ed t o do so.

J udge Ki ng concl uded by f i ndi ng debtor s Second Mot i on t o

r ecuse J udge Far i s was wi t hout f act ual or l egal suppor t . Thecour t ent ered t he order denyi ng debt or s Second Recusal Mot i on

on August 3, 2011.

Debtors Motion to Reopen

On August 2, 2011, t he day bef or e t he cour t i ssued i t s

Memorandum Deci si on, debt or f i l ed an ex part e mot i on t o r eopen

t he mat t er . Debt or sought t hi s rel i ef on t he gr ounds that CI C

had or der ed a t r anscr i pt of t he J ul y 28, 2011 hear i ng, debt or s

counsel r ecei ved a cal l f r om a cl er k of t he cour t concer ni ng t he

dat e of a not i ce of appeal f i l ed by debt or , and unspeci f i ed new

mat t er s wer e al l eged t o have ar i sen. The cour t deni ed t he ex

par t e mot i on on the gr ounds t hat t her e was not hi ng ext r aor di nar y

about counsel or der i ng a t r anscr i pt , t he cal l f r om t he cl er k was

t o r emi nd debt or t o suppl y t he dat e of t he f i l i ng of hi s not i ceof appeal and t he new mat t ers were not st ated i n any detai l

and t hus coul d not be t he basi s f or r eopeni ng. On August 3,

2011, t he cour t ent er ed t he or der denyi ng debt or s mot i on t o

r eopen.

CICs Motion for Reconsideration

On August 3, 2011, CI C f i l ed a mot i on f or cl ar i f i cat i on or

r econsi derat i on of t he August 3, 2011 order and memorandum. CI C

r equest ed t hat t he cour t modi f y cer t ai n l anguage i n t he deci si on

per t ai ni ng t o i nconsi st enci es bet ween J udge Far i s or al r ul i ng

at t he Oct ober 19, 2009 hear i ng and the l anguage i n the

November 9 Or der . That i nconsi st ency had t o do wi t h whether


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15 Thi s l aw was submi t t ed t o J udge Ki ng f or t he f i r st t i mei n t he r econsi der at i on mot i on.

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or not t he August and Sept ember r ent s were t o be i ncl uded i n the

or der .

Accor di ng t o CI C, as a mat t er of l aw, 15 t here coul d be no

of f set of a pr epet i t i on cl ai m agai nst a post pet i t i on debt . CI Cal so ar gued t hat t he cour t coul d not del ay t he payment of t he

post pet i t i on r ent beyond Oct ober 11, 2009 under 365( d) ( 3)

excuse per i od. CI C mai nt ai ned t hat debt or never r equest ed t o

be excused f r om t i mel y payi ng t he post pet i t i on r ent . Ther ef or e,

CI C ar gued t hat J udge Far i s knew, as a mat t er of l aw, t hat

debt or was not el i gi bl e f or a 60- day excuse or del ay t o pay

t he post pet i t i on r ent f or t he mont hs of August and Sept ember

2009.

CI C al so ar gued t hat J udge Ki ng s i nt er pr et at i on of J udge

Far i s comment s at t he Oct ober 19, 2009 hear i ng was cont r ary t o

t he speci f i c l anguage of 365( d) ( 3) . CI C cont ended t hat t he

cour t s i nt er pr et at i on made i t seem l i ke J udge Far i s was gi vi ng

debt or an open- ended extensi on or del ay unt i l i t had t o paypost pet i t i on r ent under 365( d) ( 3) .

The August 18, 2011 Memorandum Decision

I n i t s August 18, 2011 Memorandum Deci si on, t he bankr upt cy

cour t deni ed CI C s mot i on f or r econsi der at i on f or sever al

r easons. Fi r st , because debt or s Second Recusal Mot i on al l eged

a di scr epancy between J udge Far i s st atement s at t he Oct ober 19,

2010 hear i ng and the November 9 Or der , J udge Ki ng made cl ear

t hat he assumed, but di d not deci de, t hat cer t ai n di scr epanci es


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16 Af t er t he br i ef s wer e submi t t ed, CI C submi t t ed addi t i onalaut hor i t i es t o t he Panel on Febr uary 6 and 14, 2013. Al t hough wehave r evi ewed t he addi t i onal aut hor i t i es, we do not f i nd t hemper t i nent t o t he i ssues on appeal .

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di d i n f act exi st . Second, J udge Ki ng not ed t hat CI C was gi ven

t hr ee oppor t uni t i es t o pr esent i t s si de of t he di screpancy

i ssue. J udge Ki ng concl uded t hat CI C had ampl e oppor t uni t y t o

pr esent t he ar gument s set f or t h i n i t s mot i on t o r econsi der , butdi d not . Fi nal l y, J udge Ki ng f ound t hat hear i ng CI C s mot i on t o

r econsi der woul d ser ve no pur pose because t he i ssue bef ore t he

cour t was whet her or not t o di squal i f y t he pr esi di ng bankrupt cy

j udge, not debtor s cl ai m of a di scr epancy bet ween t he j udge s

ver bal r ul i ng and t he wr i t t en or der pr epar ed by CI C s counsel .

J udge Ki ng st at ed t hat hi s r ul i ng on t he mot i on t o di squal i f y

woul d not change even i f he assumed no di scr epancy.

Accor di ngl y, J udge Ki ng deni ed the mot i on by or der ent er ed on

August 18, 2011.

G. The Appeals

Debt or t i mel y appeal ed the or der s denyi ng i t s Second

Recusal Mot i on and mot i on t o r eopen ( BAP No. 11- 1464) . CI C

t i mel y f i l ed i t s appeal of t he or der denyi ng CI C s mot i on f orr econsi der at i on ( BAP No. 11- 1468) and t i mel y f i l ed i t s cr oss

appeal of t he or der denyi ng Debt or s Second Recusal Mot i on ( BAP

No. 11- 1475) . 16

II. JURISDICTION

The bankrupt cy cour t had j ur i sdi ct i on over t hi s proceedi ng

under 28 U. S. C. 1334 and 157( b) . We have j ur i sdi ct i on under


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17 On Oct ober 13, 2011, t he BAP i ssued a Cl erk s Or der ReFi nal i t y, i ndi cat i ng t hat t he appeal s mi ght be i nt er l ocut or y andr equi r i ng a r esponse f r om t he par t i es. The Panel r ecei ved andconsi dered t he responses and i ssued an order on J anuary 6, 2012,f i ndi ng t he or der s on appeal wer e f i nal .

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28 U. S. C. 158. 17

III. ISSUES

A. Whet her t he bankr upt cy cour t er r ed i n denyi ng debt or s

Second Recusal Mot i on;B. Whet her t he bankr upt cy cour t er r ed i n denyi ng debt or s

mot i on t o reopen;

C. Whet her t he bankr upt cy cour t er r ed i n denyi ng CI C s

mot i on f or r econsi der at i on of t he Second Recusal Mot i on.

IV. STANDARDS OF REVIEW

We revi ew under an abuse of di scr et i on st andard a

bankrupt cy cour t s deci si on t o ( 1) deny a mot i on f or r ecusal of

a bankr upt cy j udge; ( 2) deny a mot i on t o reopen; and (3) deny a

mot i on f or r econsi der at i on under Rul e 9023. See Ber r y v. U. S.

Tr . ( I n r e Sust ai t a) , 438 B. R. 198, 208 ( 9t h Ci r . BAP 2010)

( mot i on f or r ecusal ) ; Zeni t h Radi o Cor p. v. Hazel t i ne Resear ch

I nc. , 401 U. S. 321, 331 ( 1971) ( mot i on t o r eopen) ;

Di ker v. Dye ( I n r e Edel man) , 237 B. R. 146, 150 ( 9t h Ci r . BAP1999) ( r econsi der at i on under Rul e 9023) .

A bankr upt cy cour t abuses i t s di scret i on i f i t appl i ed t he

wr ong l egal st andar d or i t s f i ndi ngs wer e i l l ogi cal ,

i mpl ausi bl e, or wi t hout suppor t i n t he r ecor d.

Tr af f i cSchool . com, I nc. v. Edr i ver I nc. , 653 F. 3d 820, 832 ( 9th

Ci r . 2011) .


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V. DISCUSSION

A. The Bankruptcy Court Did Not Abuse Its Discretion InDenying Debtors Second Recusal Motion (BAP No. 11-1464)

A bankr upt cy j udge shal l be governed by 28 U. S. C. 455,and di squal i f i ed f r om pr esi di ng over t he pr oceedi ng or cont est ed

mat t er i n whi ch t he di squal i f yi ng ci r cumst ance ar i ses, or , i f

appr opr i at e, shal l be di squal i f i ed f r om pr esi di ng over t he

case. Rul e 5004( a) . Sect i on 455 of Ti t l e 28 pr ovi des:

( a) Any j ust i ce, j udge, or magi st r at e of t he Uni t edSt at es shal l di squal i f y hi msel f i n any pr oceedi ng i nwhi ch hi s i mpar t i al i t y mi ght r easonabl y be quest i oned.

( b) He shal l al so di squal i f y hi msel f i n t he f ol l owi ngci r cumst ances:

( 1) Wher e he has a per sonal bi as or pr ej udi ceconcer ni ng a par t y, or per sonal knowl edge of di sput edevi dent i ar y f act s concer ni ng t he pr oceedi ng.

I n eval uat i ng r ecusal mot i ons, we st ar t f r om t he pr emi se

t hat [ j ] udi ci al i mpar t i al i t y i s pr esumed. Fi r st I nt er stat e

Bank of Ar i z. , N. A. v. Mur phy, Wei r & But l er , 210 F. 3d 983, 987( 9t h Ci r . 2000) ; see al so Li t eky v. U. S. , 510 U. S. 540, 554- 55

( 1994) .

Eval uat i ons of bi as or pr ej udi ce ar e j udged f r om an

obj ect i ve per spect i ve; whet her a reasonabl e per son wi t h

knowl edge of al l t he f act s woul d concl ude that t he j udge s

i mpar t i al i t y mi ght r easonabl y be quest i oned. Sei del v. Dur ki n

( I n r e Goodwi n) , 194 B. R. 214, 222 ( 9t h Ci r . BAP 1996) ; Li t eky,

510 U. S. at 548. The r easonabl eness t est i s l i mi t ed t o out war d

mani f est at i ons and r easonabl e i nf er ences dr awn t her ef r om. I n

appl yi ng t he t est , t he i ni t i al i nqui r y i s whet her a r easonabl e

f actual basi s exi st s f or cal l i ng t he j udge s i mpar t i al i t y i nt o


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quest i on. Uni t ed St at es v. Cool ey, 1 F. 3d 985, 993 ( 10t h Ci r .

1993) . However , f act ual al l egat i ons do not have t o be t aken as

t r ue, and [ t ] her e i s as much obl i gat i on f or a j udge not t o

r ecuse when t her e i s no occasi on . . . t o do so as t her e i s. . . t o [ r ecuse] when t her e i s. A j udge shoul d not r ecuse

. . . on unsuppor t ed, i r r at i onal , or hi ghl y tenuous

specul at i on. Lopez v. Behl es ( I n r e Am. Ready Mi x, I nc. ) ,

14 F. 3d 1497, 1501 ( 10t h Ci r . 1994) .

Gener al l y, al l egat i ons of bi as or pr ej udi ce must st em f r om

some ext r aj udi ci al sour ce. Li t eky, 510 U. S. at 550- 55. I f

t her e i s no evi dence of ext r aj udi ci al sour ces of bi as or

pr ej udi ce, t hen a char ge of i mpar t i al i t y has t o be suppor t ed on

evi dence t hat t he j udge exhi bi t ed such a hi gh degr ee of

f avor i t i sm or ant agoni sm t o make f ai r j udgment i mpossi bl e. I d.

at 554- 55.

Debt or al l eged t hat J udge Far i s had a r el at i onshi p wi t h

Guben and Chi ng because t hey were al l part of what debt or r ef erst o as an Ol d Boys Network. What t hat exact l y means i s not

r eadi l y appar ent f r om t he r ecor d. I nst ead, what i s appar ent i s

t hat debt or s vague accusat i ons about t he r el at i onshi p and

r esul t i ng bi as have no f act ual suppor t i n t hi s recor d. Fur t her ,

even i f such a r el at i onshi p exi st ed, evi dence of whi ch i s not i n

t he r ecor d, i t does not f ol l ow t hat t he r el at i onshi p was

suf f i ci ent t o demonst r at e per sonal bi as or an i nabi l i t y t o be

i mpar t i al . Soci al acquai nt ances, f r i endshi ps or associ at i onal

r el at i onshi ps ar e r ar el y gr ounds f or r ecusal . See Sexson v.

Ser vaas, 830 F. Supp. 475, 482 ( S. D. I nd. 1993) ( j udge s soci al or

associ at i onal r el at i onshi p was not gr ounds f or r ecusal ) ; Cl ay v.


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Doher t y, 608 F. Supp. 295 ( N. D. I l l . 1985) ( j udge s acquai nt ance

wi t h key wi t ness i n ci vi l r i ght s case di d not j ust i f y r ecusal ) ;

M. K. Met al s, I nc. v. Nat l St eel Cor p. , 593 F. Supp. 991, 99495

( N. D. I l l . 1984) ( j udge s f r i endshi p wi t h t he pr i nci pal of at hi nk- t ank t hat was pr ovi di ng an exper t wi t ness t o t he

def endant di d not j ust i f y r ecusal ) ; Uni t ed St at es v. Conf or t e,

457 F. Supp. 641 ( D. Nev. 1978) , af f d, 624 F. 2d 869, cer t .

deni ed, 449 U. S. 1012 ( 1980) ( r ecusal not r equi r ed i n cr i mi nal

case i n whi ch def endant had dozens of soci al encount er s wi t h

j udge at br i dge t our nament s, despi t e t he f act t hat t he j udge had

publ i cl y expr essed a negat i ve i mpr essi on of t he def endant ) .

Debt or woul d l i ke us t o i nf er f r om t he al l eged Ol d Boys

Net wor k r el at i onshi p t hat J udge Far i s showed f avor i t i sm t owar ds

Guben and Chi ng and bi as agai nst debtor when he entered t he

November 9 Or der . The f act ual r ecor d does not r easonabl y

suppor t such an i nf er ence. I ndeed, t he r ecor d shows that t her e

was not hi ng si ni st er goi ng on when J udge Far i s ent er ed t heorder . Rather , t he f act s show t hat t he November 9 Or der was

pr oper l y ser ved on debt or and Locr i cchi o pr i or t o and af t er i t s

ent r y. Al t hough Locr i cchi o mai nt ai ned t hat he never r ecei ved

t he pr oposed or der , J udge Ki ng di d not bel i eve hi m when t he

emai l s i n evi dence and Guben s decl arat i on showed otherwi se.

Fur t her mor e, t he BNC Cer t i f i cat e of Ser vi ce cl ear l y showed t hat

Locr i cchi o r ecei ved t he or der af t er i t was ent er ed. The

t r anscr i pt of t he Oct ober 19, 2009 hear i ng was r eadi l y avai l abl e

f or al l par t i es t o r evi ew pr i or t o t he ent r y of t he or der , but

at no t i me di d Locr i cchi o r evi ew t he t r anscr i pt . Locr i cchi o


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18 Locr i cchi o cont i nues t o asser t on appeal t hat he i ndeedf i l ed an appeal t o set asi de t he November 9 Or der . Hi s asser t i oni s i ncor r ect . Thi s f al se asser t i on i s t r oubl i ng.

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al so di d not appeal t he November 9 Or der 18 nor coul d he t el l

J udge Ki ng exact l y when he l earned about t he so- cal l ed

di scr epancy i n t he or der . We do not t hi nk a r easonabl e per son,

possessi ng knowl edge of t hese f act s, coul d pl ausi bl y quest i onJ udge Far i s i mpar t i al i t y i n ent er i ng t he November 9 Or der . I n

r eal i t y, debt or s Second Recusal Mot i on appear s t o have been

f uel ed by i t s at t empt t o col l at er al l y at t ack t he November 9

Or der whi ch was not appeal ed. I n any event , di ssat i sf act i on

wi t h a rul i ng may pr esent ampl e gr ounds f or appeal , but i t

r ar el y - i f ever - pr esent s a basi s f or r ecusal . Li t eky,

510 U. S. at 555.

On t hi s r ecor d, we al so cannot concl ude t hat J udge Far i s

handl i ng of t he May 24, 2010 hear i ng t he so- cal l ed ambush

hear i ng shows any out war d mani f est at i on of af f i r mat i ve bi as

agai nst debt or . Debt or compl ai ns about J udge Far i s f ai l ur e t o

r ul e on i t s Rent Of f set Mot i on, but J udge Far i s deni ed t he

mot i on i n hi s May 27, 2010 Memorandum Deci si on. J udge Far i s di dnot r ul e on t he mot i on any sooner because debt or f ai l ed t o

not i ce a hear i ng on t he mat t er .

Debt or next compl ai ns t hat J udge Far i s depar t ed f r om hi s

t ent at i ve r ul i ng because of hi s bi as agai nst debt or . But J udge

Far i s t ent at i ve deci si on was j ust t hat t ent at i ve. Of cour se,

J udge Far i s coul d depar t f r om t hat r ul i ng af t er hear i ng or al

ar gument f r om t he par t i es. Debt or conveni ent l y i gnor es t he

basi s f or J udge Far i s r ul i ngs on mat t er s t hat t he j udge


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19 As previ ousl y ment i oned, debt or has appeal ed t hesedeci si ons t o t he Ni nt h Ci r cui t . Fur t her , besi des r equest i ngr ecusal of J udge Far i s, i t i s uncl ear what r emedy debt or seeksf or t he al l eged bi as when i t s case has been di smi ssed. Fr om what


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pr evi ousl y t hought may be moot ed by t he di smi ssal of debt or s

case. A huge i ssue was t he f act t hat $95, 000 r emai ned i n t he

DI P bank account . How di d i t get t her e? The r ecor d r ef l ect s

t hat money came out of Locr i cchi o s cl i ent t r ust account t o payCI C s post pet i t i on r ent and CI C r et ur ned t hat money t o debt or .

Locr i cchi o t hen cl ai med t he money was J i m Sl emons. The r ecor d

shows t hat Locr i cchi o never obt ai ned cour t aut hor i zat i on f or J i m

Sl emons t o l oan debt or money t o pay t he r ent s. Based on t hese

f act s, J udge Far i s per haps was concer ned, r i ght l y so, t hat once

debt or s bankrupt cy case was di smi ssed, debt or coul d use t he

money f or pur poses ot her t han t he payment of CI C s

admi ni st r at i ve r ent , whi ch was order ed t o be pai d i n t he

November 9 Or der .

I n shor t , J udge Far i s handl i ng of t he hear i ng does not

i ndi cat e t hat he had any bi as or prej udi ce agai nst debt or . A

r easonabl e person wi t h knowl edge of t hese f act s coul d not

concl ude t hat J udge Far i s exhi bi t ed such a hi gh degr ee of . . .ant agoni sm [ t owards debt or ] as t o make f ai r j udgment

i mpossi bl e. Li t eky, 510 U. S. at 555. Fi nal l y, t o t he ext ent

J udge Far i s r ul i ngs on t he var i ous or der s ar e adver se r ul i ngs

agai nst debt or , such r ul i ngs ar e not gr ounds f or

di squal i f i cat i on, but gr ounds f or appeal . I d. Debt or i n f act

appeal ed each of t he or ders t hat st emmed f r om t he May 24, 2010

hear i ng and we af f i r med J udge Far i s r ul i ngs on appeal . 19


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19( . . . cont i nued)we can t el l , t he onl y r emai ni ng aspect of t he case i s t hedi st r i but i on of t he $95, 000 whi ch was l ef t i n t he DI P bankaccount .

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As debt or has ar gued, i t i s best t o l ook at t he

pr oceedi ngs i n t hi s case i n t hei r ent i r et y. Looki ng at t he

r ecor d as a whol e, debt or s gr ounds f or r ecusal of J udge Far i s

her e ar e no mor e per suasi ve t han i n i t s f i r st mot i on. Debt ori mpl i es t hat j ust about ever yone i nvol ved i n t hi s case, wi t h t he

except i on of Di di on, i s par t of t he Ol d Boys Net wor k. At one

poi nt , debt or quest i ons whet her J udge Ki ng coul d be i mpar t i al .

But none of what debtor compl ai ns about woul d have caused a

r easonabl e per son t o quest i on t he i mpar t i al i t y of any j udge who

handl ed any par t of t hi s case. As st at ed bef or e, t he f act t hat

a cour t r ul es agai nst a par t y cannot , i n and of i t sel f , be

gr ounds f or r ecusal . Thi s poi nt needs no f ur t her el abor at i on.

I n sum, J udge Ki ng pr oper l y i dent i f i ed t he cor r ect l egal

r ul es t o appl y t o t he r ecusal mot i on. On t hi s r ecor d, we cannot

say t hat hi s f actual f i ndi ngs wer e i l l ogi cal , i mpl ausi bl e or

wi t hout suppor t i n i nf er ences t hat may be dr awn f r om t he f act s

i n t he r ecor d. Accor di ngl y, J udge Ki ng di d not abuse hi sdi scr et i on i n denyi ng debt or s Second Recusal Mot i on.

B. The Bankruptcy Court Did Not Abuse Its Discretion inDenying Debtors Motion to Reopen (BAP No. 11-1464)

We have l ooked at t he ent i r e recor d i n t hi s mat t er and t he

def ect s i n debt or s mot i on t o r eopen ar e si mi l ar t o t he def ect s

i n i t s Second Recusal Mot i on. Ther e was si mpl y no basi s f or

debt or s mot i on.


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Fact or s f or a t r i al cour t t o consi der when deci di ng t o

r eopen a case are:

( 1) t he i mpor t ance and pr obat i ve val ue of t he evi denceor ar gument s sought t o be i nt r oduced, i . e. , whet her i t

i s cumul at i ve or mi ght af f ect t he out come of t he caseby, f or exampl e, of f er i ng a new t heor y of l i abi l i t y orpr esent a si gni f i cant al t er at i on of t he evi dencepr esent ed at t r i al [ , ] ( 2) t he movi ng par t y sdi l i gence and expl anat i on f or f ai l i ng t o pr evi ousl yi nt r oduce t he evi dence or argument s, ( 3) t he unduepr ej udi ce that t he del ay mi ght cause t he non- movi ngpart y, and ( 4) whether t he cour t has al r eady announcedi t s deci s i on.

I n r e W. Shor e Assocs. , I nc. , 435 B. R. 723, 725 ( Bankr . M. D.

Fl a. 2010) . The Ni nt h Ci r cui t has st at ed t hat r eopeni ng a case

f or t he pur pose of i nt r oduci ng over l ooked evi dence must be done

wi t h ext r eme rel uct ance because of t he undue emphasi s gi ven t o

t he i nt r oduced evi dence wi t h consequent di st or t i on of t he

evi dence as a whol e and t he possi bi l i t y t hat such pr ej udi ce wi l l

r esul t t o t he ot her par t y as t o r equi r e a mi st r i al . Eason v.

Uni t ed St at es, 281 F. 2d 818, 822 ( 9t h Ci r . 1960) .

Debt or s mot i on di d not meet any of t he st andards f or amot i on t o r eopen. I t s mot i on si mpl y asser t ed vague and

ambi guous ar gument s r egardi ng new mat t ers and of f ered no

di scussi on as t o what t hese mat t ers were or how t hey woul d

af f ect t he out come of t he case. Fur t her , as f ound by t he

bankrupt cy cour t , t he or der i ng of a t r anscr i pt or t he phone cal l

by the cour t s cl er k had not hi ng t o do wi t h t he under l yi ng

mer i t s of t he Second Recusal Mot i on. Fi nal l y, debt or made no

showi ng t o excuse the unt i mel i ness of t he pr oposed i nt r oduct i on

of new evi dence. For t hese r easons, we concl ude t hat J udge

Ki ng s deni al of t he mot i on t o reopen was not an abuse of

di scr et i on.


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C. The Bankruptcy Court Did Not Abuse Its Discretion inDenying CICs Motion for Reconsideration (BAP No. 11-1468)

CI C cont ends t hat J udge Ki ng s f i ndi ngs r egar di ng t he

di scr epancy bet ween J udge Far i s r ul i ng at t he Oct ober 19, 2010hear i ng and t he November 9 Or der are i ncor r ect as a mat t er of

l aw. We do not deci de i n t hi s appeal whether or not t he

f i ndi ngs regar di ng t he or der wer e r i ght or wr ong. I n hi s

Memorandum Deci si on, J udge Ki ng made cl ear t hat he di d not

deci de there was i n f act a di scr epancy, but he si mpl y assumed

t he di scr epancy exi st ed because debt or s Second Recusal Mot i on

di r ect l y r ai sed t he i ssue. Mor eover , as poi nt ed out by J udge

Ki ng, t he i ssue bef or e hi m was whet her t he f act s sur r oundi ng t he

ent r y of t he November 9 Or der demonst r ated t hat J udge Far i s was

bi ased agai nst debt or . J udge Ki ng f ound t hose f act s di d not

demonst r at e bi as. Ther ef or e, accor di ng t o J udge Ki ng,

r egar dl ess of t he al l eged di scr epancy, J udge Ki ng s deci si on

r egar di ng t he al l eged bi as woul d not change. On t hi s basi s,t her e was r eal l y no r eason f or J udge Ki ng t o r econsi der hi s

f i ndi ngs.

I n addi t i on, CI C had ampl e opport uni t y t o make a r ecor d of

i t s l egal ar gument s t o i t s l i ki ng on t he i ssue, but di d not do

so unt i l af t er t he f act . Ther e wer e al so no gr ounds f or

r econsi der at i on CI C di d not pr esent newl y di scover ed evi dence,

demonst r at e cl ear er r or , or show an i nt er veni ng change i n

cont r ol l i ng l aw. See Font enot v. Mesa Pet r ol eum Co. , 791 F. 2d

1207, 1219 (5t h Ci r . 1986) ( a mot i on t o amend under Rul e 52( b)

i s i nt ended t o cor r ect mani f est er r or s of l aw or f act or , i n

some l i mi t ed si t uat i ons, t o pr esent newl y di scover ed


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evi dence. ) ; 389 Or ange St . Par t ner s v. Ar nol d, 179 F. 3d 656,

665 ( 9t h Ci r . 1999) ( set t i ng f or t h gr ounds f or r econsi der at i on

under Ci vi l Rul e 59( e) ) ; see al so Rul es 7052 and 9023 ( appl yi ng

Ci vi l Rul e 52 and 59 t o bankrupt cy pr oceedi ngs) . Under t heseci r cumst ances, we concl ude t hat t he bankr upt cy cour t di d not

abuse i t s di scr et i on by denyi ng CI C s mot i on f or

r econsi der at i on.

D. CICs Cross Appeal of Recusal Order #2 (BAP No. 11-1475)

Si mi l ar t o i t s mot i on f or r econsi der at i on, CI C f i l ed i t s

cr oss appeal of Recusal Or der #2 seeki ng t o amend J udge Ki ng s

f i ndi ngs. As st at ed, J udge Ki ng made cl ear i n hi s Memor andum

Deci si on t hat he di d not deci de t he i ssue r egar di ng t he al l eged

di scr epancy i n t he November 9 Or der . Theref ore, because t he

al l eged di scr epancy was not one of t he i ssues adj udi cat ed, CI C

di d not suf f er an adver se i mpact f r om ent r y of Recusal Or der #2.

See Cobb v. Ayt ch, 539 F. 2d 297, 300 ( 3d Ci r . 1976) ( appel l ant s

suf f er ed no adver se i mpact f r om t he decr ee and l acked st andi ng) .Mor eover , J udge Ki ng st at ed t hat i f a di scr epancy occur r ed,

t hat f act was i mmat er i al t o hi s deci si on r egar di ng r ecusal . The

Supreme Cour t has hel d: A par t y may not appeal f r om a j udgment

or decr ee i n hi s f avor , f or t he pur pose of obt ai ni ng a r evi ew of

f i ndi ngs he deems err oneous whi ch ar e not necessary t o support

t he decr ee. El ec. Fi t t i ngs Cor p. v. Thomas & Bet t s Co. ,

307 U. S. 241, 242 ( 1939) ; see al so N. Y. Tel ephone Co. v.

Mal t bi e, et al . , 291 U. S. 645 ( 1934) ( appel l ant not ent i t l ed t o

an appeal f r om a decr ee f or t he pur pose of r evi ewi ng por t i ons of

t he decr ee t hat ar e not r es j udi cat a) . For t hese r easons,

because we l ack j ur i sdi ct i on over CI C s cr oss appeal of Recusal


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Or der #2, t he cr oss appeal i s di smi ssed.

VI. CONCLUSION

Havi ng det er mi ned t hat t her e i s no basi s f or r ever sal of

any of J udge Ki ng s deci si ons, we AFFI RM each of t he or der s onappeal .

in re: jim slemons hawaii, inc., 9th cir. bap (2013)

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