United States District Court, D. Idaho
In re: Allen L. Wisdom, Debtor.
JEREMY J. GUGIONO, UNITED STATES TRUSTEE, BOISE Appellees. ALLEN L. WISDOM, Appellant, Adv. No. 13-06045-TLM Bk. No. 11-01135-JDP
MEMORANDUM DECISION AND ORDER
EDWARD J. LODGE, District Judge.
Pending before the Court in the above-entitled matter is Debtor-Appellant Allen L. Wisdom's appeal from the decision of Chief Bankruptcy Judge Terry L. Myers denying his Motion to Recuse and Motion for Order to Turnover Estate Funds. The parties have submitted their responsive briefing and the matter is now ripe for the Court's review. Having fully reviewed the record herein, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the court conclusively finds that the decisional process would not be significantly aided by oral argument, this matter shall be decided on the record before this court without oral argument.
1. The Underlying Bankruptcy Case
In April of 2011, Appellant Allen L. Wisdom filed a Chapter 7 bankruptcy petition, BK Case No. 11-01135-JDP. Included in the list of claimed exemptions were certain life insurance policies. The Appellee, the Acting United States Trustee appointed to this case, Jeremy Gugino (the "Trustee"), objected to the claimed exemptions in the life insurance policies. United States Bankruptcy Court Judge Jim D. Pappas sustained the Trustee's objection and ordered that the claimed exemptions in the life insurance policies would be disallowed. The Trustee then liquidated the policies and filed his Final Report in Mr. Wisdom's Chapter 7 bankruptcy proceeding. Mr. Wisdom objected to the Final Report arguing the Trustee fraudulently and unlawfully liquidated the life insurance policies. Judge Pappas issued a decision overruling Mr. Wisdom's objections and approving the Trustee's Final Report. Mr. Wisdom appealed that decision to the United States District Court in a case that was assigned to Chief United States District Judge Lynn B. Winmill, DC Case No. 1:12-cv-00530-BLW.
Judge Winmill issued a ruling affirming Judge Pappas' decision upholding the Trustee's Final Report. (Dkt. 13, DC Case No. 1:12-cv-00530-BLW.) Mr. Wisdom appealed Judge Winmill's ruling to the Ninth Circuit, Case No. 13-35409. That appeal is still pending before the Ninth Circuit.
2. The Adversary Proceeding
In December of 2013 Mr. Wisdom filed an adversary proceeding in the Bankruptcy Court asserting claims against the Trustee and the bonding company arguing they improperly liquidated the insurance policies in the underlying bankruptcy proceeding and that the Trustee committed fraud and violated the fiduciary duty he owed to Mr. Wisdom. Because he had presided over the underlying bankruptcy case, Judge Pappas recused himself from the adversary proceeding. The adversary case was then reassigned to Chief Bankruptcy Judge Terry L. Myers, Adv. Case No. 13-06045-TLM.
In April of 2014, Mr. Wisdom filed a Motion to Recuse Judge Myers because the Trustee assigned to the underlying bankruptcy matter had served as Judge Myers' law clerk several years prior. Judge Myers denied the Motion to Recuse. (Dkt. 59, Adv. Case No. 13-06045-TLM.) Mr. Wisdom then filed a Motion for Leave to File an Interlocutory Appeal of Judge Myers' decision which Judge Winmill denied. (Dkt. 8, DC Case No. 1:14-00279-BLW.) Mr. Wisdom appealed Judge Winmill's denial of his Motion to Appeal to the Ninth Circuit, Case No. 15-35013. On April 20, 2015, the Ninth Circuit issued its mandate effectuating its March 26, 2015 Order affirming Judge Winmill's decision. The Mandate states it is made "without prejudice to appellant challenging the bankruptcy judge's denial of the motion to recuse after the bankruptcy court enters a final order." (Dkt. 14, DC Case No. 1:14-cv-00279-BLW.) Thus, Mr. Wisdom was denied only the request to pursue an interlocutory challenge of Judge Myers' order denying the Motion to Recuse at this time. Mr. Wisdom may still challenge that order on a direct appeal. See Stewart Enterprises, Inc. v. Horton (In re Horton), 621 F.2d 968, 970 (9th Cir. 1980) ("The decision of a bankruptcy judge not to disqualify himself, however, cannot be appealed until a direct appeal is taken from a final decision adverse to the moving party.").
3. The Turnover Motion
In June of 2014, Mr. Wisdom filed a Motion for Order to Turnover Estate Funds ("Turnover Motion") in the underlying bankruptcy case, BK Case No. 11-01135-JDP, which again challenged the Trustee's liquidation of the life insurance policies. Since Judge Pappas had recused himself, the Turnover Motion was assigned to Judge Myers. Mr. Wisdom then filed a second motion requesting that Judge Myers recuse himself. On September 26, 2014, Judge Myers issued a decision denying both the second Motion to Recuse and the Turnover Motion. (Dkt. 217, BK Case No. 11-01135-JDP.) Mr. Wisdom has appealed that decision to this Court which is the subject of this Order.
STANDARD OF REVIEW
Factual findings of the Bankruptcy Court are reviewed by this court by applying a "clearly erroneous" standard. Fed.R.Bankr.P. 8013. Legal conclusions of the Bankruptcy Court are subject to a de novo review by this Court. See Fed.R.Bankr.P. 8013. As a general rule, the Court will not consider an issue raised for ...