United States District Court, D. Idaho
In re ALLEN L. WISDOM, Debtor.
JEREMY J. GUGINO and LIBERTY MUTUAL INSURANCE COMPANY, et al., Appellees. ALLEN L. WISDOM, Appellant, Bk. No. 1:11-01135-JDP Adv. No. 13-06045-TLM
MEMORANDUM DECISION AND ORDER
J. Lodge United States District Judge
before the Court in the above-entitled matter is
Appellant's appeal of Chief Bankruptcy Judge Terry L.
Myers' decision denying his Motions to Recuse and
Application for Default Judgment and granting the
Appellees' Motion for Summary Judgment. The matter is
ripe for the Court's review. Having fully reviewed the
record, 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 is decided on the record before this Court
without oral argument.
The Underlying Bankruptcy Case
April 19, 2011, Debtor-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 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 be disallowed. The Trustee then liquidated the
policies and filed the Trustee's Final Report
(“TFR”) in the Chapter 7 bankruptcy proceeding.
Mr. Wisdom objected to the Final Report arguing the Trustee
fraudulently and unlawfully liquidated the life insurance
policies, breached his fiduciary duties, and engaged in
misrepresentations and criminal misconduct. Judge Pappas
overruled those objections and approved the TFR. (Dkt. 156,
BK Case No. 11-01135-JDP.) Mr. Wisdom appealed that decision
to the United States District Court and the Ninth Circuit,
both of whom affirmed the lower courts' rulings and, in
doing so, found Mr. Wisdom's claims lacked merit. (Dkt.
13, DC Case No. 1:12-cv-00530-BLW); (9th Cir. Case No.
The Adversary Proceeding
December 3, 2013, Mr. Wisdom filed an adversary proceeding in
the Bankruptcy Court against the Trustee, his bankruptcy
attorneys, and New York Life Insurance Company (“N.Y.
Life”). (Adv. Case No. 13-06045-TLM.) Mr. Wisdom raised
claims of breach of contract, breach of fiduciary duty,
negligence, tortious interference with contract, constructive
fraud, legal malpractice, intentional and negligent
infliction of emotional distress, slander per se,
and civil conspiracy. The claims allege the Trustee
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. The adversary case was ultimately assigned to
Chief Bankruptcy Judge Terry L. Myers.
April of 2014, Mr. Wisdom filed a Motion to Recuse Judge
Myers arguing the Trustee assigned to the underlying
bankruptcy matter had been 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.) The Ninth Circuit affirmed. (Dkt.
14, 9th Cir. Case No. 15-35013.)
The Turnover Motion and Motions to Recuse in the Bankruptcy
of 2014, Mr. Wisdom filed a Motion for Order to Turnover
Estate Funds (“Turnover Motion”) in the
underlying bankruptcy case which again challenged the
Trustee's liquidation of the life insurance policies.
(Dkt. 199, BK Case No. 11-01135-JDP.) Since Judge Pappas had
recused himself, the Turnover Motion was assigned to Judge
Myers. Mr. Wisdom then filed a second Motion to Recuse Judge
Myers based upon the same arguments as his first motion.
(Dkt. 214, BK Case No. 11-01135-JDP.) 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 appealed that ruling to this Court
which affirmed the Bankruptcy Court's decision. (D.C.
Case No. 14-00497-EJL.)
Wisdom filed another Motion to Recuse Judge Myers in the
bankruptcy case on August 17, 2016. (Dkt. 251, BK Case No.
11-01135-JDP.) The Bankruptcy Court again denied the motion.
(Dkt. 253, BK Case No. 11-01135-JDP.)
The Motion for Summary Judgement in the Adversary
amending his complaint in the adversary case, Mr. Wisdom
filed an Application for Default Judgment. (Dkt. 89, Adv.
Case No. 13-06045-TLM.) Judge Myers orally denied the
Application for Default Judgment on January 26, 2015. (Dkt.
105, Adv. Case No. 13-06045-TLM.) Thereafter, on March 15,
2016, Judge Myers granted the Trustee's Motion for
Summary Judgement as to all of the claims in the First
Amended Complaint. (Dkt. 160, Adv. Case No. 13-06045-TLM.)
appeal, Mr. Wisdom challenges the Bankruptcy Court's
rulings 1) denying his Motions to Recuse, 2) denying his
Application for Default Judgment, and 3) granting the
Appellees' Motion for Summary Judgment. (Dkt. 1.)
general, this Court applies the “clearly
erroneous” standard of review to the Bankruptcy
Court's factual findings and its legal conclusions are
subject to de novo review. See Fed. R.
Bankr. P. 8013. The Court does not consider an issue raised
for the first time on appeal. United States v.
Robinson, 20 F.3d 1030 (9th Cir. 1994).
Bankruptcy Court's rulings on the Motions to Recuse and
Application for Default Judgement are reviewed for abuse of
discretion. In re Goodwin, 194 B.R. 214, 220 (9th
Cir. 1996); In re Beltran, 182 B.R. 820, 823 (9th
Cir. BAP 1995). “A bankruptcy court abuses its
discretion if it applies law incorrectly or if it rests its
decision on a clearly erroneous finding of material
fact.” In re Brothby, 303 B.R. 177, 184 (9th
Cir. BAP 2003) (citation omitted). The ruling on the Motion
for Summary Judgment is reviewed de novo.
Carpenter v. Universal Star Shipping, S.A., 924 F.2d
1539, 1542 (9th Cir. 1991).
Preliminary Issue: Recusal of This Court
Wisdom has again raised a preliminary issue in his opening
brief arguing this Court should recuse itself in this matter
because it has a conflict based on its “stake in the
outcome of the appeal, ” the Trustee being a former
co-employee of the Court, and the facts surrounding the
Trustee's appointment. (Dkt. 9 at 3-7.) Appellees assert
this argument is not properly before the Court as it was not
raised in the ...