Menu    2 ABR 373 
HERBERT A. ROSS
U.S. Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA
605 West 4th Avenue, Room 138, Anchorage, AK 99501-2296 (Phone 907/271-2655)


In re Case No. A91-00269-HAR
Chapter 7
J.R. MARINE, INC., f/k/a J.R.
Repair Services, Inc.,

MEMORANDUM RE JIM ROBINSON'S
MOTION FOR RECUSAL
Debtor(s)      


Table of ContentsPage
1.PROCEEDINGS1
2.GROUNDS CITED FOR RECUSAL2
3.DISCUSSION3
3.1.Standards Regarding 28 USC §§ 144, 4553
3.2.Statements on April 22, 19916
3.3.Conversion of Cases to Chapter 78
3.4.Withdrawal of Attorney10
3.5.February 14, 1992 Hearing11
3.6.Other Proceedings12


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  Contents        1. PROCEEDINGS - Jim L. Robinson filed a motion or affidavit of prejudice in the J. R. Marine, Inc. case (Docket No. 173 filed on TOP    2 ABR 374  March 2, 1992), Case No. A91-00296-HAR, and the Jim L. Robinson and Charlotte A. Robinson case, A91-00280-HAR, for the recusal of myself, Bankruptcy Judge Herbert A. Ross.

The motion was filed in the form of an affidavit of disqualification of judge signed by Mr. Robinson, and apparently sent to the U.S. District Court. District Court Judge H. Russel Holland referred the matter to me and offered to review my ultimate decision under 28 USC § 144. A copy of this memorandum and a cassette tape of a February 14, 1992 hearing is being sent to Judge Holland for his review.

  Contents        2.  GROUNDS CITED FOR RECUSAL - Mr. Robinson cited four grounds for recusal:

(a). That on April 22, 1991, the "Court was aware of Mr. Robinson's Arizona problems, I read the newspapers".

(b). That on May 24, 1991, the court "involuntarily converted the chapter 11 filings to chapter 7" even after the corporation had secured other financing and was prepared to run the corporations not withstanding Mr. Robinson's incarceration in Arizona. Mr. Robinson states that the motion was filed by Cabot Christianson, attorney for Exxon U.S.A. who also represents Kenneth Battley, the trustee in these cases and other matters. Mr. Robinson called Exxon's allegations unsubstantiated.

(c). Mr. Robinson alleges that on February 14, 1992 the court advised the debtor in a telephonic hearing in which Mr. Robinson TOP    2 ABR 375  appeared from Tucson, Arizona, that the court would accept debtor's amendment to his schedule of exempt property, that the sale of this property would continue. Robinson says that the court indicated that his "credibility was tainted, being that I was incarcerated in prison in Arizona".

(d). Finally, Mr. Robinson criticizes the court's impartiality because it allowed the attorney for J. R. Marine, Karl Walter, to withdraw from representation of the corporate debtor.

  Contents        3. DISCUSSION -

  Contents        3.1. Standards Regarding 28 USC §§ 144, 455 - I am not biased against Mr. Robinson due to anything that has appeared in any newspaper. I do question his truthfulness as a result of the inaccuracy of his representations in a number of hearings and have ruled against his expressed desires on a number of occasions. Most of my rulings have been based on the fact that the trustee and the creditors, who have a higher interest than Mr. Robinson in these cases have not opposed, and have often approved of rulings which Mr. Robinson has opposed.

28 USC § 455 provides in part:

Disqualification of justice, judge, or magistrate

(a) Any justice, judge, or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.

(b) He shall also disqualify himself in the following circumstances:

TOP    2 ABR 376 

(1) Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding; • • •

28 USC § 455 is incorporated into the bankruptcy process by Bankruptcy Rule 5004(a). "The test for disqualification under 28 USC § 455 is an objective one: whether a reasonable person with knowledge of all the facts would conclude that the judge's impartiality might reasonably be questioned." Datagate, Inc. v Hewlett-Packard Co., 941 F2d 864, 871 (9th Cir 1991).

Adverse rulings or disbelief of a litigant arising from his or her court appearances is not grounds for removal under 28 USC § 455. Hasbrouck v Texaco, Inc., 830 F2d 1513, 1524 (9th Cir 1987) ("The bias must stem from an extrajudicial source and not the course of the proceedings."); Herrington v County of Sonoma, 834 F2d 1488, 1502 (9th Cir 1988). Expressions of doubt about the merits of a case is not grounds for recusal. Noli v Commissioner of Internal Revenue, 860 F2d 1521, 1527 (9th Cir 1988). Even an extraordinarily high number of adverse rulings is not a legally sufficient reason for recusal. Matter of Beverly Hills Bancorp., 752 F2d 1334, 1341 (9th Cir 1984).

28 USC § 144 provides for the filing of an affidavit of prejudice by a litigant. It reads:

Bias or prejudice of judge

Whenever a party to any proceeding in a district court makes and files a timely and sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice either against him or in favor of any adverse TOP    2 ABR 377  party, such judge shall proceed no further therein, but another judge shall be assigned to hear such proceeding.

The affidavit shall state the facts and the reasons for the belief that bias or prejudice exists, and shall be filed not less than ten days before the beginning of the term at which the proceeding is to be heard, or good cause shall be shown for failure to file it within such time. A party may file only one such affidavit in any case. It shall be accompanied by a certificate of counsel of record stating that it is made in good faith.

The affidavit must be filed in a timely manner. Preston v United States, 923 F2d 731, 733 (9th Cir 1991) and Gonzales v Parks, 830 F2d 1033, 1037 (9th Cir 1987) (bankruptcy case). The applicability of 28 USC § 144 to bankruptcy courts seems to be assumed in Gonzales, but, see Matter of Celotex Corporation, _____ BR ______, 1992 WL 52693 at *5-7 (Bankr MDFla 1992) which stated:

Title 28 U.S.C. § 144 does not apply to the bankruptcy court. As indicated by 28 U.S.C. § 151, the bankruptcy court is not considered to be a district court. More importantly, however, it has long been established the bankruptcy court, or indeed, the referee in bankruptcy, does not come within 28 U.S.C. § 144. 13A Charles A. Wright et al., Federal Practice and Procedure § 3551, at 630 (2d ed.1984). The Court of Appeals for the Fifth Circuit, which this Court follows through the Eleventh Circuit's adherence to Fifth Circuit precedent before our Circuit was formed, holds 28 U.S.C. § 144 applies only to district courts. Hepperle v. Johnston, 590 F.2d 609, 613 (5th Cir.1979). There has been a series of decisions from various federal courts all acknowledging this inapplicability. Dubnoff v. Goldstein, 385 F.2d 717 (2d Cir.1967); In re Casco Bay Lines, Inc., 25 B.R. 747 (Bankr.1st Cir.1982); In re Norton, 119 B.R. 332 (Bankr.N.D. Ga.1990); Lieb v. Tillman (In re Lieb), 112 B.R. 830 (Bankr.W.D. Tex.1990); Southwestern Gold, Inc., v. Williams (In re Williams), 99 B.R. 70 (Bankr.D. N.M.1989); Hessen v. Beagan (In re Teltron Services, Inc.), 39 B.R. 446 (Bankr.E.D. N.Y.1984); In re Whet, Inc., 33 B.R. 424 (Bankr.D. Mass.1983). Within this context, Rule 5004 of the Federal Rules of Bankruptcy Procedure clearly states 28 U.S.C. § 455 governs the TOP    2 ABR 378  disqualification of bankruptcy judges. Congress, the Supreme Court and the Rules Committee, although certainly aware of the existence of 28 U.S.C. § 144, have not provided for its utilization with respect to bankruptcy judges. [footnotes omitted]

  Contents        3.2. Statements on April 22, 1991 - I can locate no hearings in either case relating to the April 22, 1991 date referred to by Mr. Robinson. The J.R. Marine case was filed on March 25, 1991, and the individual case was filed on March 27, 1991. Prior to the bankruptcy filings (although my memory on the date may be mistaken) several extensive articles by Charles Wohlforth appeared in one of the Anchorage daily newspapers about an incident on the Aleutian Chain involving the disappearance of several seamen and the loss or sinking of a barge.

In the process of skimming these articles, I realized that they referred to a Jim Robinson who had been a debtor in a prior chapter 13 bankruptcy proceeding in Ketchikan, Alaska. The articles alluded to Mr. Robinson's connection as a witness with the lengthy John Kenneth Peel murder trial which took place in Southeast Alaska.

Mr. Robinson is correct that, when he first appeared in court, I disclosed to him that I had read the articles in the paper. I never told him that because of allegations in these articles it would detract from his credibility or would be a strike against him. In fact, if I said anything to him other than disclosing having read the articles, it would have been to the contrary.

TOP    2 ABR 379 

A second series of articles began appearing in the Anchorage newspapers in about May of 1991 concerning an extradition proceeding in the Alaska courts brought by the State of Arizona to have Mr. Robinson returned to Arizona where he was alleged to be a fugitive from justice. Although I saw these articles, I did not rely on them as evidence or draw any inference from them against Mr. Robinson. However, the issue of whether or not Mr. Robinson would be extradited and possibly have to serve time in Arizona was an issue which was discussed in open court by a number of creditors. It was Mr. Robinson's consistent denial that there was a problem or that Arizona actually wanted him back as a fugitive from justice, all of which proved to be false, which is a big factor in my doubt about his truthfulness.

There was no question that Mr. Robinson's potential incarceration in Arizona was discussed in some of the hearings. The fact that the articles appeared in the paper held no sway. The real issue was whether or not Mr. Robinson was going back to Arizona to serve time. If he was, he was going to have a difficult time assisting in any reorganization.

I went out of my way to assure Mr. Robinson that I was not going to rely on hearsay matters in newspaper articles to his detriment. Rather than converting the case to chapter 7 immediately as was requested by Exxon after a May 24, 1991 hearing, I allowed TOP    2 ABR 380  the debtor to explore avenues of keeping the debtor in a viable chapter 11 case.

  Contents        3.3. Conversion of Cases to Chapter 7 - J.R. Marine owned a number of vessels when the case began. Almost all of them were under arrest or needed significant repair or maintenance. His principal creditor, Key Bank of Alaska, was seeking relief from stay to foreclose its preferred ship's mortgages on some of these vessels.

Both Key Bank and Exxon questioned Mr. Robinson's ability to continue to be involved in the case due to his problems with the State of Arizona which wanted him back as a fugitive from justice.

Exxon alleged Mr. Robinson had been involved in a scam arising out of the Exxon Valdez oil spill and had bilked Exxon out of a lot of money. I heard testimony on the Exxon motion to convert to chapter 7 and determined that Exxon had a probable claim against J.R. Marine and Jim Robinson and had standing to request conversion.

In May, 1991, Mr. Robinson said that he had an investor who was going to invest a substantial amount of money to allow the corporation to operate in chapter 11. The investor (or, a promoter for an unnamed investor) was an attorney from Tucson named Kent Morgan.

I held a lengthy hearing on Exxon's motion to convert to chapter 7 on May 24, 1991. I heard from Exxon's security chief and Kent Morgan. It became apparent that: (a) J.R. Marine's accounts TOP    2 ABR 381  receivable (one of its major assets listed on its schedules and a potential source of cash to operate) were suspect, being over 90 days old; (b) eight of its vessels were under arrest; (c) there were suspicious dealings with an insider, Roy Robertson, who received transfers of J.R. Marine property just before bankruptcy; (d) a $60,000 "bonus" was taken by Jim Robinson in January, 1991, just before bankruptcy, which he could not account for; (e) although Kent Morgan seemed legitimate, the financing scheme seemed doubtful (there was no written agreement and no financial analysis); (f) Mr. Robinson's "bankability" was severely hampered by the bad press he had received; (g) the schedules of assets and liabilities were sloppy and indifferent; (h) Mr. Robinson had been a party to a prior chapter 13 case which never developed a plan; (i) he had no articulated business plan other than to "get the boats working"; and (i) the assets of the estate were in some jeopardy due to the high cost of maintenance, storage, and insurance.

Notwithstanding my misgivings, rather than just converting the case on May 24, 1991, I continued the hearing and requested the U.S. Trustee to investigate the bona fides of Kent Morgan's involvement. When Mr. Morgan advised the court that he had determined not to go ahead with the investment, the court finally converted the case to chapter 7 (Hearing of June 11, 1991 in J.R. Marine case on Exxon's motion to convert). The case was converted on June 11, 1991, not May 24, 1991 (see Order at Docket No. 70).

TOP    2 ABR 382  Almost every large creditor (with the exception of possibly Mr. Robinson's cousin, Roy Robertson) favored the conversion of the case through distrust in Mr. Robinson and feeling that the assets would be dissipated unless the case were converted.

Any statements I made about Mr. Robinson's veracity came from my dealings with him in court and from the hearings regarding the motion to convert by Exxon Corporation. Although identifying precise statements that were made would require that I go back and listen to audio cassettes of a number of hearings, I came to the conclusion that Mr. Robinson promoted the viability and going concern value of J. R. Marine by indicating that he had valid leases and contracts, and that he had financing. I found that the spin that Mr. Robinson put on the facts regarding J.R. Marine's viability, financial stability, and going concern value did not exist.

The facts were compelling under a number of the criteria set forth in 11 USC § 1112(b) that the case should be converted to chapter 7.

  Contents        3.4. Withdrawal of Attorney - Karl Walter moved to withdraw as attorney for the debtor on July 17, 1991 (Docket No. 81 in J.R. Marine). He alleged that he had little or no contact with Mr. Robinson and could not effectively represent the debtor. At that time the debtor appeared to have been incarcerated in Arizona, and the case was in chapter 7. There was no opposition to the TOP    2 ABR 383  motion to withdraw. An order was entered on August 1, 1992 (Docket No. 85).

Mr. Walter gave as his reasons for withdrawal: (a) nonpayment of much of his fees; (b) the conversion of the case to chapter 7; (c) inability to communicate with Mr. Robinson on a reliable basis; and, (d) some question about whether Mr. Robinson was willing to follow his advise for the benefit of the corporate debtor. (Docket No. 82 filed July 17, 1991).

  Contents        3.5. February 14, 1992 Hearing - A hearing was held on February 14, 1992 in both cases. In the individual case of Jim and Charlotte Robinson, the matter pending was Mr. Robinson's motion to dismiss. Because his personal estate appeared to have assets, I denied the motion. I also, at that time, ruled that the trustee would not be disqualified. Finally, in the individual case, Mr. Robinson's unopposed motion to modify his claim of exemptions was allowed.

In the corporate case, there was pending an order to sell various vessels, a motion to sell some personal property, and Mr. Robinson's motion to dismiss. I denied the motion to dismiss since Key Bank and the U.S. Trustee opposed the motion. First of all, the corporate property is not the subject of Mr. Robinson's exemptions. Secondly, the trustee was aware that Mr. Robinson was claiming some of the property the trustee believed to belong to the corporate debtor was Robinson's own exempt property, and was prepared to try TOP    2 ABR 384  and segregate any property which was not J.R. Marine's. Finally, the trustee acknowledged that, if he erroneously sold some of the property, there should be more than enough money to pay the full value of the exemption to the debtor.

Basically, I told Mr. Robinson that I lacked faith in his credibility. I also believed he was doing everything he could to disrupt the trustee in his duties to liquidate the estates. Given the size of the debt, Mr. Robinson had little standing to raise these questions since any money that is going to be derived is going to go to creditors and not to him, except for the possible exception of his personal exemptions in tools of the trade.

  Contents        3.6. Other Proceedings - Independent of Mr. Robinson's affidavit of prejudice, I have transferred some of the adversary proceedings involved in these cases to Judge MacDonald to equalize our work load. For example, a removed Superior Court civil suit has been assigned to Judge MacDonald, Adv. Proc. No. A91-00280-003, Jim L. Robinson; J.R. Marine, Inc. vs. Key Bank of Alaska; Stanley Lewis, Esq. The defendants filed a notice of removal.

I have no proprietary feelings about Mr. Robinson's bankruptcy matters, or any particular desire to hear them, but I must object to an unwarranted motion to recuse.


TOP    2 ABR 385 

DATED: April 14, 1992 
  
 ______________________________
 HERBERT A. ROSS
 Bankruptcy Judge


Serve: 
-Jim Robinson, Pro Se, aka Kenneth Harvey Robinson # 41120 
     Arizona State Prison-Rincon 
     10,000 S. Wilmot Rd., Tucson, AZ 85777 
-Hon. H. Russel Holland, District Judge 
-William D. Artus, Esq., for Kenneth Battley, Trustee 
-Dietra Ennis, Esq., for Charlene Robinson 
-U.S. TrusteeH4126