Jones v . University of Pittsburgh CV-94-590-M 05/10/95 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

In r e : David A . Jones, Debtor. David A . Jones, Appellant,

v. Civil N o . 94-590-M

University of Pittsburgh; Sheriff, Essex County, New Jersey; Donald P. Garrity; E . Mark Noonan; John J. Hurley; Nancy Regan; Sterling P. Miller; Alison E . Miller; George Saxion; Betty Saxion; Harry Saxion; Lawrence P. Sumski, Chapter 13 Trustee; Liberty Mutual Insurance Company; Alfred E . Thomson I I I , d/b/a Thomson Properties, d/b/a Atlas Self-Storage, Appellees. Geraldine L . Karonis, Trustee.

O R D E R

David A . Jones appeals from an order of the United States

Bankruptcy Court for the District of New Hampshire dismissing his

Chapter 13 petition. The bankruptcy court (Vaughn, J.) dismissed

Jones's petition because, among other things, he failed to make

payments to the Chapter 13 trustee and filed his petition in bad

faith. In his appeal, Jones identifies twelve (12) grounds upon which the bankruptcy court's decision should be reversed. For

the reasons set forth below, the court affirms the bankruptcy

court's order in all respects.

Factual Background

On October 1 2 , 1993, Jones filed a pro se petition for

relief under Chapter 13 of the United States Bankruptcy Code,

, et seq. Approximately six weeks later, he filed

his bankruptcy schedules, listing his occupation as attorney and

professor at the University of Pittsburgh. Jones represented

that his total monthly income was in excess of $10,000.00. Among

other estate assets, Jones listed claims against Liberty Mutual

Fire Insurance Company valued at $1.3 billion and against the

University of Pittsburgh valued at $3.5 million.

Jones's original Chapter 13 plan provided for monthly

payments to the trustee of approximately $1,300.00. However, the

plan provided that these monies were to be paid to the trustee

directly from the University of Pittsburgh. No payments were

actually made. Subsequently, on March 1 4 , 1994, Jones filed an

amended Chapter 13 plan, which provided for monthly payments to

the trustee of only $10.00.

2 Beginning in July, 1994, Jones filed a series of six adversary proceedings in the bankruptcy court. On July 6, 1994, that court held an evidentiary hearing on the trustee's motion to dismiss the petition. By order dated September 1 , 1994, the bankruptcy court dismissed the petition and Jones's pending adversary proceedings, without prejudice. After thoroughly addressing the pertinent facts and the controlling law, the bankruptcy court concluded that: (i) contrary to the representations set forth in his schedules, Jones was not a person with regular income; (ii) success of his Chapter 13 plan (as originally filed and as amended) depended entirely upon successful litigation of the claims against his former landlords, former employer, and insurance company; (iii) the filing of a series of Chapter 13 petitions by Jones and his wife suggested the absence of good faith; and (iv) Jones's Chapter 13 plan was actually filed in bad faith.

Standard of Review

When appealed to a district court, a bankruptcy court's

legal determinations are reviewed de novo. In re Gonic Realty

Trust,

2 4 , 626-27 (1st Cir. 1990); In re G.S.F. Corp.,

3

(1st Cir. 1991). Findings of fact, however,

are accorded much greater deference. This court will not disturb

a bankruptcy court's factual findings unless they are clearly

erroneous. Briden v . Foley,

(1st Cir. 1985);

Bankr. R. 8013. A factual finding is clearly erroneous when,

although there is evidence to support i t , the reviewing court,

after consideration of all evidence before i t , is left with the

definite and firm conviction that a mistake has been made. In re

McIntyre,

7 , 28 (D.N.H. 1986).

As the appellant, Jones bears the responsibility of

providing this court with all transcripts necessary to address

the issues raised on appeal. Sanabria v . International

Longshoremen's Ass'n,

1 2 , 313 (1st Cir. 1979); see also

Bankr. R. 8006 ("If the record designated by any party includes a

transcript of any proceeding or a part thereof, the party shall,

immediately after filing the designation, deliver to the reporter

and file with the clerk a written request for the transcript and

make satisfactory arrangements for payment of its costs."); 9

Collier on Bankruptcy ¶8006.4 ("Decisions under the Appellate and

Bankruptcy Rules have made it clear that the burden of presenting

the court of appeals with an adequate record is squarely upon the

4 appellant. Unless the record that is brought before the appellate court affirmatively shows the occurrence of the matters

upon which the appellant relies for relief, the appellant may not

urge those matters on appeal.").

Here, Jones has failed to provide a transcript of the July

6, 1994, hearing on the trustee's motion to dismiss his

petition.1 Following that hearing, the bankruptcy court

dismissed his petition. That order of dismissal forms the basis

of a substantial number of the issues Jones raises on appeal.

Nevertheless, Jones argues the record before the court is

adequate. The record consists of the parties' briefs,

appendices, and a limited number of pleadings filed in the

bankruptcy court. See Reply Brief of Appellant, at 10 and 2 7 .

Accordingly, to the extent possible the court will resolve the

issues raised on the limited record before i t . In re Abijoe

Realty Corp.,

2 1 , 123-24 n.1 (1st Cir. 1991); Grimard

v . Carlston,

(1st Cir. 1978).

1 The record suggests that Jones failed to pay the costs associated with preparing the transcript (or arrange with the court to have such costs waived). See, e.g., Bankr. Document Nos. 6 6 , 8 3 , 93 (notices of fees due from Jones). The docket does not contain any evidence that Jones ever paid those outstanding invoices.

5 Discussion

A. Failure of the Bankruptcy Judge to Recuse Himself.

Jones argues that the judge presiding over his bankruptcy case should have recused himself, sua sponte, because of an alleged conflict of interest. Relying upon an advertisement published by the law firm of Devine, Millimet & Branch ("Devine Millimet") in the 1994 NYNEX yellow pages, Jones claims that Judge Vaughn continues to practice law and represent clients of Devine Millimet. Reply Brief of Appellant at 3 . Jones also claims that Liberty Mutual Fire Insurance Company, a defendant in one of the adversary proceedings filed by Jones, is a client of Devine Millimet. Jones points to nothing in the record to support his claim2 nor has he produced any independent evidence to substantiate his claim. He merely relies upon his unsubstantiated assertions.

Because he claims Liberty Mutual is a client of Devine

Millimet and because he argues that Judge Vaughn remains a

partner in that firm, Jones concludes that Liberty mutual may

2 Jones argues that he only recently discovered that Judge Vaughn was previously a member of Devine Millimet and that Devine Millimet allegedly represents (or once represented) Liberty Mutual. Accordingly, he argues that he was unable to raise this issue in a timely fashion below.

6 still be a client of Judge Vaughn's, which, of course, would

create a conflict of interest:

These insurance carriers may continue to be Judge Vaughn's present clients, because he continues to list himself as a member of Devine, Millimet and Branch, P.A. in the section on "attorneys' on page 365 of the current NYNEX 1994-1995 yellow pages telephone directory for the areas of Manchester/Derry, New Hampshire, longer than a full year after Judge Vaughn supposedly became a full-time Federal judge!

Reply Brief of Appellant at 3 (emphasis in original). Despite

acknowledging that Judge Vaughn resigned from Devine Millimet

before assuming the bench, Jones apparently still believes (or,

more accurately, he still argues) that Judge Vaughn may continue

to practice law.

Having failed to raise the issue of recusal below, Jones

would ordinarily be barred from litigating it on appeal. See In

re Abijoe Realty Corp.,

2 1 , 126-27 (1st Cir. 1991)

(holding that disqualification claim was waived where it was not

raised below). "In the words of Judge Aldrich, 'a party, knowing

of a ground for requesting disqualification, can not be permitted

to wait and decide whether he likes subsequent treatment that he

receives.'"

at 126 (quoting In re Shoe Machinery Corp.,

7 , 79 (1st Cir. 1960) (applying

)). See

7 also United States v . Devin,

8 0 , 294 n.11 (1st Cir.

1990) (noting that appellant's failure to move for judge's

recusal below could constitute waiver of bias claim arising out

of facts known prior to or during trial). But, Jones claims that

the judge's alleged bias arose out of "facts" not known to him at

the time his case was before the bankruptcy court. Under these

circumstances, the court will, albeit briefly, address the merits

of his argument.

Title 2 8 , section 455, of the United States Code sets forth

certain circumstances under which a federal judge should recuse

himself or herself from presiding. Recusal is warranted when the

impartiality of the court is reasonably suspect, when the court

has a personal bias or prejudice regarding a party, or when the

court has personal knowledge of the evidence. The test employed

to determine whether the court's impartiality might reasonably be

questioned is whether the claim of partiality is supported by

facts which would create a reasonable doubt concerning the

court's impartiality in the mind of a reasonable person. United

States v . Cowden,

5 7 , 265 (1st Cir. 1976), cert.

denied,

(1977).

8 This record is completely devoid of any facts which might

cause a reasonable person to question the impartiality of the

bankruptcy judge. Other than his reference to the yellow pages

advertisement, Jones has produced no evidence to support his

claim that Judge Vaughn was, while presiding over Jones's

petition, a member of the Devine Millimet law firm. Likewise,

Jones has failed to support his claim that Liberty Mutual is

actually a client of Devine Millimet or that Judge Vaughn

continues to represent (or ever represented) Liberty Mutual.

Notwithstanding Jones's unsupported statements regarding the alleged conflict, the court concludes that the bankruptcy judge did not abuse his discretion in not recusing himself. Nothing in the record even remotely suggests that a reasonable person could question the impartiality of the bankruptcy court in this matter.

B. Denial of Appellant's Motion to Turn Over Funds.

In his appellate briefs, Jones makes repeated reference to

approximately $28,500.00 in cash, which he claims is wrongfully

being held by the Sheriff of Essex County, New Jersey. The

sparse record on appeal makes it somewhat difficult to ascertain

9 the basis for Jones's claims.3 Apparently, New Jersey creditors

of Jones's bankruptcy estate obtained an attachment against

certain funds owed, but not yet paid, to Jones. Jones argues

that these funds were attached in violation of both New Jersey

and federal law.

There is little evidence supporting Jones's claim that the

bankruptcy court abused its discretion in denying his motion to

3 In his briefs, Jones makes reference to repeated requests made to the bankruptcy court to turn over funds accumulating in an "escrow account" held by the Essex County Sheriff. See, e.g., Reply Brief of Appellant at 1 8 . After a careful review of the record presented on appeal and the index of all pleadings filed in the bankruptcy court, this court is unable to locate anything which might shed light on this issue. The record, at least as presented to this court, simply fails to contain a single reference to any motion seeking the release of these funds. This supports the United States Trustee's argument that:

Again, Appellant has failed to put forth any evidence or references to the transcript or record below to establish that the Bankruptcy Court abused its discretion "by denying Appellant's timely Motion to Turn Over $22,000 in earnings to his family, etc." Appellant did not file a timely "Motion to Turn Over" but instead filed an Adversary Proceeding, Adv. N o . 94- 1050MWV. The Bankruptcy Court did not "deny" the "Motion to Turn Over" but dismissed the Adversary Proceeding without prejudice. . . . Moreover, there was no request to the Court to retain jurisdiction over the adversary proceedings even though the main case was ordered dismissed.

Reply Brief of the Appellee at 10 (emphasis in original).

10 turn over these funds. In fact, as noted above, Jones has failed

to provide the court with copies of (or, at a minimum, references

to) such a motion. Accordingly, Jones has failed to carry his

burden of proof with regard to this issue.

C. Dismissal of Jones's Chapter 13 Petition.

The core of Jones's appeal is his claim that the bankruptcy

court abused its discretion when it dismissed his Chapter 13

petition. The court based its order of dismissal on the

following factual findings: first, Jones failed to make timely

payments to the trustee under his Chapter 13 plan; second,

success of Jones's bankruptcy reorganization depended entirely

upon success in speculative litigation against numerous parties

with whom Jones had longstanding disputes; and, third, Jones

filed his bankruptcy petition in bad faith. With regard to the

first issue, the bankruptcy court held:

Section 1307(c) of the Bankruptcy Code provides that, upon request from a party in interest or the United States Trustee, the Court may dismiss a case or convert a case under chapter 13 "for cause including --." Section 1307(c)(4) includes as a cause, "failure to commence making timely payments under §1326 of this title." Section 1326 requires that the debtor, unless the Court orders otherwise, commence making payments within thirty days of the filing of the plan. There has been no order of this Court extending that deadline. The facts of this case support dismissal on

11 this ground alone. The debtor filed his original chapter 13 plan on October 1 2 , 1993. No payments were made under that plan and, in fact, the plan did not provide for payments. . . . The Court finds that the debtor has failed to make payments to the chapter 13 trustee required by section 1326, which, by itself, is grounds for dismissal.

Order of the Bankruptcy Court (September 1 , 1994) at 6. Again,

Jones points to no evidence in the record which supports his

claim that the bankruptcy court abused its discretion in making

these factual findings. He does not dispute, for example, that

payments were not made to the trustee under his original Chapter

13 plan.

In support of its conclusion that he filed his petition in

bad faith, the court found that Jones was not an "individual with

regular income," as defined in section 101(30) of the Bankruptcy

Code.

The debtor testified that his current income was insufficient to support [him] and his wife and their six minor children and fund the chapter 13 plan. The only evidence of recent income was a temporary position at Clark University which has since concluded, and minor consulting fees. The debtor provided no testimony at the July 6, 1994, hearing on either future jobs or future income other than that he was actively seeking employment and would have income if he ultimately prevailed in the various litigation he was pursuing. The chapter 13 plan, as noted above, relies

12 on successful litigation with the University of Pittsburgh to fund the plan, but as noted above, the University of Pittsburgh has filed a motion to dismiss based on the signed release by the debtor. The court finds that the debtor is not an individual with regular income.

Order of the Bankruptcy Court (September 1 , 1994) at 8 . Without the benefit of a transcript of the July 6 hearing, it is difficult for this court to identify any basis for concluding that the bankruptcy court abused its discretion in dismissing Jones's petition. Nevertheless, Jones makes several arguments in support of his claim that the bankruptcy court erred in that regard.

First, he claims that the disputed $28,500 held in escrow in

New Jersey would have been sufficient to fund, at least in part,

his Chapter 13 plan. Again, however, Jones fails to identify

specific items in the record showing that the bankruptcy court

was either aware of his claims to this money o r , more

importantly, that this money was (or should have been) available

for payment to the trustee. Instead, Jones relies entirely upon

unsupported, but aggressive conclusory statements in support of

his claims, such as the assertion that, "absent a corrupt state

of mind, it does not take very much intelligence to determine

13 that Appellant is able to pay his legitimate creditors under his

Amended Debt Adjustment Plan, particularly if he could use part

or all of the stolen $28,500.00 for this purpose!" Reply Brief

of Appellant at 5 (emphasis in original). As an attorney, Jones is of course aware that he must point to specific evidence in the record to support his contention that the bankruptcy court abused its discretion; it is not enough to merely reiterate points he made (or should have made) before the bankruptcy court.

In further support of the claim that he i s , in fact, an individual with regular income, Jones says that he has a lifetime annuity income of approximately $20,000.00 per year. Brief of the Appellant at 2 8 . However, the record on appeal lacks even a single reference to this annuity income and, again, Jones points to none. Facts regarding the stability and regularity of Jones's income should have been established at the July 6, 1994, hearing. Such facts cannot be raised for the first time on appeal.

Finally, Jones argues that he had a legitimate expectancy

that he would secure regular and stable income at some time in

the future:

14 Appellant's unrefuted testimony is that he is in demand throughout New England as a professor of law and management, because of his combined J.D. and Ph.D degrees. He is licensed to practice law in several jurisdictions, and indeed was developing a law practice in Massachusetts at the time the court below granted Appellees Noonan and Hurley the retroactive relief from Automatic Stay which they requested to enable them to "evict" Appellant therefrom. Throughout the vast majority of Appellant's professional career, spanning two (2) decades, his gross annual income has been at about the $100,000.00 level. (Since 1992, it has fallen somewhat, which Appellant attributes to "blacklisting" on the part of the University of Pittsburgh, and/or its legal team).

Brief of the Appellant at 2 8 . While Jones may legitimately

expect to obtain full-time employment at some future date, such

an expectancy obviously cannot fund a Chapter 13 plan. Like the

funds Jones claims are owed to him by the University of

Pittsburgh, there is no guarantee that he will actually secure a

stable and regular income sufficient to fund his plan in the immediate future. See, Order of the Bankruptcy Court at 6.

Accordingly, the court finds that the bankruptcy court did not

abuse its discretion in holding that Jones was not an individual

with regular income.

Based upon all of the circumstances surrounding the filing

of Jones's Chapter 13 petition, the bankruptcy court properly

concluded that Jones's case should be dismissed. The record

15 presented to this court on appeal amply supports the bankruptcy

court's findings and establishes its proper exercise of

discretion.

D. Dismissal, Without Prejudice, of Jones's Adversary Proceedings. Whether to retain jurisdiction over an adversary proceeding

when the underlying bankruptcy petition has been dismissed is a

matter committed to the sound discretion of the bankruptcy court.

In re Morris,

(11th Cir. 1992). As a general

rule, "the dismissal of a bankruptcy case should result in the

dismissal of `related proceedings' because the court's

jurisdiction of the latter depends, in the first instance, upon

the nexus between the underlying bankruptcy case and the related

proceedings." In re Smith,

(3rd Cir. 1989).

Typically, bankruptcy courts follow this rule and dismiss related

proceedings once the underlying bankruptcy case has been

dismissed. In re Tim Wargo & Sons, Inc.,

(Bankr.E.D.Ark. 1989) (citing several cases).

In unusual circumstances, bankruptcy courts have exercised

discretion to retain jurisdiction over related proceedings,

despite having dismissed the underlying bankruptcy petition.

16 Factors considered when determining whether to retain such

jurisdiction include: (1) judicial economy; (2) fairness and

convenience to the litigants; and (3) the degree of difficulty

surrounding the legal issues raised in the related matters. In

re Smith,

.

Here, the bankruptcy court did not abuse its discretion in

declining to exercise jurisdiction over Jones's adversary

proceedings. In light of his history of litigiousness (at least

some of which the bankruptcy court suggests has been frivolous

and vexatious) and because Jones's Chapter 13 petition was

properly dismissed for cause, it was not an abuse of discretion

for the bankruptcy court to also dismiss his adversary

proceedings without prejudice. See, e.g., In re Tim Wargo &

Sons, Inc.,

("The bankruptcy court has found that

the debtor has repeatedly abused the system. To retain

jurisdiction over a `related proceeding' . . . would be

ludicrous.").

The remaining issues raised on appeal are without merit and

lack support in the record. With regard to his attack on the

bankruptcy court's order granting retroactive relief from the

17 automatic stay to one of his creditors, this court has already

ruled. That issue was fully addressed in an earlier order and

need not be revisited beyond reaffirming its content.

Conclusion

For the foregoing reasons, the court holds that the

bankruptcy court did not abuse its discretion in dismissing

Jones's Chapter 13 petition and the related adversary

proceedings, without prejudice. Accordingly, the bankruptcy

court order of September 1 , 1994, is affirmed in all respects.

The Motion to Strike Brief submitted by Appellees Sterling and Ali Miller, the Motion to Dismiss Appeal (document n o . 3 ) submitted by Appellee Donald Hurley, the consolidated Motions for Continuation of Automatic Stay (documents nos. 5 and 6 ) submitted by Jones, and the Motion to Vacate Relief from Automatic Stay (document n o . 8 ) submitted by Jones are denied as moot.

18 SO ORDERED.

Steven J. McAuliffe United States District Judge May 1 0 , 1995 cc: W . Thomas McGough, Esq. Thomas M . Bachman, Esq. Nancy H . Michels, Esq. David J. Rogers, Esq. Robert E . Murphy, Jr., Esq. Mary M . Howie, Esq. George Vannah Geraldine L . Karonis Lawrence P. Sumski David Jones

19