Obduskey v. Wells Fargo ( 2023 )

Appellate Case: 22-1156 Document: 010110810640 Date Filed: 02/09/2023 Page: 1
FILED
UNITED STATES COURT OF APPEALS United States Court of Appeals
Tenth Circuit
FOR THE TENTH CIRCUIT
_________________________________ February 9, 2023
Christopher M. Wolpert
DENNIS OBDUSKEY, Clerk of Court
Plaintiff - Appellant,
v. No. 22-1156
(D.C. No. 1:15-CV-01734-JLK)
WELLS FARGO; WELLS FARGO (D. Colo.)
BANK; WELLS FARGO & CO.; WELLS
FARGO BANK, N.A.; WELLS FARGO
HOME MORTGAGE; MCCARTHY &
HOLTHUS, LLP,
Defendants - Appellees.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before MORITZ, BRISCOE, and CARSON, Circuit Judges.
_________________________________
Plaintiff Dennis Obduskey, proceeding pro se,1 appeals the district court’s
post-judgment order affirming the dismissal of his claims brought against the
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
1
“Although we liberally construe pro se filings, we do not assume the role of
advocate.” Yang v. Archuleta, 525 F.3d 925, 927 n.1 (10th Cir. 2008) (internal
quotation marks omitted).
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defendants, Wells Fargo Bank, N.A (“Wells Fargo”)2 and McCarthy & Holthus LLP
(“McCarthy”). After the district court entered judgment in the defendants’ favor,
which both this court and the United States Supreme Court affirmed, the district court
judge disclosed a conflict of interest. Thereafter, Obduskey challenged the outcome
of his case, and, upon independent review by another district court judge, the
judgment was affirmed. Obduskey now appeals that post-judgment order.
Exercising jurisdiction under 28 U.S.C. § 1291, we AFFIRM the district
court’s post-judgment order terminating this case.
I
A. Obduskey’s Loan & Foreclosure Proceedings
In 2007, Obduskey procured a $329,940 loan from Magnus Financial
Corporation to purchase a home in Bailey, Colorado. ROA, Vol. I at 110, 115. The
loan was secured by Obduskey’s property and serviced by Wells Fargo. Id. In 2009,
Obduskey defaulted on the loan. Id. at 25. Over the next six years, Wells Fargo
initiated three nonjudicial foreclosure proceedings, none of which resulted in
foreclosure.3 Id. at 18.
2
Wells Fargo Bank, N.A. asserts that Obduskey improperly named Wells
Fargo, Wells Fargo Bank, Wells Fargo & Co., and Wells Fargo Home Mortgage as
defendants in this case. Aple. Br. at 2. As did the district court, we will refer to
these entities, collectively, as “Wells Fargo.” ROA, Vol. I at 823, 860.
3
About half of the States provide for what is known as a nonjudicial
foreclosure. Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. 1029, 1034 (2019).
Pursuant to a nonjudicial foreclosure, “notice to the parties and sale of the property
occur outside court supervision.” Id. Colorado’s form of nonjudicial disclosure,
however, “is something of a hybrid” because it requires some court involvement. Id.2
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In 2014, Wells Fargo hired a new law firm, McCarthy, to initiate a fourth
nonjudicial foreclosure on Obduskey’s home. Id. at 128. In August 2014, McCarthy
sent Obduskey undated letters advising him that the firm was serving as Wells
Fargo’s debt collector and that Wells Fargo intended to reinitiate foreclosure
proceedings. Id. The notices also informed Obduskey that McCarthy would assume,
for purposes of the Fair Debt Collection Practices Act (the “FDCPA”), that the debt
was valid unless Obduskey responded within thirty days. Id. The FDCPA states,
If the consumer notifies the debt collector in writing within [30 days]
. . . , the debt collector shall cease collection of the debt, or any disputed
portion thereof, until the debt collector obtains verification of the debt
or a copy of a judgment, or the name and address of the original
creditor, and a copy of such verification or judgment, or name and
address of the original creditor, is mailed to the consumer by the debt
collector.
Colorado’s nonjudicial foreclosure process, at issue here, proceeds as follows:
[A] creditor (or more likely its agent) must first mail the homeowner
certain preliminary information, including the telephone number for the
Colorado foreclosure hotline. Thirty days later, the creditor may file a
“notice of election and demand” with a state official called a “public
trustee.” The public trustee records this notice and mails a copy,
alongside other materials, to the homeowner. These materials give the
homeowner information about the balance of the loan, the homeowner’s
right to cure the default, and the time and place of the foreclosure sale.
Assuming the debtor does not cure the default or declare bankruptcy,
the creditor may then seek an order from a state court authorizing the
sale. . . . In court, the homeowner may contest the creditor’s right to sell
the property, and a hearing will be held to determine whether the sale
should go forward.
Id. (citations omitted).
3
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15 U.S.C. § 1692g(b). Although Obduskey requested verification of the debt, he
alleges that McCarthy did not provide the requested information before it initiated a
foreclosure action in May 2015. ROA, Vol. I at 16, 125–26, 129.
B. Obduskey’s Claims Challenging Foreclosure Proceedings and Alleging
FDCPA Violations
In August 2015, Obduskey filed suit against Wells Fargo and McCarthy in the
United States District Court for the District of Colorado. Id. at 5. In his complaint,
Obduskey alleged (1) violations of the FDCPA; (2) unfair and deceptive trade
practices in violation of the Colorado Consumer Protection Act; (3) defamation;
(4) extreme and outrageous conduct; and (5) “commencement of an unlawful
collections action.” Id. at 3; see id. at 21–27. The case was assigned to Judge R.
Brooke Jackson. Id. at 5.
Wells Fargo and McCarthy filed motions to dismiss pursuant to Federal Rule
of Civil Procedure 12(b)(6). Id. at 141–55, 157–68. On July 19, 2016, Judge
Jackson granted the motions and dismissed each of Obduskey’s claims with
prejudice. Id. at 822–38.
In his ruling, Judge Jackson concluded that neither Wells Fargo nor McCarthy
qualified as a “debt collector” under the FDCPA and, therefore, the FDCPA’s
provisions did not apply to Obduskey’s case. Id. at 827–28. Judge Jackson
explained that the FDCPA’s definition of “debt collector” excludes “any person
collecting or attempting to collect any debt . . . which was not in default at the time it
was obtained by such person.” 15 U.S.C. § 1692a(6)(F); ROA, Vol. I at 826 (“Courts
4
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have consistently held that a mortgage servicing company is not a debt collector
within the meaning of the statute if the entity acquired the servicing rights before the
loan was in default.”). As to Wells Fargo, Judge Jackson reasoned that it was not a
debt collector because it began servicing Obduskey’s loan before he went into
default; as to McCarthy, Judge Jackson reasoned that it was not a debt collector
because “foreclosure proceedings are not a collection of a debt.” ROA, Vol. I
at 827–28. Judge Jackson noted, however, that “not all courts have agreed” on
whether foreclosure proceedings are covered under the FDCPA. Id. at 828.
Judge Jackson also dismissed Obduskey’s remaining four claims for failure to
allege a necessary element or failure to plead a recognized cause of action. Id.
at 829–37.
On August 17, 2016, Obduskey timely filed his notice of appeal. Id. at 7.
C. Appellate Review Before the United States Court of Appeals for the Tenth
Circuit
In January 2018, this court reviewed de novo Judge Jackson’s judgment and
unanimously affirmed the dismissal as to all claims. See Obduskey v. Wells Fargo,
879 F.3d 1216 (10th Cir. 2018), aff’d sub nom. Obduskey v. McCarthy & Holthus
LLP, 139 S. Ct. 1029 (2019).
We first addressed Judge Jackson’s dismissal of Obduskey’s FDCPA claim
against Wells Fargo and McCarthy. As an initial matter, we agreed with the district
court that Wells Fargo was not a “debt collector” under the FDCPA because it began
servicing Obduskey’s loan before he went into default. Obduskey, 879 F.3d at 1219.
5
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As Judge Jackson correctly noted, the FDCPA’s definition of “debt collector”
excludes “any person collecting or attempting to collect any debt . . . which was not
in default at the time it was obtained by such person.” 15 U.S.C. § 1692a(6)(F).
McCarthy, on the other hand, began its collection efforts after Obduskey’s
default. The same reasoning that we applied to Wells Fargo, therefore, was not
applicable to McCarthy. Instead, we looked to the plain language of the FDCPA and
policy considerations to determine whether McCarthy was a debt collector for
purposes of the FDCPA. Obduskey, 879 F.3d at 1220–23. Although we
acknowledged a split among our sister circuits, we ultimately held that “[e]ntities
engaged in non-judicial foreclosure actions in Colorado are not debt collectors under
the FDCPA.”4 Id. at 1221. Accordingly, we concluded that McCarthy was not a
“debt collector” under the FDCPA on that basis.
4
In our opinion, we explained the “critical difference between judicial and
non-judicial foreclosures” that informed our holding:
[A] non-judicial foreclosure differs from a judicial foreclosure in that
the sale does not preserve to the trustee the right to collect any
deficiency in the loan amount personally against the mortgagor.
Colorado follows this general rule and allows a creditor to collect a
deficiency only after the non-judicial foreclosure sale and through a
separate action. . . . While judicial mortgage foreclosures may be
covered under the FDCPA because of the underlying deficiency
judgment, a non-judicial foreclosure proceeding is not covered because
it only allows the trustee to obtain proceeds from the sale of the
foreclosed property, and no more. Had McCarthy attempted to induce
. . . Obduskey to pay money by threatening foreclosure, the FDCPA
might apply.
Obduskey, 879 F.3d at 1221–22 (internal quotation marks and citations
omitted).
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We also affirmed the dismissal of Obduskey’s remaining claims, noting that
they “warrant[ed] summary treatment.” Id. at 1223.
D. Appellate Review Before the United States Supreme Court
Obduskey subsequently petitioned the Supreme Court for certiorari as to his
FDCPA claim against McCarthy.5 The Supreme Court granted Obduskey’s petition
“[i]n light of different views among the Circuits about application of the FDCPA to
nonjudicial foreclosure proceedings.” Obduskey, 139 S. Ct. at 1035.
On March 20, 2019, the Supreme Court unanimously affirmed this court’s
judgment. In its opinion, the Supreme Court considered the extent to which the
FDCPA applies to nonjudicial foreclosure proceedings by focusing on the FDCPA’s
“limited-purpose definition” of a “debt collector,” as that term applies to McCarthy.
Id. at 1036 (“For the purpose of section 1692f(6) [the] term [debt collector] also
includes any person . . . in any business the principal purpose of which is the
enforcement of security interests.” (quoting 15 U.S.C. § 1692a(6))).
The parties did not dispute that McCarthy was subject to § 1692f(6)’s
prohibitions, in light of its role enforcing security interests; however, the parties
disagreed over whether McCarthy was subject to the main coverage of the FDCPA.
Id. The Supreme Court concluded that, except for the limited purpose of § 1692f(6),
a business like McCarthy, which is engaged only in nonjudicial foreclosure
proceedings, is not a “debt collector” under the FDCPA. Id. at 1038. Accordingly,
5
Obduskey did not include his FDCPA claim against Wells Fargo in his
petition for certiorari.
7
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the Supreme Court held that McCarthy was not subject to the FDCPA’s main
provisions. Id.
E. Judge Jackson’s Disclosure of His Conflict of Interest
On November 8, 2021, over two years after the Supreme Court issued its
opinion in this case, the district court Clerk of the Court sent a letter to the parties
(the “Clerk’s Letter”) advising them that Judge Jackson had learned that, while he
was presiding over the case, he or his wife owned Wells Fargo stock. ROA, Vol. I
at 841. The Clerk’s Letter explained that Judge Jackson’s “stock ownership would
have required recusal under the Code of Conduct for United States Judges.” Id.
Additionally, the Clerk’s Letter noted that the parties were “invited to respond to
Judge Jackson’s disclosure of a conflict in this case” by November 30, 2021. Id.
The parties’ responses would then be reviewed by another district court judge,
without Judge Jackson’s participation. Id.
On November 30, 2021, Obduskey timely responded to the Clerk’s Letter. Id.
at 843. In his response, Obduskey stated that he was not represented by counsel and
that he had only received a copy of the Clerk’s Letter a week earlier. Id. Obduskey
requested at least three weeks to find new counsel and to “determine [his] ability to
pursue the matter in the courts and potentially request a review.” Id. However,
Obduskey did not retain new counsel or file a motion to reopen the case. See id. at 8.
Wells Fargo also filed a request for an extension in line with any extension
that the court might grant to Obduskey. Id. at 849. On December 15, 2021, Wells
Fargo filed a response to the Clerk’s Letter explaining why Judge Jackson’s conflict
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disclosure was not a basis to reopen the final judgment in this case. Id. at 848–59.
McCarthy did not file a response.
F. Independent Review of Judge Jackson’s Judgment
Judge Jackson recused from the case, and it was reassigned to Judge John L.
Kane. Id. at 8, 860. Over four months later, and Obduskey filing nothing in the
interim, on April 15, 2021, Judge Kane issued a Memorandum Opinion and Order
concluding that vacatur was unwarranted because Obduskey was not prejudiced by
Judge Jackson’s failure to disclose his stock ownership and recuse from the case.6 Id.
at 861, 866.
As an initial matter, Judge Kane concluded that Judge Jackson should have
recused himself from the case pursuant to 28 U.S.C. § 455. Id. at 865. Section 455
states that a judge must disqualify himself “in any proceeding in which his
impartiality might reasonably be questioned,” including if the judge or his spouse
“has a financial interest . . . in a party to a proceeding.” Id. at 864–65 (quoting
§ 455(a), (b)). In light of these provisions, Judge Kane concluded that an error
occurred “when Judge Jackson failed to disclose the stock ownership and recuse from
the case immediately upon its having been [assigned] to him by the Clerk’s Office.”
Id. at 866.
6
After Obduskey submitted his response to the Clerk’s Letter, stating his
intent to retain new counsel, his prior counsel filed a motion to withdraw. ROA,
Vol. I at 8, 865. Judge Kane granted this motion in his April 15, 2022, Order, in light
of the fact that over four months had passed since Obduskey submitted his response
to the Clerk’s Letter and no new attorney entered an appearance. Id. at 865.
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Although “[§] 455 does not, on its own, authorize the reopening of closed
litigation,” Judge Kane explained that Federal Rule of Civil Procedure 60(b) “‘grants
federal courts broad authority to relieve a party from a final judgment’ by vacating
the judgment.” Id. at 866 (quoting Liljeberg v. Health Services Acquisition Corp.,
486 U.S. 847, 863 (1988)). Here, however, Obduskey had not filed a Rule 60(b)
motion to vacate the judgment. But “[r]ather than encourage . . . Obduskey to pursue
a fruitless [Rule 60(b)] motion,” Judge Kane “preemptively” reviewed the case
de novo to confirm whether Judge Jackson’s failure to disqualify himself prejudiced
Obduskey. Id. In doing so, Judge Kane used the factors set out by the Supreme
Court in Liljeberg, 486 U.S. at 864, and concluded that “no prejudicial error would
support vacatur here.” ROA, Vol. I at 866; see Liljeberg, 486 U.S. at 864 (discussing
the factors to be used by district courts when assessing whether a judgment should be
vacated based on a judge’s violation of § 455).
Although Judge Kane reasoned that Judge Jackson’s failure to recuse
warranted independent review of the case, he concluded that it did not warrant
vacatur because the stock ownership “could not have had any influence on the
outcome of this case.” ROA, Vol. I at 869. Judge Kane explained that Judge Jackson
dismissed the case based “entirely on issues of law” while “taking all of . . .
Obduskey’s allegations as true for purposes of the motions to dismiss.” Id. at 867.
Additionally, Judge Kane observed that Judge Jackson “made no discretionary
rulings or subjective determinations that favored [Wells Fargo and McCarthy].” Id.
(noting that Judge Jackson did not make any “findings of fact on contested matters of
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evidence” or “any determinations of credibility that might have created a possibility
of bias”).
Additionally, Judge Kane noted that this court affirmed Judge Jackson’s order
granting the motions to dismiss after conducting a de novo review. Id. at 867–68.
Judge Kane also observed that the Supreme Court largely agreed with this court’s
analysis on the FDCPA issue, identifying only a limited exception for entities such as
McCarthy that is not relevant here. Id. at 868–69; see Obduskey, 139 S. Ct. at 1038(holding that McCarthy is only a debt collector within the meaning of the FDCPA for
the limited purpose of enforcing security interests under § 1692f(6) of the FDCPA).
In sum, Judge Kane found it telling that “[t]welve other judges, three on the Court of
Appeals and nine on the Supreme Court, gave this case a fresh look unhindered by an
appearance of impropriety at all.” ROA, Vol. I at 869.
In light of these factors, Judge Kane concluded that Judge Jackson’s
undisclosed stock interest “could not have had any influence or caused any prejudice
to . . . Obduskey,” and that “there [was] no useful purpose in reopening this case.”
Id. Judge Kane, therefore, terminated the matter. Id. On May 16, 2022, Obduskey
filed a timely notice of appeal. Id. at 870.
II
Federal Rule of Civil Procedure 60(b) “provides an ‘exception to finality’ that
‘allows a party to seek relief from a final judgment, and request reopening of his
case, under a limited set of circumstances.’” United Student Aid Funds, Inc. v.
Espinosa, 559 U.S. 260, 269 (2010) (citation omitted) (quoting Gonzalez v. Crosby,
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545 U.S. 524, 528–29 (2005)). Although a district court has substantial discretion to
grant Rule 60(b) relief as justice requires, “Rule 60(b) relief is extraordinary and may
only be granted in exceptional circumstances.” Lebahn v. Owens, 813 F.3d 1300,
1306 (10th Cir. 2016) (internal quotation marks omitted).
The specific clause of Rule 60(b) at issue here, (b)(6), allows federal courts to
relieve a party from a judgment for any reason—other than those in the five
enumerated preceding categories—“that justifies relief.” Fed. R. Civ. P. 60(b)(6).
“We have described Rule 60(b)(6) as a ‘grand reservoir of equitable power to do
justice in a particular case.’” Kile v. United States, 915 F.3d 682, 687 (quoting
Cashner v. Freedom Stores, Inc., 98 F.3d 572, 579 (10th Cir. 1996)). As relevant
here, judicial bias can, depending on the specific circumstances, serve as a ground for
relief under Rule 60(b)(6). See Liljeberg, 486 U.S. at 863–64.
We review the denial of a post-judgment motion for abuse of discretion.
Jennings v. Rivers, 394 F.3d 850, 854 (10th Cir. 2005). We will reverse the district
court’s determination “only if we find a complete absence of a reasonable basis and
are certain that the district court’s decision is wrong.” Utah ex rel. Div. of Forestry,
Fire & State Lands v. United States, 528 F.3d 712, 723 (10th Cir. 2008) (internal
quotation marks omitted). But a “district court would necessarily abuse its discretion
if it based its ruling [under Rule 60(b)] on an erroneous view of the law or on a
clearly erroneous assessment of the evidence.” Zurich N. Am. v. Matrix Serv., Inc.,
426 F.3d 1281, 1289 (10th Cir. 2005) (internal quotation marks omitted). Moreover,
“even in the context of the deferential abuse-of-discretion standard, we review
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subsidiary legal questions de novo.” Johnson v. Spencer, 950 F.3d 680, 701 (10th
Cir. 2020).
III
On appeal, Obduskey challenges Judge Kane’s post-judgment order on
Obduskey’s response to the Clerk’s Letter, which Judge Kane construed as a
Rule 60(b) motion. Obduskey asks this court to vacate Judge Kane’s order and
remand the case to the district court “for new proceedings with hearings, discovery,
and testimony.” Reply Br. at 14.
Pursuant to § 455(a), “[a]ny justice, judge, or magistrate judge of the United
States shall disqualify himself in any proceeding in which his impartiality might
reasonably be questioned.” 28 U.S.C. § 455(a). Additionally, § 455(b) specifically
compels a judge to disqualify himself if either he or his spouse “has a financial
interest in the subject matter in controversy or in a party to the proceeding.” Id.
§ 455(b)(4). To be sure, Judge Kane correctly determined that Judge Jackson
violated § 455 by failing to initially recuse from this case, in light of the fact that
Judge Jackson or his wife owned Wells Fargo stock while he was presiding over the
case.
“A conclusion that a statutory violation occurred does not, however, end our
inquiry.” Liljeberg, 486 U.S. at 862. “Although § 455 defines the circumstances that
mandate disqualification of federal judges, it neither prescribes nor prohibits any
particular remedy for a violation of that duty.” Id. Rather, “Congress has wisely
delegated to the judiciary the task of fashioning the remedies that will best serve the
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purpose of the legislation.” Id. The Supreme Court, therefore, has explained that
“[t]here need not be a draconian remedy for every violation of § 455(a),” and it has
held that a judge’s violation of § 455(a) may constitute harmless error that does not
warrant setting aside the judge’s previous rulings. Id. This court has also extended
the Supreme Court’s harmless error analysis to violations of § 455(b). Harris v.
Champion, 15 F.3d 1538, 1571 (10th Cir. 1994) (holding that a district court judge’s
violation of § 455(b) for failure to recuse was harmless error that did not warrant
vacatur).
The Supreme Court has directed courts to consider the following factors when
assessing whether a violation of § 455 is harmless error that does not warrant vacatur:
“the risk of injustice to the parties in the particular case, the risk that the denial of
relief will produce injustice in other cases, and the risk of undermining the public’s
confidence in the judicial process.” Liljeberg, 486 U.S. at 864.
Here, Obduskey raises several arguments in support of vacatur. Specifically,
Obduskey contends that Judge Kane erred in (1) finding that Judge Jackson lacked
awareness of the conflict of interest when he presided over the case, and, therefore,
this case should be remanded for a hearing on the issue of whether Judge Jackson
should have recused himself from the original proceedings; (2) construing
Obduskey’s letter as a Rule 60(b) motion to vacate the judgment; and (3) concluding
that vacatur is not warranted because upholding the judgment will not only result in
injustice to Obduskey, but it will also undermine the public’s confidence in the
judicial system.
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We conclude that Judge Kane did not err in any of these respects. Contrary to
Obduskey’s assertions, Judge Kane did not abuse his discretion in finding that Judge
Jackson’s financial conflict did not create the extraordinary or exceptional
circumstances that warrant vacatur.
A. Obduskey’s Request for a Hearing on the Recusal Issue
First, Obduskey argues that this case should be remanded to a new district
court judge for a hearing solely on the issue of whether Judge Jackson should have
recused himself from the original proceedings. Aplt. Br. at 12 (requesting “hearings
related strictly to the recusal issue,” rather than a “recitation of the reasons [why] all
past rulings . . . made [Judge Jackson’s] non-recusal appropriate”). Obduskey’s
request for a hearing on the recusal issue is unnecessary, however, as Judge Kane has
already issued the ruling that Obduskey seeks. Specifically, Judge Kane concluded
that “Judge Jackson should have recused from this case upon its assignment to him
without taking any other action beforehand.” ROA, Vol. I at 865.
Obduskey appears to be conflating two separate issues: (1) whether Judge
Jackson’s failure to recuse himself from the original proceedings constituted a
violation of § 455; and (2) whether Judge Jackson’s judgment should be vacated
because of the § 455 violation. As to the first issue, Judge Kane agreed with
Obduskey that Judge Jackson should have recused himself from this case upon its
assignment to him, and that his failure to do so constituted an error under § 455. Id.
at 866. “A conclusion that Judge [Jackson] should have recused himself does not,
however, end our inquiry,” as “a judge’s violation of § 455[] may be harmless error
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that does not warrant setting aside the judge’s previous rulings.” Harris, 15 F.3d
at 1571. As to the second issue, Judge Kane ultimately concluded that, although
Judge Jackson violated § 455, “no error affected . . . Obduskey’s substantial rights,”
and vacatur, therefore, was unwarranted under the circumstances. ROA, Vol. I at
866.
Obduskey appears to seek a new hearing because he challenges Judge Kane’s
finding that Judge Jackson lacked awareness of the conflict of interest when he
presided over the case. Aplt. Br. at 7; Reply Br. at 11–12. Specifically, Obduskey
cites to a footnote in Judge Kane’s opinion and order, in which Judge Kane noted that
he was focusing his review on whether the belatedly disclosed stock ownership was
prejudicial to Obduskey. Reply Br. at 11 (citing ROA, Vol. I at 866 n.5). In that
footnote, Judge Kane explained that he was focusing on this issue considering “the
circumstances here—in particular, Judge Jackson’s lack of awareness of the grounds
for disqualification during the time he presided over the case.” ROA, Vol. I at 866
n.5.
Obduskey asserts that Judge Jackson’s lack of knowledge of the grounds for
disqualification was “never in evidence,” Aplt. Br. at 7, and he speculates that Judge
Kane learned about this information by “engag[ing] in ex-parte communications
[with Judge Jackson],” Reply Br. at 11. “[S]imply speaking to each other in a federal
court hallway,” Obduskey contends, “is insufficient ground to conclude there was no
bias, prejudice[,] or impropriety and does not resolve the question of Judge Jackson’s
knowledge.” Aplt. Br. at 7. Contrary to Obduskey’s assertions, however, Judge
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Kane’s finding that Judge Jackson lacked awareness of the conflict when he presided
over the case is reasonably supported by the Clerk’s Letter. As the Clerk’s Letter
explains, “Judge Jackson informed [the Clerk] that it ha[d] been brought to his
attention that while he presided over the case[,] he or his spouse owned stock in
Wells Fargo,” and that “[t]he ownership of stock neither affected nor impacted his
decisions in this case.” ROA, Vol. I at 844.
As Judge Kane correctly explained, however, § 455 “can be violated without
knowledge of a disqualifying circumstance.” Id. at 864. Indeed, if a judge later
becomes aware of a disqualifying circumstance, he or she has still violated § 455; at
that point, the judge must then “take the steps necessary to maintain public
confidence in the impartiality of the judiciary.” Liljeberg, 486 U.S. at 861. Although
a “judge’s lack of knowledge of a disqualifying circumstance may bear on the
question of remedy,” this inquiry is separate from the question of whether the
circumstances warrant recusal. Id. at 860.
Here, Judge Kane held that Judge Jackson violated § 455 regardless of
whether he was aware of the stock ownership at the time of the case. See id. at 865–
66 (“Judge Jackson should have recused from this case upon its assignment to him
without taking any other action beforehand.”). Therefore, Obduskey’s request for
“new proceedings with hearings, discovery, and testimony” as to the recusal issue is
unnecessary.7 Reply Br. at 14.
7
Obduskey also asserts a due process theory in support of his argument that
Judge Jackson should have recused himself from this case. Reply Br. at 7 (“The Due
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B. Judge Kane’s Construal of Obduskey’s Response to the Clerk’s Letter as
a Rule 60(b) Motion
Next, Obduskey challenges Judge Kane’s “failure to even advise [Obduskey]
of his intent to independently rule without communicat[ing]” this to Obduskey first.
Reply Br. at 3. According to Obduskey, Judge Kane “intentionally misread[]”
Obduskey’s response to the Clerk’s Letter, and, by issuing his order with “a sense of
urgency,” Judge Kane deprived Obduskey of “opportunities to bring arguments” and
“explore any grounds beyond what was already known.” Aplt. Br. at 11–12.8
Contrary to Obduskey’s arguments, however, Judge Kane did not err in
construing Obduskey’s response to the Clerk’s Letter as a Rule 60(b) motion. In fact,
Judge Kane’s decision to construe Obduskey’s response as a Rule 60(b) motion
Process clauses of the United States Constitution require judges to recuse themselves
where the judge has a financial interest in the case’s outcome.”); see, e.g., Caperton
v. A.T. Massey Coal Co., 556 U.S. 868, 876 (2009) (stating that due process requires
that “a judge must recuse himself when he has ‘a direct, personal, substantial,
pecuniary interest’ in a case” (quoting Tumey v. Ohio, 273 U.S. 510, 523 (1927))).
As explained earlier, however, Judge Kane already concluded that Judge Jackson
should have recused himself from this case upon its assignment to him. ROA, Vol. I
at 865. Obduskey’s argument, therefore, has no bearing on Judge Kane’s subsequent
inquiry regarding whether Judge Jackson’s judgment should be vacated because of
the § 455 violation.
8
Obduskey also raises a host of grievances regarding the proceedings at both
the district court and the Supreme Court level. Specifically, Obduskey asserts that
(1) the district court did not provide Obduskey with additional communication
beyond the Clerk’s Letter; (2) the district court initially denied Obduskey in forma
pauperis status (although, upon reconsideration, the district court ultimately granted
Obduskey’s request); and (3) Justice Neil Gorsuch did not recuse himself from the
case at the Supreme Court, despite previously recusing himself from this case when it
was before this court. Aplt. Br. at 8–10. Each of these grievances, however, has no
bearing on whether Judge Jackson’s failure to recuse himself when the case was
initially assigned to him amounted to prejudicial error.
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benefitted Obduskey, who had failed to provide the court with any procedural basis
for review of his claims. In his opinion, Judge Kane explained the legal framework
for determining whether the judgment should be vacated because of a § 455 violation.
ROA, Vol. I at 866. Although a § 455 violation does not, on its own, authorize
vacatur, Rule 60(b)(6) vests courts with the discretion to vacate judgments in the
interest of justice in extraordinary circumstances. Liljeberg, 486 U.S. at 863–64.
Therefore, Judge Jackson’s § 455 violation for the belated disclosure of stock
ownership, on its own, would not allow the district court to grant Obduskey relief.
Rather, the proper avenue for Obduskey to request relief would have been through a
Rule 60(b)(6) motion.
Here, however, Obduskey did not file a Rule 60(b)(6) motion. Instead, he
responded to the Clerk’s Letter, and he asked the district court to consider it as his
“initial response.” ROA, Vol. I at 843. In his response, Obduskey explained that he
had only recently learned about the Clerk’s Letter from his former attorney’s law
firm, and that he would “need a minimum of at least three weeks to locate counsel
and determine [his] ability to pursue the matter in the courts and potentially request a
review.” Id.
Judge Kane waited over four months to conduct his independent review, which
far exceeded the minimum three-week timeframe that Obduskey had requested.
During this time, the district court did not receive any further correspondence from
Obduskey, and no new attorney entered an appearance on his behalf. Id. at 865.
Under these circumstances, it was reasonable for Judge Kane to conclude that
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Obduskey was proceeding pro se.9 “A pro se litigant’s pleadings are to be construed
liberally,” and such pleadings are “held to a less stringent standard than formal
pleadings drafted by lawyers.” Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.
1991). Accordingly, Judge Kane could reasonably construe Obduskey’s response to
the Clerk’s Letter as a Rule 60(b)(6) motion, as such a motion was the proper vehicle
for seeking the relief Obduskey requested.
Obduskey also asserts that Judge Kane “made a conscious decision to avoid
any pretense of communication or fairness” when he issued his opinion and order
terminating the case. Reply Br. at 2 (emphasis omitted). This argument is
unavailing. The Clerk’s Letter clearly advised the parties of Judge Jackson’s conflict
of interest and invited the parties to respond to this development in writing. ROA,
Vol. I at 841. Moreover, the Clerk’s Letter also provided the parties with guidance
regarding the proper procedure for navigating Judge Jackson’s disqualification
9
Generally, there is no constitutional right to the appointment of counsel in
civil cases. Nelson v. Boeing Co., 446 F.3d 1118, 1120–22 (10th Cir. 2006).
Although civil litigants “ha[ve] no Sixth Amendment right to counsel[,] . . . a court
has discretion to request an attorney to represent a litigant who is proceeding in
forma pauperis.” Johnson v. Johnson, 466 F.3d 1213, 1217 (10th Cir. 2006) (per
curiam). Here, however, Obduskey did not raise a request for counsel in his response
to the Clerk’s Letter. Rather, Obduskey requested at least three weeks to seek
counsel and determine how he wished to proceed. Obduskey’s response to the
Clerk’s Letter was therefore akin to a motion to extend, which Judge Kane
effectively granted by waiting over four months to conduct his independent review.
In light of district courts’ wide discretion over how they manage their dockets and
related deadlines, Judge Kane did not err in concluding that Obduskey was
proceeding pro se and issuing his opinion and order. See United States v. Schneider,
594 F.3d 1219, 1226 (10th Cir. 2010) (“The power of district courts to manage their
dockets is deeply ingrained in our jurisprudence.”).
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moving forward. Specifically, the Clerk’s Letter included an excerpt from Advisory
Opinion 71 from the Judicial Conference Codes of Conduct Committee, which
provides guidance for addressing a judge’s disqualification that is not discovered
until after the judge has already participated in a case. Id. Advisory Opinion 71
provides that, after a judge has disclosed the facts bearing on his disqualification,
“[t]he parties may then determine what relief they may seek and a court (without the
disqualified judge) will decide the legal consequence, if any, arising from the
participation of the disqualified judge in the entered decision.” Id. The Clerk’s
Letter, therefore, provided the parties with a procedure to request relief in light of
Judge Jackson’s disqualification, and this procedure complied with the guidance set
out by Advisory Opinion 71. In doing so, the Clerk’s Letter promoted the very
principles of communication, fairness, and transparency that Obduskey contends
were lacking.10
10
Obduskey appears to argue, for the first time in his reply brief, that he
suffered a violation of his procedural due process rights when Judge Kane “fail[ed] to
even advise [Obduskey] of his intent to independently rule without communicat[ing]”
this to Obduskey first. Reply Br. at 3 (asserting that “[w]hen an individual faces a
deprivation of life, liberty, or property, procedural due process mandates that he or
she is entitled to adequate notice, a hearing, and a neutral judge.”). “This court does
not ordinarily review issues raised for the first time in a reply brief.” Stump v. Gates,
211 F.3d 527, 533 (10th Cir. 2000). Although we have recognized an exception to
this general rule when an issue initially raised in a reply brief relates to our subject
matter jurisdiction, Sadeghi v. INS, 40 F.3d 1139, 1143 (10th Cir. 1994), Obduskey’s
arguments do not invoke such a concern. Therefore, we need not consider this issue
here.
Even if Obduskey had timely raised this argument, however, we would
conclude that he did not suffer a violation of his procedural due process rights. As
we explained above, the Clerk’s Letter provided Obduskey with (1) notice of Judge
Jackson’s conflict of interest; and (2) the opportunity to respond in writing and
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Despite Obduskey’s arguments to the contrary, he had over four months to find
counsel, assess his ability to pursue the matter, and request relief from the district
court. Id. at 843. However, Obduskey failed to do so; the only correspondence the
district court had to rely upon was his initial response to the Clerk’s Letter. Judge
Kane, therefore, acted reasonably in construing Obduskey’s response to the Clerk’s
Letter as a Rule 60(b)(6) motion, as such a motion was the proper vehicle for seeking
the relief Obduskey requested.
C. Whether Vacatur Was Warranted Based on a Risk of Injustice and of
Undermining the Public’s Confidence in the Judicial Process
Lastly, Obduskey argues that vacatur was warranted because upholding the
judgment will not only result in injustice to him, but it will also undermine the
public’s confidence in the judicial system. According to Obduskey, “[w]hen a jurist
fails to follow the law, it puts the public trust of the institution at risk,” Aplt. Br. at 2,
and “[t]he judges who administer justice in our countr[y] must be seen as ethical and
subject to meaningful correction when it is necessary,” Reply Br. at 13.
Although Obduskey’s sentiments may ring true, his concerns about
undermining the public’s trust in the judicial process have no application here. Judge
Kane did not err in concluding that the circumstances of this case do not warrant
request any relief in light of Judge Jackson’s disqualification, which would be
considered by another judge without any conflicts of interest. Under these
circumstances, where Obduskey had notice and the opportunity to be heard, he was
not entitled to anything more. See de la Llana-Castellon v. I.N.S., 16 F.3d 1093,
1096 (10th Cir. 1994) (“The fundamental requirement of due process is the
opportunity to be heard at ‘a meaningful time and in a meaningful manner.’” (quoting
Mathews v. Eldridge, 424 U.S. 319, 333 (1976))).
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vacatur. After Judge Kane found that Judge Jackson violated § 455, he properly
turned to the issue of whether the judgment should be vacated based on the Liljeberg
factors. In Liljeberg, the Supreme Court directed courts to consider the following
factors when assessing whether a judgment should be vacated based on a violation of
§ 455: “the risk of injustice to the parties in the particular case, the risk that the
denial of relief will produce injustice in other cases, and the risk of undermining the
public’s confidence in the judicial process.” 486 U.S. at 864.
Here, each of the Liljeberg factors supports Judge Kane’s decision to terminate
the case. As to the first factor, Judge Kane reasonably concluded that there was no
risk of injustice to Obduskey because the stock ownership “could not have had any
influence on the outcome of this case.” ROA, Vol. I at 869. Judge Jackson
dismissed the case based “entirely on issues of law” while “taking all of . . .
Obduskey’s allegations as true for purposes of the motions to dismiss.” Id. at 867.
Moreover, Judge Jackson did not make any contested factual findings or credibility
determinations that could have favored Wells Fargo and McCarthy over Obduskey.
Id. Because this case was resolved solely on legal issues, relitigating the case only to
reach the same result would result in an inefficient use of judicial resources and
undermine the policy in favor of the finality of judgments. See Harris, 15 F.3d
at 1572 (noting that upholding the district court’s judgments would not create an
injustice to the losing party where “vacating the decisions and remanding for new
proceedings . . . would be largely duplicative of those before us”); Kotlicky v. U.S.
Fid. & Guar. Co., 817 F.2d 6, 9 (2d Cir. 1987) (“In deciding a Rule 60(b) motion, a
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court must balance the policy in favor of hearing a litigant’s claims on the merits
against the policy in favor of finality.”). In these circumstances, Judge Kane
reasonably concluded that upholding the judgment would not create an injustice to
Obduskey.
Moreover, any risk of injustice to Obduskey is further minimized by the fact
that a panel of this court—whose members had no conflicts of interest—affirmed
Judge Jackson’s order granting the motions to dismiss after conducting a de novo
review of the legal issues. See Obduskey, 879 F.3d at 1219 (“We review the grant of
a motion to dismiss de novo.”). When we review de novo the district court’s grant of
a motion to dismiss, we “apply[] the same legal standard applicable in the district
court.” Teigen v. Renfrow, 511 F.3d 1072, 1078 (10th Cir. 2007). Our prior
affirmance of Judge Jackson’s decision, therefore, involved a fresh review of the
record and relevant case law, without affording any deference to Judge Jackson’s
underlying decision. This review protects against any risk of injustice to Obduskey
and assuages any doubts regarding any prejudice he may have suffered from the
belatedly disclosed stock ownership.11
Similarly, the risk of injustice to Obduskey is also minimized by the Supreme
Court’s affirmance of our decision as to whether McCarthy was acting as a debt
collector under the FDCPA. Obduskey, 139 S. Ct. at 1040. Although Obduskey’s
11
Because Judge Jackson did not disclose any conflict of interest involving
McCarthy, Obduskey has not shown that he suffered any prejudice regarding the
dismissal of McCarthy’s claims. See ROA, Vol. I at 841.
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claims against Wells Fargo were not on appeal to the Supreme Court, Judge
Jackson’s reasoning as to McCarthy involved the interpretation of the same statute
that he used to determine whether Wells Fargo was a debt collector. See ROA, Vol. I
at 827–28. The fact that the Supreme Court affirmed Judge Jackson’s legal reasoning
as to McCarthy, therefore, provides additional assurance that Judge Jackson reached
his decision based on a correct understanding of the statute and that his decision was
not tainted by the stock ownership.
As to the second Liljeberg factor, there is “little or no risk of injustice in other
cases” because “the present denial rest[s] on the specific facts of this case.” Polaroid
Corp. v. Eastman Kodak Co., 867 F.2d 1415, 1420 (Fed. Cir. 1989). Moreover, any
risk of injustice in future cases is lessened by the fact that Judge Jackson’s decision
was affirmed by an unconflicted panel of this court.
Finally, as to the third Liljeberg factor, upholding Judge Jackson’s judgment
will not undermine public confidence in the judicial system. As an initial matter, the
public’s confidence in the judicial process is bolstered by the fact that Judge
Jackson’s decision has been affirmed by an unconflicted panel of this court, as well
as by the Supreme Court’s subsequent affirmance of our decision that McCarthy was
not acting as a debt collector under the FDCPA. Additionally, after the conflict of
interest was disclosed, Judge Kane’s opinion concluding that Judge Jackson violated
§ 455 and affirming his recusal also promotes the public’s confidence in the judicial
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process.12 See Harris, 15 F.3d at 1572 (noting that this court’s “determination that a
violation has occurred” and its order that the conflicted judge “should recuse himself
from all further proceedings” involving the conflict “should instill confidence in the
judiciary”). Moreover, at this late stage in the lifespan of the case, disturbing Judge
Jackson’s judgment entered over six years ago would likely undermine, rather than
promote, the public’s confidence in the judicial process. See Polaroid Corp., 867
F.2d at 1420 (“[T]he public’s confidence in the judicial process is less likely to be
undermined when its result is adhered to in repose, and would be more likely to be
undermined if the law were to countenance a sundering of the result six and one-half
years later on grounds other than the merits.”).
In sum, each of the Liljeberg factors supports Judge Kane’s conclusion that
vacatur was not warranted. The circumstances of this case do not present a risk of
injustice to Obduskey or to litigants in other cases, nor do they risk undermining public
confidence in the judicial system. Accordingly, Judge Kane did not err in finding that
this case does not present the extraordinary or exceptional circumstances that warrant
Rule 60(b)(6) relief.
12
Although Obduskey alleges that Judge Kane is “a co-worker and close
associate” of Judge Jackson, he points to no facts in the record that cause us to
question Judge Kane’s impartiality. Reply Br. at 1.
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IV
For the foregoing reasons, we AFFIRM Judge Kane’s post-judgment order
terminating this case.
Entered for the Court
Mary Beck Briscoe
Circuit Judge
27