Tehrani v. Walters (In Re Walters) ( 2016 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 15-2317
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IN RE: TENNYSON WALTERS and
KARLENE A. RAWLE-WALTERS,
Debtors
NAHID TEHRANI
v.
TENNYSON WALTERS;
KARLENE A. RAWLE-WALTERS,
Appellants
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On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 2-13-cv-06544)
District Judge: Honorable Kevin McNulty
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Submitted Pursuant to Third Circuit LAR 34.1(a)
January 15, 2016
Before: MCKEE, Chief Judge, AMBRO, and SCIRICA, Circuit Judges
(Filed: May 20, 2016)
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OPINION*
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*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
SCIRICA, Circuit Judge
Tennyson Walters and Karlene A. Rawle-Walters filed for Chapter 7 bankruptcy
on April 21, 2010. In the bankruptcy proceeding, Nahid Tehrani obtained a final
judgment declaring a debt the debtors owed Tehrani was non-dischargeable. Before the
District Court, the debtors contended the bankruptcy judge erred by failing to disqualify
herself from the proceeding. The debtors had not moved for the bankruptcy judge to
disqualify herself in the Bankruptcy Court. The District Court found the bankruptcy
judge did not err. We will affirm.1
The debtors appealed to the District Court on several grounds, contending the
bankruptcy judge was biased, should not have given collateral estoppel effect to state
court findings of fraud, and should not have denied certain cross-motions. Regarding the
bias claim, they contended the bankruptcy judge was biased because of how she handled
their case and her familiarity with Tehrani’s attorney. In particular, the debtors stated
Tehrani’s attorney was related to a now-deceased judge for whom the bankruptcy judge
clerked. The debtors also stated the bankruptcy judge was President of the Bankruptcy
Inn of Court and that organization was “formed to honor [the now-deceased judge] and
some other jurists.” App. 22a (internal citation omitted). Furthermore, the debtors
contended, “[i]t would be reasonable to assume therefore that [the bankruptcy judge] and
[Tehrani’s attorney] know each other very well” because Tehrani’s attorney “has
practiced in bankruptcy court for over two decades.” Id. (internal citation omitted). The
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The Bankruptcy Court had jurisdiction under 28 U.S.C. §§ 157(b)(1) and (b)(2)(I). The
District Court had jurisdiction under 28 U.S.C. § 158(a)(1). We have jurisdiction under
28 U.S.C. § 1291.
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debtors also claimed the bankruptcy judge was biased because she decided seventeen
“pleadings and motions” in favor of Tehrani. Id. Finally, the debtors contended there was
a “pattern from the series of pleadings by plaintiff and the corresponding rulings by the
court,” designed so “[a]ll of the ducks would then be in line for the bankruptcy court to
enter a nondischargeable judgment.” Id. at 23a (internal citation omitted).
The District Court rejected these allegations of bias and affirmed the Bankruptcy
Court on all issues the debtors raised. Tehrani v. Walters, No. 2:13–6544(KM), 2015 WL
1815510 (D.N.J. Apr. 21, 2015). On the bias claim, the District Court held even assuming
all the debtors’ allegations were true, “it comes nowhere near a showing of judicial bias
requiring disqualification.” App. 22a. In particular, it held “[i]t is unreasonable to infer
bias based on [Tehrani’s attorney’s] regular practice of bankruptcy law in this district.”
Id. It noted “if an attorney could not litigate more than a certain number of cases in a
particular court without creating an inference of bias, the judicial system might grind to a
halt.” Id. And the court found the debtors’ contentions of bias regarding the bankruptcy
judge’s connections to the now-deceased judge to be “innocuous” and “wholly
unpersuasive.” Id. It rejected the debtors’ claim the bankruptcy judge was biased because
she decided in Tehrani’s favor. As the court stated, “[a] losing streak, without more, is
not suggestive of bias; it ordinarily reflects nothing more or less than the judge’s view of
the merits.” Id. Finally, the court held there was “nothing erroneous, let alone improper,”
about the court’s procedural actions (lifting the automatic stay to permit state court
proceedings to go forward, then adopting the state court’s findings of fraud by way of
collateral estoppel). Id. at 23a.
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On appeal, the debtors present one issue for review: whether the District Court
erred in finding that the bankruptcy judge did not err by failing to disqualify herself from
their bankruptcy proceeding.
“Where a party has not requested that the district judge recuse himself or herself
during proceedings in the district court, we review a recusal argument made on appeal for
plain error.” Selkridge v. United of Omaha Life Ins. Co., 360 F.3d 155, 166 (3d Cir.
2004). This standard applies with respect to bankruptcy court proceedings as well. “For
reversible plain error to exist, there must be (1) an error; (2) that is plain; (3) that affects
substantial rights; and (4) which seriously affects the fairness, integrity, or public
reputation of judicial proceedings.” United States v. Moreno, 809 F.3d 766, 773 (3d Cir.
2016) (internal quotation marks omitted).
A judge must “disqualify h[er]self in any proceeding in which h[er] impartiality
might reasonably be questioned.” 28 U.S.C. § 455(a) (2012). “Under § 455(a), if a
reasonable [perso]n, were [that person] to know all the circumstances, would harbor
doubts about the judge’s impartiality . . . , then the judge must recuse.” Selkridge, 360
F.3d at 167 (internal quotation marks omitted).
The debtors contend, as they did in the District Court, that a “review of . . .
relationships in the bankruptcy case demonstrates that there was impropriety or/and an
appearance of impropriety.” Appellants’ Opening Br. 14 (emphasis removed). But as the
District Court correctly pointed out, “[t]he facts . . . do not raise any reasonable inference
of bias.” App. 21a. This conclusion was not plain error. Even if the contentions the
debtors made in the District Court were true, none of them would cause an objective
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observer to question the bankruptcy judge’s impartiality in this case, as required by
section 455(a). We refer the parties to the District Court’s well-reasoned analysis of the
debtors’ claims of judicial bias, quoted above, which addresses these contentions. App.
21a–23a. We see no error that is plain, affects substantial rights or which seriously affects
the fairness, integrity or public reputation of judicial proceedings.
In addition to renewing arguments they made in the District Court, the debtors
contend for the first time before us that the bankruptcy judge sat on cases in which her
sister, or that sister’s firm, represented a litigant. There is no allegation that the sister
played any role in this case. Because the debtors did not raise their contention about the
sister before the District Court, we decline to consider it.
For the foregoing reasons, we will affirm the judgment of the District Court.
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