Friendly Finance Service-Eastgate Inc. v. Dorsey , 489 F. App'x 763 ( 2012 )

Case: 12-30018 Document: 00512018948 Page: 1 Date Filed: 10/12/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 12, 2012
No. 12-30018 Lyle W. Cayce
Clerk
In the Matter of: GREGORY NEAL DORSEY; GWENDOLYN DORSEY,
Debtors
FRIENDLY FINANCE SERVICE - EASTGATE INCORPORATED,
Appellant
v.
GREGORY NEAL DORSEY; GWENDOLYN DORSEY,
Appellees
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 3:09-CV-573
Before JONES, GARZA and PRADO, Circuit Judges.
PER CURIAM:*
Appellant Friendly Finance Service-Eastgate, Inc. (Friendly Finance)
appeals the denial of its motion to disqualify Bankruptcy Judge Henley Hunter.
For the reasons discussed below, we dismiss for lack of jurisdiction.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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No. 12-30018
Background
The genesis of this appeal was a bankruptcy proceeding filed by Gregory
and Gwendolyn Dorsey. Friendly Finance, a creditor of the Dorseys, filed an
adversary complaint seeking either to have the Dorseys’ debt declared
nondischargeable under 11 U.S.C. § 523 or to have the Dorseys’ discharge denied
under 11 U.S.C. § 727. Bankruptcy Judge Henley Hunter dismissed both of
Friendly Finance’s objections and also determined that Friendly Finance had
repeatedly filed “abusive complaints.” As a result, he enjoined Friendly Finance
from filing any similar complaints in Chapter 7 cases without prior leave of
court. After the district court affirmed Judge Hunter’s decision, Friendly
Finance appealed to this court. We affirmed Judge Hunter’s dismissal of the
§ 523 objection but vacated the district court’s judgment affirming the injunction
and dismissal of the § 727 objection and remanded the case for further
proceedings on those two issues. Friendly Fin. Serv.-Eastgate Inc. v. Dorsey (In
re Dorsey), 505 F.3d 395, 400–01 (5th Cir. 2007) (per curiam).
On remand, Friendly Finance moved to disqualify Judge Hunter under 28
U.S.C. § 455(a) and (b)(1), arguing that “his impartiality might reasonably be
questioned” and that he had a “personal bias or prejudice against [Friendly
Finance], its sister corporations, its parent, Friendly Finance Discount
Corporation, and its president, John G. Loftin.” In a lengthy order from the
bench, Judge Hunter denied the motion to disqualify without hearing any
evidence. He then orally ruled on the § 727 objection and the injunction, leaving
his previous decision on those issues unchanged. Friendly Finance appealed the
decision on the injunction and § 727 objection and moved for rehearing of the
motion to disqualify. After Judge Hunter denied rehearing, Friendly Finance
appealed that decision as well.
On appeal, Judge Robert G. James ruled that Judge Hunter erred in
failing to give Friendly Finance an opportunity to present evidence to support
2
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No. 12-30018
its motion to disqualify. As a result, Judge James vacated Judge Hunter’s order
on disqualification and remanded the case for reconsideration. In the interest
of judicial economy, however, Judge James declined to consider the appeal
regarding the injunction and § 727 objection. Instead, he administratively
terminated1 the appeal pending further proceedings in the bankruptcy court,
noting that “if Judge Hunter recuse[d] himself on remand, the orders entered on
the § 727 objection and injunction should be vacated, and the case should be
referred to another judge.”
Judge Hunter decided not to recuse himself on remand, however, and
again denied the motion to disqualify after hearing evidence. Friendly Finance’s
appeal of that decision was once again before Judge James, who had terminated
Friendly Finance’s previous appeal, but for reasons unknown Judge James
disqualified himself from participating in the case. As a result, the appeal was
reassigned to Chief Judge Richard T. Haik. Before Judge Haik, Friendly
Finance argued that Judge Hunter was wrong to deny the disqualification
motion but did not present any argument on the injunction or § 727 objection.
Judge Haik dismissed the appeal as moot, stating that Judge Hunter no longer
presided over the bankruptcy proceeding. Friendly Finance’s appeal of that
decision is now before this Court.
Discussion
The denial of a motion to disqualify is not an appealable final order under
28 U.S.C. § 1291, is not subject to the collateral order doctrine, and is not an
1
Administrative termination is a device frequently used by district courts “to remove
from their pending cases suits which are temporarily active elsewhere (such as before an
arbitration panel) or stayed (such as where a bankruptcy is pending).” Mire v. Full Spectrum
Lending Inc., 389 F.3d 163, 167 (5th Cir. 2004). This device “affects the count of active cases
pending on the court’s docket” because “administratively closed cases are not counted as
active.” Id. But even though a case may be administratively closed, it “still exists on the
docket of the district court and may be reopened upon request of the parties or on the court’s
own motion.” Id.3
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appealable interlocutory order under 28 U.S.C. § 1292(a). Nobby Lobby, Inc. v.
City of Dall., 970 F.2d 82, 86 n.3 (5th Cir. 1992). Instead, a party “must await
final judgment to appeal [a] judge’s refusal to recuse.” Id.; see also Steering
Comm. v. Mead Corp. (In re Corrugated Container Antitrust Litig.), 614 F.2d
958, 960–61 (5th Cir. 1980) (“Disqualification questions are fully reviewable on
appeal from final judgment.”). Here, there is a final judgment from the
bankruptcy court, but the appeal of that judgment has not been fully resolved.
Neither the denial of the § 727 objection nor the propriety of the injunction
imposed upon Friendly Finance has been addressed on appeal. Instead, the
appeal of those issues was administratively terminated, which “is the functional
equivalent of a stay.” Int’l Ass’n of Machinists & Aerospace Workers Local Lodge
2121 v. Goodrich Corp., 410 F.3d 204, 209 (5th Cir. 2005). Until those issues are
resolved, we lack jurisdiction to review the motion to recuse. Friendly Finance
must await the final resolution of its appeal.2
For the foregoing reasons, the appeal is DISMISSED.
2
We note that the district court dismissed the appeal of the disqualification order as
moot based on the belief that Judge Hunter no longer presides over the matter. It is this
court’s understanding that Judge Hunter remains the presiding judge in this case. In light
of our dismissal of this appeal, the district court may find it appropriate to reevaluate the
recusal issue on its merits.
4