American Employers' Insurance v. King Resources Co.

545 F.2d 1265
CourtCourt of Appeals for the Tenth Circuit
DecidedNovember 5, 1976
DocketNos. 75-1884, 75-1886-75-1891, 75-1897 and 75-1898
StatusPublished
Cited by8 cases

This text of 545 F.2d 1265 (American Employers' Insurance v. King Resources Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Employers' Insurance v. King Resources Co., 545 F.2d 1265 (10th Cir. 1976).

Opinions

BARRETT, Circuit Judge.

John M. King (King), appearing pro se, appeals the District Court’s en banc denial of his motion to consolidate nine (9) actions. King’s motion was to consolidate “for purposes of settlement only.”

The nine actions which King sought to be consolidated included: American Employers’ Insurance Company v. King Resources Company, an action by an insurance company for the rescission of an officers and directors liability insurance policy; Bottger v. King Resources Company, a class action securities fraud case involving the sale of certain limited partnership interests; The Dietrich Corporation v. King Resources Company, Gross, et al. v. Blyth & Co., Inc., et al, Morrell, et al. v. John M. King, et al., three consolidated security fraud class actions involving the sale of King Resources Company stocks and securities; In the Matter of King Resources, and In the Matter of Imperial-American Resources, two separate reorganization proceedings under Chapter X of the Bankruptcy Act; In the Matter of John McCandish King, and In the Matter of The Colorado Corporation, two separate liquidation “straight” bankruptcy proceedings, contained in Chapters I-VII.

The cases all arose, directly or indirectly, as a result of King’s elaborate, aggressive, and broadranging investment activities throughout the world and the subsequent demise of same. Their interrelationship is predicated upon King’s involvement within each on a personal or corporate official basis. The cases were, for the most part, filed in 1971. They have proceeded to various stages of agreements and settlements. None of the cases have been finalized in terms of effectuating settlement agreements or adjudicative determinations. Furthermore, we have not been informed nor are we able to ascertain from the record that these cases encompass all the matters presently ripe for adjudication or that their adjudication will afford any degree of finality to the plethora of litigation generated by the demise of King’s investment activities.

On October 24, 1975, approximately four years after the initial litigation herein was commenced, King filed his motion to consolidate seeking the “appointment of an independent tribunal (judge) to hear and finally determine an overall settlement and the enforcement thereof.” In denying his motion, the district court, sitting en banc, held:

. the fiduciaries and all parties in interest in these cases and proceedings have such conflicts of interest and that there are so many cross, currents within these matters, that any judge assigned to hear them in their totality would be so caught up in those conflicts as to subject his determinations to the appearance of a lack of impartiality. Under 28 U.S.C. § 455, as amended by P.L. 93-512, a judge must disqualify himself in any proceeding in which his impartiality might be questioned. Additionally, the court . has expressly held that a judge supervising a Chapter XI proceeding should not hear an action involving an attempt to recover insurance proceeds for the payment of debts involved in the arrangement. United Family Life Insurance Company v. Barrow, 452 F.2d 997 (10th Cir. 1971). To grant this motion would violate the admonition of that decision.

As part of his petition for reconsideration of his motion to consolidate King alleged, inter alia:

4. That the essence of the subject motion was not that an independent judge be appointed to hear these matters “in their totality”; but that an independent forum be established for the purposes of determining that the pending settlements are fair, equitable, reasonable and adequate to parties affected thereby and for the purpose of redress. (Emphasis supplied.)

King did not specify the manner in which an “independent forum” could be procedur[1268]*1268ally established, nor did he certify that all the cases had achieved a pending settlement capable of consolidation, and that the consolidated cases represent all the actions or claims which can arise by reason of the various proceedings in bankruptcy and/or related thereto which are ongoing.

On appeal King contends that (1) it is the responsibility of the courts to insure a fair, equitable, reasonable, and adequate determination of the rights of all the parties involved in these actions, and (2) the extremely complicated nature of these cases, as well as their interdependency, together, with the conflicts of interest and other inherent problems regarding the approved settlements, mandate the need for a separate forum to afford all of the parties involved a fair, equitable, reasonable, and adequate determination of their rights, for purposes of settlement and enforcement of such overall settlement. None of the other affected parties have joined King in this appeal, nor have they seen fit to adopt or support his arguments on appeal.

Because of the dispositive nature of the district court’s order, we hold that King’s contentions miss their mark and are not germane. Suffice it to note that whereas the district court acknowledged the “appeal to reason and common sense” expressed in King’s motion for consolidation, we likewise agree that “it would be nice,” if possible, for one judge to administer a final overall settlement disposition of all assets on a theoretically impartial, fair, and equitable basis for the debtors and creditors. However, the facts of this case and the law do not comport with the implementation of the requested consolidation settlement. The purpose of bankruptcy from the point of view of one deeply in debt is relief, while the purpose from the point of view of the creditor is that of salvaging some recovery. The public interest is sympathetic with both interests.

I

The district court properly relied upon 28 U.S.C.A. § 455 as amended by P.L. 93-512 and United Family Life Insurance Company v. Barrow, 452 F.2d 997 (10th Cir. 1971) in denying the motion for consolidation. Section 455 provides in part:

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

King’s requested consolidation would certainly and necessarily place a judge in the position of weighing the interests of all parties, non-parties, and absent parties, whose interests are diverse and in sharp conflict. His impartiality would likely be under constant challenge. A judge could not effectuate the settlement of the rescission action involved herein, together with the securities fraud cases and do “equity” between the competing interests and those interested parties while settling two reorganization proceedings and two bankruptcies involving untold numbers of other parties with other interests and claims. Such a “Solomonic” approach is not possible.

In United Family Life Insurance Company v. Barrow, supra, this Court held that the interrelationship of the cases precluded their assignment to one judge:

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Bluebook (online)
545 F.2d 1265, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-employers-insurance-v-king-resources-co-ca10-1976.