FILED DEC 07 2015
1 NOT FOR PUBLICATION 2 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. NC-14-1573-TaDJu )
6 JACQUELINE C. MELCHER, ) Bk. No. 01-53251 A/K/A Jacqueline Carlin, )
7 )
Debtor. )
8 ______________________________)
)
9 JACQUELINE C. MELCHER, )
)
10 Appellant, )
)
11 v. ) MEMORANDUM* )
12 JOHN W. RICHARDSON, CHAPTER 7 )
TRUSTEE, )
13 )
Appellee. )
14 ______________________________) 15 Argued and Submitted on October 23, 2015 at San Francisco, California 16 Filed – December 7, 2015
17 Appeal from the United States Bankruptcy Court 18 for the Northern District of California 19 Honorable Arthur S. Weissbrodt, Bankruptcy Judge, Presiding 20 Appearances: Jacqueline C. Melcher argued pro se; Charles 21 Patrick Maher of McKenna Long & Aldridge LLP argued for John W. Richardson, Chapter 7 Trustee.
22 23 Before: TAYLOR, DUNN, and JURY, Bankruptcy Judges. 24 25 26 * This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8024-1(c)(2).
1 INTRODUCTION 2 In the latest installment of this ongoing bankruptcy saga, 3 chapter 71 debtor Jacqueline Melcher appeals from the bankruptcy 4 court’s pre-filing order. We AFFIRM the bankruptcy court in the 5 main; but, in a narrow regard, we REVERSE and REMAND with 6 instructions that the bankruptcy court strike certain language 7 from the order. 8 FACTS2 9 The Debtor is no stranger to the Panel; various issues in 10 her now 14-year old bankruptcy case spawned two prior appeals. 11 See Estate of Terrence P. Melcher v. Melcher (In re Melcher), 12 2006 WL 6810966 (9th Cir. BAP May 31, 2006) (“Melcher I”), 13 aff’d, 300 F. App’x 455 (9th Cir. 2008); Richardson v. Melcher 14 (In re Melcher), 2014 WL 1410235 (9th Cir. BAP Apr. 11, 2104) 15 (“Melcher II”). Those memorandum decisions detail the factual 16 background of the property division disputes between the Debtor 17 and her deceased ex-husband and his probate estate and the 18 Debtor’s bankruptcy. There is a long complicated history, but 19 we recount here only those facts most relevant to the present 20 appeal. 21 At the heart of the Debtor’s disputes is 3.75 acres of real 22 property located on Martha’s Vineyard and known as “Stonewall.” 23 24
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Unless otherwise indicated, all chapter and section 25 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 26 2 We exercise our discretion to take judicial notice of 27 documents filed in the bankruptcy case. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th 28 Cir. BAP 2003).
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1 During pre-petition divorce proceedings, a California state 2 court ordered the Debtor to sell Stonewall and then split the 3 proceeds with her ex-husband. In the face of this mandate, she 4 filed a chapter 11 petition in June 2001, mere hours before a 5 sale of Stonewall was to close. 6 In September 2008, the bankruptcy case was converted to 7 chapter 7. As the Melcher II panel observed, the Debtor then 8 began to “oppose[] most substantive actions of the Trustee to 9 liquidate estate property.” 2014 WL 1410235, at *2. 10 Eventually, the Trustee requested, at least twice, an 11 adjudication that the Debtor was a “vexatious litigant”; the 12 bankruptcy court denied these requests. 13 Following a further series of protracted proceedings 14 relating to his unsuccessful attempts to sell Stonewall, the 15 Trustee made another attempt to obtain an order controlling the 16 Debtor-driven litigation juggernaut. The Trustee asserted that 17 the Debtor had: 18 [S]teadily depleted her bankruptcy estate by (1)
incurring during the Chapter 11 case $3.5 million in 19 professional expenses, borrowing approximately the same sum secured by equity in real estate, and selling [a 20 rental property], and (2) filing possibly 1,000 pleadings or more during the Chapter 7 case, [and]
21 challenging the Trustee in almost every aspect of his administration of the bankruptcy estate.
22 23 Id. at *8. The bankruptcy court, again, denied his motion, and 24 the Trustee appealed. 25 On appeal, the Melcher II panel determined that the 26 Trustee’s motion in effect requested a pre-filing restriction 27 and that the bankruptcy court abused its discretion in denying 28 this request. After determining that the standard articulated
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1 in DeLong v. Hennessey, 912 F.2d 1144 (9th Cir. 1990), was 2 applicable, it vacated and remanded. In short, DeLong required 3 consideration of factors which were clearly satisfied based on 4 the evidence in the record on appeal: the Debtor received 5 sufficient notice and an opportunity to be heard in relation to 6 the request for a pre-filing order, and an adequate record of 7 the Debtor’s abusive litigation activities over a lengthy period 8 of time existed. The Melcher II panel observed that the 9 Debtor’s history of litigation and motive in pursuing litigation 10 “were no longer subject to any dispute,” and pointed to the 11 Ninth Circuit’s determination in another appeal that the 12 Debtor’s motive in the bankruptcy case was an abusive use of the 13 bankruptcy process. Id. at *10-11. It also noted that the 14 “record establishe[d] beyond any question that estate assets 15 [had] been all but used up as a result of [the Debtor’s] 16 continued meritless litigation.” 2014 WL 1410235, at *11. And, 17 finally, it noted that no sanction short of a pre-filing 18 restriction would curtail the Debtor’s actions. 19 The Melcher II panel, thus, concluded that the bankruptcy 20 court abused its discretion and clearly erred in denying the 21 Trustee’s motion. It vacated the order denying the motion and 22 remanded the case back to the bankruptcy court with instructions 23 that it make appropriate findings and that it implement an 24 appropriate pre-filing order. 25 On remand, the bankruptcy court complied and issued the 26 required order (“Pre-Filing Order”). Based on its findings, the 27 bankruptcy court ordered that the Debtor was “enjoined from 28 filing, in this bankruptcy case, and any related litigation with
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1 the Trustee in any other federal or state court, any further 2 pleadings without prior order of this Court.” It then provided 3 guidelines for any proposed future filings. The Debtor 4 appealed. 5 JURISDICTION 6 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 7 §§ 1334 and 157(b)(2)(A) and (O). We have jurisdiction under 8 28 U.S.C. § 158. 9 ISSUE 10 Whether the bankruptcy court abused its discretion in 11 issuing the Pre-Filing Order. 12 STANDARD OF REVIEW 13 We review for an abuse of discretion a bankruptcy court’s 14 decision to issue pre-filing orders. See Ringgold–Lockhart v. 15 Cnty. of Los Angeles, 761 F.3d 1057, 1062 (9th Cir. 2014). A 16 bankruptcy court abuses its discretion if it applies the wrong 17 legal standard, misapplies the correct legal standard, or if its 18 factual findings are illogical, implausible, or without support 19 in inferences that may be drawn from the facts in the record. 20 See TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 21 (9th Cir. 2011) (citing United States v. Hinkson, 585 F.3d 1247, 22 1262 (9th Cir. 2009) (en banc)). 23 We may affirm on any basis supported by the record. Heers 24 v. Parsons (In re Heers), 529 B.R. 734, 740 (9th Cir. BAP 2015). 25 DISCUSSION 26 A. Request for recusal 27 As a preliminary matter, we consider the Debtor’s motion 28 seeking an order recusing Judge Dunn from this appeal based on
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1 his membership in the Melcher II panel.3 She contends that the 2 Melcher II panel, including Judge Dunn, was unduly harsh and 3 simply “adopted the Trustee’s unsupported litigious accusations 4 against [her] and did not rule on the prudential standing issue 5 on appeal.” Given his involvement in Melcher II, the Debtor 6 believes that “Judge Dunn cannot hear the [appeal] in a fair and 7 prudential manner.” 8 The decision on a motion to recuse a judge rests with that 9 particular judge. See Bernard v. Coyne (In re Bernard), 31 F.3d 10 842, 843 (9th Cir. 1994). As a result, Judge Dunn is 11 appropriately involved in the recusal decision. 12 In relevant part, 28 U.S.C. § 455(a)-(b)(1) provides that a 13 judge must “disqualify himself in any proceeding in which his 14 impartiality might reasonably be questioned,” such as “[w]here 15 he has a personal bias or prejudice concerning a party . . . .” 16 Emphasis added. Whether an appearance of impropriety exists is 17 examined from an objective standpoint. Blixseth v. Yellowstone 18 Mountain Club, LLC, 742 F.3d 1215, 1219 (9th Cir. 2014) (“We 19 gauge appearance by considering how the conduct would be viewed 20 by a reasonable person, not someone hypersensitive or unduly 21 suspicious.”) (internal quotation marks and citation omitted). 22 Here, Judge Dunn’s involvement in Melcher II is an 23 insufficient basis to demonstrate impartiality, personal bias, 24 or prejudice. It is well established that “judicial rulings 25 alone almost never constitute a valid basis for a bias or 26 27 3 Judge Jury was also a member of the Melcher II panel;
28 however the Debtor does not seek her recusal from this appeal.
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1 partiality motion.” Liteky v. United States, 510 U.S. 540, 555 2 (1994). That Judge Dunn sat on the Melcher II panel and gained 3 information and insight in so doing is also an insufficient 4 basis. “[O]pinions formed by the judge on the basis of facts 5 introduced or events occurring in the course of the current 6 proceedings, or of prior proceedings, do not constitute a basis 7 for a bias or partiality motion unless they display a 8 deep-seated favoritism or antagonism that would make fair 9 judgment impossible.” Id. 10 Here, the Debtor fails to show that the Melcher II decision 11 or any other facts reveal a “high degree of favoritism or 12 antagonism” by Judge Dunn such that a fair judgment on this 13 appeal is impossible. She takes particular umbrage at the 14 following statement in the Melcher II decision: “she [the 15 Debtor] will only sell the Stonewall property if she absolutely 16 has to at the end of her life.” The decision, however, refers 17 to this statement only twice,4 and in doing so is quoting the 18 bankruptcy court’s statement at a prior hearing. Judge Dunn’s 19 impartiality is not subject to reasonable question; we deny the 20 Debtor’s motion to recuse. 21 B. Pre-filing Order 22 On appeal, the Debtor reiterates the long litigation history 23 involving Stonewall and then argues that the Trustee had no 24 basis to declare her a vexatious litigant or to assassinate her 25 character and reputation. She asserts that the Trustee’s 26
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27 The Melcher I decision also refers to this statement, also quoting the bankruptcy court. Judge Dunn, however, did not 28 sit on the Melcher I panel.
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1 efforts are at their core an attempt to retroactively void a 2 prior bankruptcy court order that permitted her to object to the 3 Trustee’s fees. To be clear, the sole issue before us on this 4 appeal is whether the bankruptcy court abused its discretion in 5 issuing the Pre-filing Order; the prudential standing issue that 6 is the focus of much of the Debtor’s argument on appeal is not 7 before us. With one narrow exception, we conclude that there 8 was no abuse of discretion. 9 A pre-filing restriction permits a federal court to 10 “regulate the activities of [an] abusive litigant[] by imposing 11 carefully tailored restrictions under . . . appropriate 12 circumstances.” Ringgold-Lockhart, 761 F.3d at 1061. This 13 restriction, however, must be tempered by a litigant’s right of 14 access to the courts. Id. 15 In this respect, in order to impose pre-filing restrictions, 16 a federal court must: (1) give the litigant notice and “an 17 opportunity to oppose the order” prior to its entry; (2) compile 18 an adequate record for appellate review, including “a listing of 19 all the cases and motions that led the [] court to conclude that 20 a vexatious litigant order was needed”; (3) make substantive 21 findings of frivolousness or harassment; and (4) tailor the 22 order narrowly so as “to closely fit the specific vice 23 encountered.” Id. at 1062. The first two requirements are 24 procedural in nature; the third and fourth, constitute 25 “substantive considerations.” Id. 26 The Melcher II panel concluded that the procedural 27 considerations were satisfied. It instructed the bankruptcy 28 court on remand to make appropriate findings in connection with
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1 the substantive considerations. As a result, our review in this 2 appeal is focused solely on those particular requirements. 3 In assessing the substantive considerations and determining 4 “whether a party is a vexatious litigant and whether a 5 pre-filing order will stop the vexatious litigation or if other 6 sanctions are adequate,” the court must consider the following 7 five factors, known as the “Safir5 factors”: 8 (1) the litigant’s history of litigation and in particular 9 whether it entailed vexatious, harassing or duplicative 10 lawsuits; 11 (2) the litigant’s motive in pursuing the litigation, e.g., 12 does the litigant have an objective good faith expectation 13 of prevailing?; 14 (3) whether the litigant is represented by counsel; 15 (4) whether the litigant has caused needless expense to other 16 parties or has posed an unnecessary burden on the courts 17 and their personnel; and 18 (5) whether other sanctions would be adequate to protect the 19 courts and other parties. 20 Ringgold-Lockhart, 761 F.3d at 1062. The fifth factor is of 21 particular importance. Id. 22 1. Findings of Frivolousness or Harassment 23 To determine whether litigation is frivolous, the court 24 “must look at both the number and content of the filings as 25 indicia of the frivolousness of the litigant’s claims.” Id. at 26 27 5 See Safir v. U.S. Lines, Inc., 792 F.2d 19 (2d Cir.
28 1986).
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1 1064 (internal quotation marks and citation omitted). The court 2 may also “make an alternative finding that the litigant’s 3 filings show a pattern of harassment.” Id. (internal quotation 4 marks and citation omitted). Repetitious filings do not 5 constitute harassment per se; rather, the court must determine 6 whether the repetitious filings are done with “an intent to 7 harass the defendant or the court.” Id. 8 Here, the bankruptcy court identified the Safir factors and 9 made the following findings thereunder: 10 First factor. 11 C Many of the Debtor’s multiple pleadings and appeals were 12 duplicative of matters already ruled upon and/or were 13 frivolous and, in many instances, intended to block the 14 normal bankruptcy process and inhibit the Trustee from 15 administering the estate; 16 C The Debtor continued to re-hash arguments that the 17 bankruptcy court had already ruled on; and 18 C The Debtor directed personal attacks against the Trustee and 19 his counsel, and other parties in the case, including her 20 ex-husband’s estate and its counsel. 21 Second factor. The Debtor’s numerous, largely duplicative 22 filings were an abuse of the bankruptcy process. 23 Third factor. While the Debtor was unrepresented, her pro 24 se status was not enough to overcome the fact that she 25 continually failed to heed the bankruptcy court’s efforts to 26 instruct her as to proper procedures and to limit her arguments. 27 Fourth factor. 28 C The Debtor’s conduct had caused needless expense and
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1 unnecessary burden to other parties and to the bankruptcy 2 court; and 3 C Many of the estate’s assets had been expended as a result of 4 the Debtor’s continued and substantially meritless 5 litigation, negatively impacting creditors and the Trustee. 6 Fifth factor. No sanction short of a pre-filing restriction 7 would curtail the Debtor’s duplicative or frivolous filings. As 8 stated, the Debtor had not heeded the bankruptcy court’s 9 admonitions and surcharging a claimed homestead exemption was no 10 longer viable in light of Law v. Siegel. 11 On this record, the bankruptcy court’s findings were not 12 clearly erroneous. As detailed in Melcher I and Melcher II, and 13 the Ninth Circuit’s unpublished decision affirming Melcher I in 14 Melcher v. Estate of Terrence P. Melcher (In re Melcher), 300 F. 15 App’x 455 (9th Cir. 2008), the Debtor has a long history of 16 filing motions, papers, and appeals that are frivolous or 17 evidence a pattern of harassment. The Debtor continues to 18 advance arguments about Stonewall and the impropriety of the 19 Trustee’s and other parties’ actions in relation to the 20 property. See, e.g., In re Melcher, 300 F. App’x at 456 (“[T]he 21 [BAP] has found that Jacqueline did not file the [Chapter 11] 22 Plan in good faith but to keep Stonewall from being sold. It is 23 time to bring this abuse of the bankruptcy process to an end. 24 We affirm the judgment of the BAP.”). The order to sell 25 Stonewall was long ago adjudicated by the California state 26 court, affirmed by the California court of appeal, and is now 27 beyond dispute in the federal courts. See In re Marriage of 28 Melcher, 2006 WL 119127, at *18 (Cal. Ct. App. Jan. 13, 2006)
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1 (affirming the state court’s order to sell Stonewall), reh’g 2 denied, Feb. 9, 2006, review denied, Mar. 29, 2006. 3 There is no question that a once solvent estate is now 4 insolvent due to the Debtor’s protracted efforts to stall the 5 sale of Stonewall and other real properties. Between the dates 6 that the case was converted to chapter 7 (and the Trustee was 7 appointed to the case) and the Debtor’s filing of the notice of 8 appeal in the present appeal, there have been over 2,000 docket 9 entries in the bankruptcy case. Review of the docket in just 10 the first year of the chapter 7 case reflects a number of 11 motions, oppositions, and other papers filed by the Debtor - the 12 bankruptcy court denied many of the Debtor’s requests and 13 objections contained therein. This pattern continued in 14 subsequent years. 15 On this record, the bankruptcy court’s findings clearly 16 support a vexatious litigant finding and the imposition of a 17 pre-filing restriction against her. 18 2. Narrowly tailored 19 In addition, a “pre-filing order[] must be narrowly tailored 20 to the vexatious litigant’s wrongful behavior.” 21 Ringgold-Lockhart, 761 F.3d at 1066 (internal quotation marks 22 and citation omitted). In Ringgold-Lockhart, the Ninth Circuit 23 determined that the pre-filing order was too broad where the 24 order provided that the district court would first deem the 25 action “meritorious.” The Ninth Circuit determined that by 26 adding this qualifier, “the district court added a screening 27 criteria that is not narrowly tailored to the problem before it, 28 and is in fact unworkable.” Id.
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1 Here, the Pre-Filing Order provides that the bankruptcy 2 court “will permit the filing of the pleading only if it appears 3 that the pleading has merit and is not duplicative of matters 4 previously ruled upon by this Court and/or an appellate court, 5 and has not been filed for the purposes of harassment or delay.” 6 With one exception, we conclude that the order is not overly 7 broad. 8 First, the screening criteria are substantively narrowly 9 tailored. The order refers to criteria as: “not duplicative of 10 matters previously ruled upon by” the bankruptcy court or an 11 appellate court, and which has not been filed for the purposes 12 of harassment or delay; these are appropriate screening 13 criteria. The order, however, contains one form of 14 inappropriate criterion: that the bankruptcy court will 15 determine whether the pleading “appears to have merit.” As 16 stated in Ringgold-Lockhart, this type of criterion is overly 17 broad for a pre-filing restriction. See 761 F.3d at 1066. 18 Nonetheless, the offensive language may be stricken from the 19 order without issue. 20 Second, the Pre-Filing Order is appropriately limited to 21 actions involving the Trustee. Again, the record clearly shows 22 that the Debtor has fought the Trustee at every step both in and 23 out of the bankruptcy court, thereby exhausting significant 24 estate assets and prejudicing the interests of creditors and the 25 Debtor alike. There is no danger that this portion of the order 26 could extend to factual scenarios entirely unrelated to the 27 Trustee in his capacity as the estate representative.
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1 CONCLUSION 2 Based on the foregoing, we AFFIRM the bankruptcy court in 3 part; but, we REVERSE and REMAND the order back to the 4 bankruptcy court with instructions that it strike the “has merit 5 and” phrase from page four, line 19 of the Pre-Filing Order. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26