GREGORY M. SLEET, District Judge.
Presently before the court is the pro se appeal (D.I. 1) of Ahmed Amr ("Appellant"), a former shareholder of the above-captioned Chapter 11 debtors ("Debtors"), from a Bankruptcy Court Memorandum Order (B.D.I. 2107)
On September 29, 2016, the court issued a Memorandum Opinion and Order denying numerous motions and requests for relief filed by Appellant and other similarly aggrieved former shareholders, both related and unrelated to this appeal (the "Shareholder Motions").
The court assumes familiarity with the history of the Debtors' bankruptcy cases. The factual background of this case is set forth in prior opinions by the Bankruptcy Court.
This appeal arises from the Chapter 11 cases of Syntax-Brillian Corporation and its debtor affiliates. Prior to commencing these cases, the Debtors were in the business of selling "Olevia" brand flat screen televisions through retail distribution channels such as Target. The televisions were sourced and assembled in Asia and shipped to the United States. The record reflects that the Debtors were victims of a large scale fraud perpetuated by their pre-bankruptcy management and certain of their vendors or business partners in the Far East. As a result of losses suffered due at least in part to such fraud, the Debtors' business collapsed in the spring of 2008, and these cases were commenced on July 8, 2008 ("Petition Date"), with the stated intention of effecting a sale of substantially all assets under section 363 of the Bankruptcy Code. (See B.D.I. 1.) On August 12, 2008, the Bankruptcy Court entered an order authorizing the Debtors' retention and employment of the law firm of Greenberg Traurig, LLP ("GT") as its bankruptcy counsel. (B.D.I. 236.) The record reflects that Nancy A. Mitchell was one of the GT attorneys that lead the Debtors' representation. Following the Petition Date, the Bankruptcy Court approved sale procedures and bid protections for a proposed stalking horse bidder. (B.D.I. 210.) No competing bidders appeared, and the sale was approved by the Bankruptcy Court on August 22, 2008 (B.D.I. 317.) The stalking horse bidder subsequently failed to close on the sale, however, and the Debtors promptly shut down operations.
The Office of the United States Trustee ("UST") moved for the appointment of an examiner to investigate, among other things, substantial allegations of fraud and misconduct by the Debtors' former officers and directors, as well as prepetition business dealings between the Debtors and their Asian suppliers and business partners. (See B.D.I. 112.) The UST's motion was supported by a number of shareholders, including the Appellant. (See B.D.I. 276.) Specifically, Appellant contended that he had undertaken his own investigation and had uncovered substantial evidence of wrongdoing by the Debtors' prepetition management and numerous entities in the Far East. The UST's motion was opposed by the Debtors (B.D.I. 133, 150), the Official Committee of Unsecured Creditors ("Committee"), and by Silver Point Finance. LLC ("Silver Point"), the Debtors' DIP lender and primary prepetition secured creditor, on the bases that (i) the Debtors and Committee were capable of performing any necessary investigation, and (ii) the estates had insufficient time and money to allow for a court-ordered investigation. The Bankruptcy Court overruled these objections and appointed an examiner by Order dated September 3, 2008. (B.D.I. 366.) The Bankruptcy Court further directed that the examiner meet with Appellant to obtain the benefit of his efforts. (See B.D.I. 416.)
The examiner completed his investigation and reported back to the Bankruptcy Court at a hearing held on October 22, 2008. The examiner reported that there was substantial reason to believe that the Debtors had been defrauded by their vendors or business partners in the Far East, and that the Debtors' prepetition management was either complicit in the wrong doing or negligent in allowing it to occur. The examiner recommended further investigation and the commencement of litigation on behalf of the Debtors' estates. On November 26, 2008, the Committee obtained authority from the Bankruptcy Court to sue and promptly commenced an adversary proceeding against numerous parties.
The Debtors filed a proposed plan of liquidation. On March 12, 2009, the Bankruptcy Court approved the Debtor's Second Amended Disclosure Statement (B.D.I. 1017, 1020) (the "Disclosure Statement"). The Disclosure Statement made fulsome disclosure regarding pre-petition and post-petition investigations and claims of the Debtors against a variety of parties, including prior management and trading partners. The Disclosure Statement also specifically stated that recovery for shareholders was unlikely. (See B.D.I. 1017 at 40.) On July 6, 2009, the Bankruptcy Court entered an order (B.D.I. 1529) (the "Confirmation Order") confirming the Debtors' Second Amended Chapter 11 Liquidation Plan (B.D.I. 1016) (the "Plan"). The effective date of the Plan occurred on July 7, 2009 (the "Effective Date"). (See B.D.I. 1533.) On August 6, 2009, GT filed its final application for compensation and reimbursement of expenses as counsel to the Debtors for the period from July 8, 2008 through July 7, 2009 (B.D.I. 1583), which was approved by the Bankruptcy Court on September 10, 2009 (B.D.I. 1608) ("Final Fee Order").
Pursuant to the Plan, on the Effective Date, the Debtors' attorneys were exculpated from "any liability for any post-petition action taken or omitted to be taken in connection with or in contemplation of the restructuring or liquidation of the Debtors and/or relating to the Chapter 11 Cases" with the exception of acts or omissions determined in "a Final Order to have constituted gross negligence or willful misconduct. . .". (Plan, Article XI.A.) The Plan also authorized the establishment of a liquidating trust (the "Liquidation Trust") and appointment of a liquidation trustee ("Trustee") to, among other duties, hold the Liquidation Trust Assets, pursue Causes of Action,
(Plan, Article IV.A.7.) Thus, although the Plan provided that shareholders could potentially receive a distribution on account of their stock holdings in the Debtors, both the Plan and federal law expressly provide that no distributions to shareholders can be made until all allowed claims are paid in full. See 11 U.S.C. § 510(b).
Consistent with his duties under the Plan, the Trustee has pursued various Causes of Action, including litigation against former officers and directors of the Debtors. (See B.D.I. 2413 at 5.) The Trustee also conducted an investigation into possible claims against Appellees, which resulted in a comprehensive settlement pursuant to Federal Rule of Bankruptcy Procedure 9019 between the Trusts and Appellees, approved by the Bankruptcy Court on February 2, 2012 (B.D.I. 1976) ("Settlement Order"). The Settlement Order settled and released any and all claims arising from the pre-petition conduct of Appellees, and, to the extent not already released or exculpated under the Exculpation Provision of the Plan, any claims arising from the post-petition conduct of Appellees. See id. As of June 3, 2016, the Trustee reported that a 21% distribution has been made to holders of Allowed General Unsecured Claims. (See B.D.I. 2371, ¶ 12.) The Trustee also reported that he does not anticipate that holders of Allowed Equity Interests will receive a distribution in the Chapter 11 cases. (See id. at ¶ 10.)
On December 20, 2011, over two years after GT ceased performing in their role as counsel to the Debtors, Appellant filed a motion to sanction GT (B.D.I. 1950) (the "Sanctions Motion") and a motion to compel the production of certain documents (B.D.I. 1951) (the "Turnover Motion"). Appellant's Sanctions Motion sought various relief based on GT's alleged fraud upon the court, including disgorgement of GT's fees, sanctions for alleged violations of discovery rules, a compensatory award of $2 million in favor of "pro se litigants," and serious sanctions, including disbarment, for alleged violations of the Federal Rules of Bankruptcy Procedure and the Delaware Lawyers' Rules of Professional Conduct. (See B.D.I. 1950.) The Turnover Motion sought an order compelling the Liquidation Trust and GT to release and/or turn over the "full inventory" of the Debtors' Board of Director meeting minutes. (See B.D.I. 1951.) On January 12, 2012, the Liquidation Trust filed an Objection to these motions. (B.D.I. 1957.)
Before the Bankruptcy Court could rule, more pleadings followed. On January 26, 2012, Appellant filed a Request for Judicial Notice in Support of Motion to Sanction Nancy Mitchell and Greenberg Traurig and in Support of His Objection to Trustee's Settlement Agreement With Greenberg Traurig. (B.D.I. 1967.) GT filed its objection to the Sanctions and Turnover Motions on February 8, 2012. (B.D.I. 1997.) On February 10, 2012, Appellant filed a Request for Admissions (the "Discovery Requests"). (B.D.I. 1982.) On February 15, 2012, the Bankruptcy Court conducted a hearing with respect to the Turnover Motion, the Sanctions Motion, and the related objections of the Trust and GT. At the conclusion of the hearing, the Bankruptcy Court took the matters under advisement.
On March 2, 2012, the Bankruptcy Court entered an order denying the Turnover Motion on the bases that (1) the Bankruptcy Court "had previously ruled on, and denied, [Appellant's] request for the documents or information sought via the [Turnover Motion] on several occasions" and (2) "the purpose of the [Turnover Motion] is "to develop facts relating to potential claims that belong, not to [Appellant], but to the estates and to the Trusts created under the confirmed Plan." (B.D.I. 1996.) On the same date, the Bankruptcy Court entered an order denying the Sanctions Motion, on the bases that the Bankruptcy Court had "previously approved a comprehensive settlement between the Trusts and [GT] by order dated February 2, 2012 [Docket No. 1974]" and that "the predicate for the [Sanctions Motion] rests upon claims that have been settled or released by the confirmed Plan or by [Settlement Order]." (B.D.I. 1997.)
On March 6, 2012, Appellant filed a Motion for a Continuance of the Hearing to Sanction Mary [sic] Mitchell (B.D.I. 2004) (the "Motion for Continuance"), On March 6, 2012, the Bankruptcy Court entered an order denying the Motion for Continuance (B.D.I. 2000) because there was "no legal basis upon which [Appellant] may assert standing to seek the relief sought in the [Sanctions Motion]" and because the Court previously denied the relief requested in the Sanctions Motion due to Appellant's lack of standing, among other things. On March 8, 2012, Appellant filed the Reconsideration Motion. (B.D.I. 2001.) Through the Reconsideration Motion, Appellant asked the Bankruptcy Court to vacate its orders denying the Sanctions Motion and the Turnover Motion. On April 11, 2012, and October 3, 2012, the Bankruptcy Court held hearings on the Reconsideration Motion. At the April 11, 2012 hearing on the Reconsideration Motion, Appellant stated that he "is not seeking any relief from the estate and is not asserting any cause of action from Nancy Mitchell's and GT's pre-petition conduct. The movant is only asserting causes of action related to GT's and Nancy Mitchell's post-petition misconduct as it applied to the movant." (B.D.I. 2054, 4/11/2012 Hr'g. Tr. at 42:5-9.) The Bankruptcy Court took the matter under advisement and, on December 7, 2012, entered the Reconsideration Order which denied all relief sought in the Reconsideration Motion. (B.D.I. 2107.) Rather than appeal the Reconsideration Order at this time, Appellant filed a series of motions seeking to alter or amend the Reconsideration Order.
On January 29, 2013, Appellant filed a Notice of Appeal with respect to the Reconsideration Order. (D.I. 1.) The Notice of Appeal was filed after the statutory deadline, and Appellee's motion to dismiss the appeal as untimely (D.I. 6) was granted on January 12, 2015. (See D.I. 30.) The order dismissing the appeal was vacated by order of the Court of Appeals for the Third Circuit dated June 26, 2015. (See D.I. 34.)
As a prepetition holder of the Debtors' common stock, Appellant has actively participated in the Chapter 11 proceedings, making numerous appearances in court and numerous pro se requests for relief. Recognizing the importance of Appellant's input, the Bankruptcy Court previously awarded Appellant $6,700 pursuant to 11 U.S.C. § 503(b). Other former shareholders have also made numerous pro se filings in the Chapter 11 cases, seeking relief post-confirmation. (See B.D.I. 2393.) The court is well aware of the losses suffered by shareholders on account of the Debtors' collapse. Judge Shannon recognized the wrongs suffered by the Debtors' former shareholders:
Syntax-Brillian Corp., 551 B.R. at 158. Notwithstanding, the post-confirmation docket reflects a deluge of filings made by Appellant and other former shareholders seeking to unwind the Chapter 11 liquidation and other relief.
Following the filing of the appeal, on or about October 2, 2013, the Trustee entered into a settlement ("Shareholder Settlement") with certain former shareholders, including Appellant ("Settling Shareholders") to eliminate ongoing litigation expenses and to settle pending litigation.
The Settling Shareholders (including Appellant) further acknowledged and agreed that:
(B.D.I. 2245.)
Notwithstanding his entry into the Shareholder Settlement, and his receipt of settlement funds thereunder, the record reflects that Appellant continued to file motions, objections, and appear in the Chapter 11 cases. As the Bankruptcy Court recently observed:
Syntax-Brillian, 551 B.R. at 158-59 (footnotes omitted).
On May 16, 2016, Appellant filed the Motion of Ahmed Amr to Proceed Qui Tarn under the False Claims Act (B.D.I. 2329) ("Qui Tarn Motion"). By order dated May 17, 2016, the Chapter 11 cases were reassigned to the Honorable Kevin J. Carey. (See B.D.I. 3246.) On June 16, 2016, following a hearing on the Qui Tarn Motion, Judge Carey determined that Appellant was subject to the Shareholder Settlement and Notice of Withdrawal and thus had no standing to appear or be heard on any matter in the Chapter 11 cases. (See B.D.I. 2406 at 4.)
The court has appellate jurisdiction over all final orders and judgments from the Bankruptcy Court. See 28 U.S.C. § 158(a)(1). An "order denying reconsideration is final if the underlying order is final and together the orders end the litigation on the merits." U.S. v. Monahan (In re Monahan), 497 B.R. 642, 646 (1
Recusal is governed by 28 U.S.C. §§ 144 and 455. Section 144 provides that "Whenever a party to any proceeding in a district court makes and files a timely and sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice either against him or in favor of any adverse party, such judge shall proceed no further therein." 28 U.S.C. § 144. Appellant attached to the Recusal Motion a 48-page, unsigned "Certification that Syntax-Brillian was a Ponzi Scam That Could Not Legally Be Reorganized Into a Legitimate Enterprise and That Was Not Eligible for Chapter 11 Protection." (See D.I. 75, Ex. B.) The docket reflects that no separate affidavit was filed in support of the Recusal Motion.
As a threshold matter, it is the responsibility of the district judge against whom an affidavit is filed to assess the legal sufficiency of the affidavit. U.S. v. Townsend, 478 F.2d 1072, 1073 (3d Cir. 1973) (stating that the mere filing of an affidavit "does not automatically disqualify a judge"). The United States Court of Appeals for the Third Circuit has held that the challenged judge must determine only the sufficiency of the affidavit, not the truth of the assertions. Mims v. Shapp, 541 F.2d 415, 417 (3d Cir. 1976). An affidavit is legally sufficient if the facts alleged therein: (1) are material and stated with particularity, (2) would convince a reasonable person that a bias exists, and (3) evince bias that is personal, as opposed to judicial in nature. U.S. v. Thompson, 483 F.2d 527, 528 (3d Cir. 1973).
Construing these pleadings liberally,
The Recusal Motion, which is replete with accusations concerning the integrity of this court and the Bankruptcy Court, lacks any factual allegations of personal bias or prejudice. Appellant's primary contention is that the court allowed Judge Shannon to "ghost write" the memorandum opinion and order denying the Shareholder Motions. (See D.I. 75 at 2, 7.) According to Appellant, the court has "outsourced" its work to the bankruptcy judge formerly presiding over the chapter 11 cases, "who has a vested interest in derailing this appeal." (See id. at 2, 7, 10.) In support of this contention, Appellant argues that the memorandum opinion contained excerpts of a prior Bankruptcy Court opinion entered by Judge Shannon. (See id.) However, those excerpts, which merely provided background on the Chapter 11 cases and summarized the proceedings to date, were clearly designated as quotations and properly cited to the federal bankruptcy reporter. (See D.I. 73 at 5-6 (quoting Syntax-Brillian Corp., 551 B.R. at 158-59.)) Appellant also makes repeated allegations that the court is vested in "burying evidence" of forged documents which could be used to support criminal actions. (See e.g., D.I. 75 at 5.) This belief is apparently based on the court's prior ruling, in connection with the Shareholder Motions, that there was no law or precedent upon which the court might order the Secret Service or FBI to seize documents in the possession of the Trustee, and that the denial of any such relief by the Bankruptcy Court, if sought, was not part of the order on appeal. (See D.I. 73 at 16). Based on this and other adverse rulings on the Shareholder Motions, Appellant alleges that the undersigned "has willfully refused to uphold the Judicial Machinery of the Court," "contributed to the absolute lack of integrity of the proceedings," and "has demonstrated his gross indifference to the egregious violations of the federal rules of evidence." (See D.I. 75 at 10.) Appellant, however, offers no evidence in support of these allegations apart from adverse rulings on his appeal, and the Third Circuit has repeatedly observed that "a party's displeasure with legal rulings does not form an adequate basis for recusal." Securacomm Consulting, Inc. v. Securacom Inc., 224 F.3d 273, 278 (3d Cir. 2000). The court finds that the Recusal Motion and certification lack factual allegations of personal bias or prejudice that are material and stated with particularity. Thus, Appellant has not satisfied the requirements of 28 U.S.C. § 144.
Section 455 provides that a judge is required to recuse himself "in any proceeding in which his impartiality might reasonably be questioned." 28 U.S.C. § 455(a). The test for recusal under section 455(a) is whether a "reasonable person, with knowledge of all the facts, would conclude that the judge's impartiality might reasonably be questioned," In re Kensington Int'l Ltd., 368 F.3d 289, 296 (3d Cir. 2004), not "whether a judge actually harbors bias against a party," U.S. v. Kennedy, 682 F.3d 244, 258 (3d Cir. 2012). Under § 455(b)(1), a judge is required to recuse himself "[w]here he has a personal bias or prejudice concerning a party." Under either subsection of section 455, the bias necessary to require recusal generally must derive from a source outside of the official proceedings. See Liteky v. U.S., 510 U.S. 540, 554 (1994); Selkridge v. United of Omaha Life Ins. Co., 360 F.3d 155, 167 (3d Cir. 2004) ("beliefs or opinions which merit recusal must involve an extrajudicial factor"). Hence, "judicial rulings alone almost never constitute a valid basis for a bias or partiality motion." Liteky, 510 U.S. at 555.
It is evident from the Recusal Motion that Appellant takes exception to this court's prior dismissal of the appeal and the ruling on the Shareholder Motions, and this serves as his only basis to seek recusal. Without any factual support, Appellant alleges that the court has acted and will act to protect a wide range of parties and interests, including: the former and current bankruptcy judges presiding over the Chapter 11 cases, GT and their counsel, the interests of the Debtors' prepetition lenders Citicorp and Silver Point, "the dubious integrity of this venue," and "other federal judges." (See D.I. 75 at 16-17.) The Recusal Motion and certification offer no extra-judicial factors that might support these allegations and no factual support apart from the court's adverse ruling. Similarly, Appellant's repeated accusations that the court is "incapacitated" and "corrupt" (see e.g., id. at 15, 18) has no source outside of Appellant's view of the official proceedings and is not supported by any factual allegations that the court can glean from the pleadings. The court concludes that Appellant's unsupported statements would not lead a reasonable person, with knowledge of all the facts, to conclude that its impartiality might reasonably be questioned or that the court's rulings were based on bias or actual prejudice. Nor do the court's rulings demonstrate that it is acting in such manner in this appeal. After careful and deliberate consideration, the court also concludes that it has no actual bias or prejudice towards Appellant and that a reasonable, well-informed observer would not question the court's impartiality. In light of the foregoing standard and after considering Appellant's assertions, the court concludes that there are no grounds for recusal under 28 U.S.C. §§ 144 and 455, and the Recusal Motion will be denied.
This appeal is driven by Appellant's desire to (i) pursue causes of action belonging to the estate, notwithstanding that those causes of actions were assigned to the Liquidating Trusts pursuant to the Plan and long ago settled, and (ii) seek sanctions against, or recovery of damages from, GT. Through the appeal of the Reconsideration Order, Appellant purports to seek "de novo review of the Bankruptcy Proceedings" (see D.I. 43 at 3), apparently asking this court to, among other things, (i) revisit the findings made in the Plan Confirmation Order, (ii) reverse the findings upon which the Final Fee Order was based, (iii) and issue sanctions against, and require discovery from, Appellees, based on claims that Appellant has been repeatedly told by the Bankruptcy Court he has no standing to assert. The sole issue before this court is whether the Bankruptcy Court erred in entering an order denying reconsideration of the Turnover Motion and Sanctions Motion.
Upon appeal, an order denying a motion to reconsider, alter, or amend is reviewed for abuse of discretion. See Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir. 2010) (citing Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 348 (3d Cir. 1986)). "An abuse of discretion occurs when the court bases its opinion on a clearly erroneous finding of fact, legal conclusion or improper application of law to fact." Infinity Invs. Ltd. v. Kingsborough (In re Yes! Entm't Corp.), 316 B.R. 141, 144 (D. Del. 2004) (citing In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 278 F.3d 175, 180 (3d Cir. 2002)). It is also considered an abuse of discretion where the court's action was "arbitrary, fanciful, or clearly unreasonable." Stecyk v. Bell Helicopter Textron, Inc., 295 F.3d 408, 412 (3d Cir. 2002).
A motion to reconsider an order pursuant to Federal Rule of Bankruptcy Procedure 9023 may only be granted if the party seeking reconsideration establishes one of the following grounds: (1) an intervening change in controlling law; (2) the availability of new evidence that was not available when the court issued the ruling; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice. See Max's Seafood Café by Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999) (citing North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995)); see also Zokaites Properties LP v. La Mesa Racing, LLC, 2011 WL 2293283, at *1 (W.D. Pa. June 9, 2011) (citing Berry v. Jacobs IMC, LLC, 99 F. App'x 405, 410 (3d Cir. 2004) (noting the standard movant "must meet to prevail on a motion for reconsideration is high.")). If none of these extraordinary circumstances are present, reconsideration should be denied.
"Mere disagreement with the Court's decision will not suffice." Dare Invs., LLC v. Chi. Title Ins. Co., Civ. No. 10-6088 (DRD), 2011 WL 5513196, at *5 (D.N.J. Nov. 10, 2011) (internal quotations omitted); Zokaites, 2011 WL 2293283, at *1 (noting that "[a] party's mere disagreement with the Court does not translate into the type of clear error of law which justifies reconsideration of a ruling."). Moreover, reargument and reconsideration requests "are not a substitute for an appeal from a final judgment" nor are they an opportunity for "endless debate between the parties and the Court." Brambles USA, Inc. v. Blocker, 735 F.Supp. 1239, 1240 (D. Del. 1990) (internal citations omitted); see also, Zokaites, 2011 WL 2293283, *1 ("a motion for reconsideration is not a tool to re-litigate and reargue issues which have already been considered and disposed of by the Court.")
Based on Appellant's allegations of GT's fraud on the Bankruptcy Court, the Sanctions Motion sought (a) disgorgement of GT's pre- and post-petition fees and expenses; (b) sanctions for alleged violations of discovery rules, (c) a compensatory award of $2 million in favor of "pro se litigants;" and (d) serious sanctions, including disbarment, for GT's alleged violations of the Federal Rules of Bankruptcy Procedure and the Delaware Lawyers' Rules of Professional Conduct. (See B.D.I. 1950.)
The record reflects that Appellant never sought derivative standing to pursue any claims against GT on behalf of the estates. In denying the Sanctions Motion, the Bankruptcy Court found that it had "previously approved a comprehensive settlement between the Trusts and [GT] by order dated February 2, 2012 [Docket No. 1974]" and that "the predicate for the [Sanctions Motion] rests upon claims that have been settled or released by the confirmed Plan or by the above-referenced Order." (B.D.I. 1997.)
In seeking reconsideration, Appellant did not argue there was an intervening change in controlling law bearing on denial of the Sanctions Motion. (See B.D.I. 2001-1.) Nor did Appellant present any new evidence that was not available when the Bankruptcy Court denied that motion. (See id.)
(B.D.I. 2107.)
On appeal, Appellant makes wide-ranging accusations regarding the concealment of evidence. Construing the pleading liberally, Appellant appears to argue that the Bankruptcy Court erred in denying the Sanctions Motion based on Appellant's lack of standing to pursue claims against GT. (See D.I. 43 at 7). Appellant argues that he has standing to pursue those claims — notwithstanding that the claims he asserts belonged to the estates and have been released by the Plan or settled by the Liquidation Trust — because he is "a creditor with a pecuniary interest in the estate." (See id.)
The court agrees with the Bankruptcy Court's analysis. Appellant's alleged claims against GT for disgorgement of fees, sanctions, and damages relate to conduct by GT in its capacity as counsel to the Debtors. The Plan provided a broad exculpation to attorneys for case-related activities
Appellant further argues that he should be able to pursue his claims because the "Trustee had no incentive to pursue claims against [GT] because [the Trustee was] also implicated in the spoliation of evidence" and thus settled the controversies with GT "for no consideration." (See D.I. 43 at 9.) However, the record clearly indicates that the settlement with GT provided meaningful value to the estates. (See B.D.I. 1956, 1974.) Appellant further argues that he was denied the right to pursue claims against GT because he is a pro se litigant, but Appellant offers no argument or evidence that the Bankruptcy Court denied him this or any other relief on the basis of his pro se status, (See D.I. 43 at 9-10.) Rather, the record reflects that the Bankruptcy Court extended Appellant every courtesy throughout the Chapter 11 cases.
The Bankruptcy Court's conclusion that the Appellant lacked standing to pursue claims against Ms. Mitchell and GT is plainly supported by the record in these cases. It apparent from the pleadings that the claims and causes of action identified by Appellant relate to conduct by GT in its capacity as counsel to the Debtors, belonged to the Debtors' estates, and were settled for value and released by the estates. The docket reflects that the Final Fee Orders, Confirmation Order, and Settlement Order were not appealed and are final orders. The court finds no merit in the argument that denial of the Sanctions Motion was based on an erroneous finding of fact or legal conclusion or improper application of law to fact, and the Bankruptcy Court did not abuse its discretion in denying reconsideration of the Sanctions Motion.
Specifically, the Turnover Motion sought an order compelling the Liquidation Trust and GT to release and/or turn over the "full inventory" of the Debtors' Board of Director meeting minutes. (See B.D.I. 1951.) Notably, the Turnover Motion follows six prior attempts by Appellant to obtain the same documents.
In seeking reconsideration, Appellant did not argue there was an intervening change in controlling law bearing on denial of the Turnover Motion. (See B.D.I. 2001-1.) Nor did Appellant present any new evidence that was not available when the Bankruptcy Court issued the order denying the Turnover Motion. (See id.) Construing the pleading liberally, Appellant appeared to base his request for reconsideration on the need to correct a clear error of law or fact. (See id. at 2001-1 at 2.) Appellant contends that GT withheld discovery that would have cast doubt on the exculpation provisions of the Plan, that production of those documents was therefore critical to his Sanctions Motion, and thus the Turnover Motion should have been granted. (See id. at 4-5.) Appellant's arguments in support of reconsideration of the Turnover Motion were predicated on the "exclusive" individual claims he purports to assert against GT in the Sanctions Motion. While Appellant appears to concede his lack of standing to pursue the "total disgorgement of fees earned by GT prepetition" and claims "exclusively owned by the [Trusts] prior to the [Settlement Order]," (see id. at 2), Appellant argued that the Plan did not exculpate GT for "gross negligence or willful misconduct" and that the Settlement Order did not affect his "exclusive claims against Nancy Mitchell and [GT] in regards to denial of discovery and breach of candor . . . [which] did not belong exclusively to the estates." (See id. at 2.)
(B.D.I. 2107.)
On appeal, Appellant's arguments largely mirror his arguments in support of the Sanctions Motion: namely, that GT has concealed evidence; that Appellant has individual claims against GT based on this misconduct that did not belong to the estates exclusively, and thus were not released by the Plan or Settlement Order; and that the Bankruptcy Court erred in denying the Turnover Motion based Appellant's lack of standing to pursue estate causes of action. (See D.I. 43 at 15.) Based on his pecuniary interests Appellant asserts that he has "standing to sanction GT and Mitchell until the end of the proceedings." (Id.) However, the Bankruptcy Court decision clearly considered the types of claims alleged in the Sanctions Motion — claims alleged against GT for disgorgement of fees, sanctions, and damages that relate to conduct by GT in its capacity as counsel to the Debtors — and ruled that any such claims belonged, not to the Appellant in his own right, but to the estates, and had been released or settled. (See B.D.I. 2107 at 5.) Appellant cites no law in support of his right to seek discovery and assert such claims on an individual basis. Moreover, the Bankruptcy Court found on several prior occasions that there was no support for Appellant's underlying claims of post-petition fraud, and those rulings were never appealed.
The record supports the Bankruptcy Court's conclusions that the relief sought by Appellant has already been granted; that Appellant's additional requests for the same relief have been denied by numerous orders that have become final and non-appealable; that the purpose of the Turnover Motion is to develop facts relating to potential claims that belong, not to Appellant, but to the estates and to the Trusts created under the confirmed Plan, which have been released and settled pursuant to the Plan and Settlement Order (among other final orders); and that Appellant has failed to demonstrate that he holds any claims in his own right against GT. The court finds no merit in the argument that denial of the Turnover Motion was based on an erroneous finding of fact or legal conclusion or improper application of law to fact. Thus, the Bankruptcy Court did not abuse its discretion in denying reconsideration of the Turnover Motion.
At bottom, the Reconsideration Motion merely rehashes Appellant's prior arguments and reiterates his disagreement with the Bankruptcy Court's rulings. Appellant's dissatisfaction notwithstanding, there has been no clear error of law or fact meriting amendment of the orders denying sanctions and turnover of documents. Dare, 2011 WL 5513196, at *5; Zokaites, 2011 WL 2293283, at *1. The court finds no abuse of discretion in the Bankruptcy Court's denial of the Reconsideration Motion, as Appellant failed to establish any of the three justifications necessary to sustain reconsideration, and denial of reconsideration was not based on any erroneous finding of fact, legal conclusion, or improper application of law to fact.
For the foregoing reasons, the court will DENY the Recusal Motion and AFFIRM the Reconsideration Order. A separate order consistent with the foregoing shall be entered.
Plan, Article I.C. 19.
