USCA1 Opinion
September 23, 1993 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 93-1094
HAROLD F. CHORNEY,
Appellant,
v.
MICHAEL WEINGARTEN, ET AL.,
Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ernest C. Torres, U.S. District Judge]
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Before
Breyer, Chief Judge,
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Selya and Boudin, Circuit Judges.
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Harold F. Chorney on brief pro se.
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Edward J. Bertozzi, Jr. and Edwards & Angell, on brief for
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appellee John F. Cullen, Trustee.
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Per Curiam. Harold F. Chorney challenges the
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district court's affirmance of a bankruptcy court order of
July 2, 1992, finding him in civil contempt for a
"continuous, deliberate, and unjustified interference with
the orderly progress of this bankruptcy case," and ordering
him to pay $200,000 compensation to the trustee. We
affirm.1
The bankruptcy proceeding from which the instant
appeal arises has a long and tangled history. The docket
entries alone consume almost 79 pages as of the date of the
contempt order challenged here. On this appeal we have been
provided with a partial record consisting primarily of select
materials generated in 1991 and 1992. The following
background facts are culled from three earlier published
opinions of the courts below. In re Cumberland Inv. Corp.,
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116 B.R. 353 (Bankr. D.R.I. 1990); In re Cumberland Inv.
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Corp., 118 B.R. 3, 4 (Bankr. D.R.I. 1990); In re Cumberland
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Inv. Corp., 133 B.R. 275 (D. R. I. 1991).
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Debtor, Cumberland Investment Corporation ("CIC"),
a wholly owned Rhode Island subsidiary of a Canadian
corporation, Wescap Enterprises, Ltd., was in the business of
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1. Chorney's notice of appeal refers to the district court's
order of January 8, 1993 in the singular. There were two
orders entered that day, one dismissing the appeal on the
merits, the other dismissing a motion for reconsideration
based on "new evidence." The issues designated show that
only the first order is contested.
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buying and selling numismatic coins and stamps. Chorney was
a principal of CIC and chief executive officer of Wescap.
Eastland Bank was the major secured creditor.
In November, 1989, Eastland and two other creditors
petitioned CIC into bankruptcy. About a month later, CIC
converted the Chapter 7 involuntary petition into a voluntary
Chapter 11 proceeding. Judge Votolato initially denied an
Eastland motion for appointment of a Chapter 11 trustee,
instead authorizing appointment of an examiner. Pending the
outcome of the examiner's investigation, CIC was restrained
from selling any coins without court approval.
There ensued seven months of investigation, a
series of five reports from the examiner, and at least 11
days of contested hearings and motions by both sides. On the
basis of the evidence thus generated, which reflected a
"pervasive, broad course of debtor misconduct" and the
debtor's "repeated failure to respond adequately to an
overwhelming amount of negative evidence," the judge reversed
course. In re Cumberland Inv. Corp., 118 B.R. at 4-5, 6. He
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granted a renewed motion for appointment of a trustee,
expressing regret that he had earlier denied it.
The court simultaneously ordered the immediate
discharge of all CIC employees and three principals,
including Chorney. In re Cumberland Inv. Corp., 118 B.R. at
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7-8. Among the misdeeds leading to the discharges, the court
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found that Chorney and his agents had purposely delayed the
bankruptcy process through shifting misrepresentations about
corporate assets, unauthorized and transparently fraudulent
business operations, and circumvention of the court's
injunction against coin sales. In re Cumberland Inv. Corp.,
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118 B.R. at 4-7.
Shortly before the decision to appoint a trustee,
the court had also held hearings over a five-day period on a
CIC motion to strike one of the examiner's reports. In that
motion, Chorney had alleged examiner bias, conflict of
interest, slander, a conspiracy between the examiner and
Eastland to misrepresent CIC's affairs, and inventory
switches by Eastland. From the evidence presented there, the
court questioned the debtor's good faith, concluding that
Chorney's allegations were "totally unsupportable,"
"fabricated," and "out of touch with reality." In re
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Cumberland Inv. Corp., 116 B.R. at 354. The district court
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affirmed both orders, finding the bankruptcy judge's analysis
"well supported" by the evidence. In re Cumberland Inv.
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Corp., 133 B.R. at 279, 280. In the nine months following
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the trustee's appointment, the bankruptcy court docket sheet
shows 234 entries. Among them are a variety of motions
brought by the trustee, examiner, and Eastland seeking orders
directing Chorney to cooperate or to refrain from
interference with the bankruptcy process.
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The proceedings immediately precipitating this
appeal began on May 21, 1991, when Chorney moved to adjudge
the examiner in contempt. The sole basis for this motion was
an allegation that the examiner had failed to use his "best
efforts" to obtain agreement among the parties on a method
for sale of assets as required by an earlier court order. A
hearing was held and testimony taken which showed the motion
to be unfounded and wholly frivolous.
On July 3, 1991, in an order dismissing the
examiner contempt motion, Judge Votolato observed that over
the course of the bankruptcy proceedings Chorney had
"deliberately and continuously acted in bad faith to obstruct
and to hinder the efficient administration of the estate."
He sua sponte ordered Chorney to show cause why he should not
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be adjudged in contempt for his "wilful interference with the
orderly and economic administration of this estate and [his]
unjustified waste of the time of this Court and of numerous
parties."2
A hearing on the show cause order was held on
September 17, 1991. Testimony at that hearing spans 80
transcript pages. Judge Votolato continued the matter
without a finding in the hope that a change in Chorney's
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2. The order also barred Chorney from further participation
or intervention in judicial proceedings relating to the
disposition of the estate, except on the same basis as a
general creditor.
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behavior or attitude might warrant further consideration.
After a status conference on June 18, 1992 revealed no
change,3 the court issued the contempt order appealed here.
In addition to the entire record as reflected in the docket
entries, the court relied on the trustee's summary of recent
events at the show cause hearing.
[T]he Trustee, John Cullen, Esq., described what
was unfortunately an already too familiar pattern
of obstructionist behavior by Mr. Chorney [footnote
omitted]. For example: he continued, post-
petition, to advertise fraudulently after both
agreeing to and being ordered to desist; to cure a
glaring security problem, the Trustee moved for and
obtained a Court order to physically eject Chorney
from the Debtor's business premises (where he was
actually living,[*] after repeated broken promises
to vacate;[**] CIC records were allegedly concealed
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3. At the status conference the judge learned that in the
intervening months Chorney, through Wescap, filed a state
court lawsuit reciting the same alleged coin switches by
Eastland which the bankruptcy court had earlier determined to
be a fabricated charge. The suit was removed to federal
court and Eastland advised that it was preparing a motion to
dismiss the suit on collateral estoppel grounds. Hearing of
June 18, 1992, Tr. at 2-4. Further, liquidation of the
estate had been forced to a halt due to a pending criminal
investigation into Chorney's conduct. Tr. at 6-8.
During the same period Chorney also took four appeals to
the district court from bankruptcy orders. All four were
dismissed with prejudice on the merits. Cumberland Inv.
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Corp., Nos. 91-0594, 91-0595, 91-0596, 91-0604, slip op. (D.
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R. I., June 5, 1992). Chorney then attempted to further
appeal three of the orders to this court, which dismissed
them as improperly taken from interlocutory orders. Chorney
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v. Eastland Bank, Nos. 92-1780, 81, 82, slip. op. (1st Cir.
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Feb. 5, 1993).
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and/or destroyed; coin and other inventory values
were grossly and fraudulently overstated to the
Court, the Trustee, and to creditors; many
frivolous pleadings were filed and extensively
litigated, with the intent and effect of impeding
the administration of an estate already left in
shambles by Chorney; information concerning the
identity of redemption coin holders was wrongfully
withheld on the baseless ground of
`confidentiality,' even after disclosure was
ordered by the Court, and so on.
The most damaging consequence of Chorney's
incomprehensible behavior, however, is the
incredible amount of needless expense that has been
heaped upon the estate, and ultimately, of course,
upon the creditors. The Trustee's and Examiner's
duties (and their fees and expenses) have been
increased; secured creditors, long-delayed in
exercising their rights, have seen the interest
part of their claims escalate; and the likelihood
of a meaningful distribution to hundreds of
unsecured creditors and redemption coin holders has
been practically eliminated. All of this waste has
been caused unnecessarily by Harold Chorney.
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* Chorney's apartment was literally surrounded by
inventory, allowing a real-life "fox-guarding-the-
chicken-coup" scenario. His bed was literally within
inches of the vault and its contents.
** The Court order was ignored, however, and the Trustee
ended up, instead, moving the assets to another
location, at a cost to the estate of approximately
$95,000.
In re Cumberland Inv. Corp., No. 89-11051, slip op. at 2-3
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(Bankr. D.R.I. July 2, 1992).
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On the basis of time records submitted by the trustee,
the examiner and Eastland Bank, showing "expenses directly
attributable to unnecessary litigation and/or extra judicial
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work generated by Mr. Chorney," the court ordered Chorney to
pay $200,000 to the trustee as "partial reimbursement for the
deliberate post-petition damage he has done to creditors."
In re Cumberland Inv. Corp., No. 89-11051, slip op. at 4.
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The court said that its order was "purposefully crafted to be
compensatory and not punitive in nature." Id. at 4.
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Chorney's brief here denies the accuracy of the
judge's factual conclusions and argues that he is the victim
of retaliation for his criticisms of improprieties by the
judge, trustee and examiner. In support of his denials and
blame shifting, however, he points only to previous appellate
briefs in this court and elsewhere which recite the same
conclusions, and to selected excerpts from the record. We
have read the briefs and the record references as liberally
as possible in his favor, given his pro se status. However,
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the material he offers barely provides even a glancing basis
for his factual denials and no concrete support for his
accusations. The selectivity of his citations, incoherent or
indistinct purpose for many record references, and his
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repeated blurring of temporally distinct events, only serves
to confuse and obfuscate the issues.4
"We must uphold the factual findings of the
bankruptcy court, as affirmed by the district court, unless
they are clearly erroneous." In re Power Recovery Sys.,
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Inc., 950 F.2d 798 (1st Cir. 1991). Based on a full review
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of the record before us, including transcripts of the
hearings of May 7, 1991, May 22, 1991, September 17, 1991,
June 18, 1992, and July 17, 1992, it clearly appears that the
bankruptcy court had more than ample evidence to support the
contempt order.
We also reject Chorney's procedural challenges to
the hearing and order. While Chorney claims now that he was
never notified of the order, nor given time to prepare a
defense, the record shows that he received ample notice and
specification of the issues in the court's Show Cause order
of July 3, 1991. That order fully complied with Bankruptcy
Rule 9020(b). Chorney had more than two months to prepare a
defense, was present without objection at the September 17,
1991 hearing, represented by counsel, testified, and was
well prepared on all the issues raised.
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4. We also reviewed the videotape quoted in Chorney's brief,
and conditionally accepted by this court on Chorney's motion
to supplement the record. We are unable to determine from
the scanty information given whether the tape was in evidence
below and might thus be a proper part of this record. In any
event, the tape does not support Chorney's assignments of
error.
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Equally meritless is Chorney's claim that he was
unconstitutionally deprived of a right to a jury trial.
Absent an express statute, there is no right to a jury trial
in civil contempt proceedings. Shillitani v. United States,
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384 U.S. 364 (1966); cf. United States v. Pina, 844 F.2d 1,
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11-12 (1st Cir. 1988) (even in some classes of criminal
contempt cases there is no right to a jury). And while it
may not always be easy to distinguish between criminal and
civil contempt, there is no difficulty where, as here, the
ultimate object is to compensate the injured party. See
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generally, In re Power Recovery Sys., Inc., 950 F.2d at 802-
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03 (defining criminal and civil contempt sanctions); Charles
A. Wright et. al., 11 Federal Practice and Procedure 2960
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at nn. 59-60 (1973 & supp. 1992) (same).
At least two of the other issues raised in
Chorney's brief merely reiterate arguments he raised in
earlier appeals, which were dismissed by this court as
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improperly taken from interlocutory orders.5 Chorney's
remaining arguments are frivolous.
For the reasons stated, the judgment of the
district court is affirmed. Appellee's request for sanctions
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is denied without prejudice to renewal of the request in the
future should events so warrant.
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5. See supra note 3. Chorney reiterates that he was denied
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due process when Judge Votolato both recused himself from
hearing an Eastland motion to hold Chorney in contempt and
ruled that there was no right to a jury trial on the Eastland
motion. The Eastland motion was transferred to another
judge, and eventually withdrawn. If by reasserting this
argument Chorney is suggesting that Judge Votolato should
have recused himself from the instant contempt hearing, the
argument fails for want of any facts creating a reasonable
doubt as to the judge's impartiality. United States v.
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Lopez, 944 F.2d 33, 327 (1st Cir. 1991). Chorney also
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attempts to reargue the contentions underlying his
interlocutory appeal from denial of his motion to hold the
examiner in contempt.
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