Cadlerock Joint Venture, L.P. v. Herendeen
ORDER: This appeal is dismissed for lack of jurisdiction. The Clerk is directed to close the case. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 3/30/2016. (KAK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
CADLEROCK JOINT VENTURE L.P.,
Case No. 8:15-cv-2129-T-33
Bankr. No. 8:12-bk-19213-KRM
CHRISTINE HERENDEEN Chapter 7
Trustee, THOMAS A. LASH, and LASH
& WILCOX, PL,
In the context of a Chapter 7 bankruptcy proceeding,
requesting that the Bankruptcy Judge recuse himself, which the
Bankruptcy Judge denied.
CadleRock filed an appeal of the
denial of the motion to recuse.
The appeal is fully briefed
and, as discussed below, the Court dismisses the appeal for
lack of jurisdiction.
A. Filing of the Bankruptcy Case and Adversary Proceeding
The Debtor, Oiledkin Gonzalez, filed for protection under
Chapter 7 of the United States Bankruptcy Code in December of
2012. (Doc. # 2-36).
Judge K. Rodney May was assigned as the
presiding Judge and Christine Herendeen was appointed as the
Chapter 7 Trustee. (Doc. # 2-4).
On November 2, 2013, the Trustee filed an Application
requesting that the Bankruptcy Court appoint Thomas Lash, Esq.
and Lash & Wilcox PL as Special Counsel for the Trustee.
(Doc. # 4-2).
In the Trustee’s Application, she explained
that it was necessary to employ Special Counsel “for the
limited purpose of representing the [Trustee] in maintaining
adversary proceedings and related matters against certain
claims.” (Id. at 1). The Trustee also indicated that “these
causes of action and any proceeds from them are property of
the bankruptcy estate.” (Id.).
The Bankruptcy Court granted
the Trustee’s Application and approved Thomas Lash, Esq. and
Lash & Wilcox PL as Special Counsel on November 4, 2013. (Doc.
The Trustee, through Special Counsel, filed an Adversary
Complaint against CadleRock on November 8, 2013, under Case
No. 8:13-ap-1004-KRM, alleging that CadleRock violated the
Florida Consumer Collection Practices Act and the Telephone
allegations, the Adversary Complaint alleged that CadleRock
made “more than fifty Collection Calls to Debtor’s cell phone,
after Debtor told Defendant to stop calling Debtor’s cell
phone; all of which is a willful communication with the Debtor
with such frequency that Defendant could reasonably expect
such communication to harass Debtor” in violation of the
Telephone Consumer Protection Act. (Id.
at ¶ 21).
Adversary Complaint also alleged that CadleRock used “an
automatic telephone dialing system to make multiple Collection
Calls to Debtor on Debtor’s personal cell phone after Debtor
told Defendant that Defendant did not have permission to call
Debtor.” (Id. at ¶ 31.)
Voluntary Dismissal of the Adversary Proceeding
In a letter dated December 10, 2013, submitted pursuant
to Bankruptcy Rule of Procedure 9011(c), CadleRock expressed
its opinion that the Adversary Complaint was frivolous and
contested the factual allegations. (Doc. # 4-21). CadleRock’s
counsel attached a draft Motion for Sanctions to the December
10, 2013, letter and advised: “We trust that the filing of
this Motion will be unnecessary, and that you will dismiss the
Complaint with prejudice within 21 days.” (Id. at 3).
On December 27, 2013, the Trustee and Special Counsel
CadleRock with prejudice. (Doc. # 2-35).
On February 11,
2014, the Bankruptcy Court entered an Order discharging the
Trustee and closing the estate. (Doc. # 4-9).
CadleRock’s Initial Request for Sanctions
CadleRock submits that after the prompt dismissal of the
Adversary Complaint, it “further investigated the activities
of Herendeen, Lash, and L&W, including a review of other
creditors.” (Doc. # 3 at 10).
CadleRock indicates that the
Trustee and Special Counsel “asserted and then dismissed with
prejudice similar consumer protection acts claims in adversary
creditors (and at least 600 other creditors in cases brought
by [Special Counsel] . . . in the Tampa Division.)” (Id.).
CadleRock maintains that the Trustee and Special Counsel “knew
the actions lacked merit but filed them anyway in an attempt
creditors would settle these meritless cases seeking statutory
damages rather than spend significant legal fees to defend
CadleRock accordingly filed a Motion to Reopen the Case
in the adversary proceeding so that it could file a class
action lawsuit alleging that the Trustee and Special Counsel
“violated federal and state laws by engaging in a pattern of
wrongful conduct through the filing of frivolous lawsuits
asserting Consumer Protection Laws claims against CadleRock
and other creditors.” (Id. at 11).
sought to sue the Trustee and Special Counsel for violations
of the Racketeer Influenced and Corrupt Organizations Act,
malicious prosecution, civil conspiracy, and violations of the
Florida racketeering statute (including mail fraud, wire
fraud, extortion, and conspiracy). (Doc. ## 4-10, 4-13).
After holding a hearing, the Bankruptcy Court denied the
Motion to Reopen finding that the Trustee’s actions “were
within her discretion and authority” and also noting that “any
one of [the defenses raised by the Trustee], if proven, could
serve as a complete bar to all of the alleged claims asserted
by CadleRock.” (Doc. # 2-11 at 3).
The Bankruptcy Court also
emphasized that “[u]pon dismissal of the adversary proceeding,
CadleRock did not seek a remedy . . . under Rule 11 or
otherwise. Instead, ten (10) months after the bankruptcy case
was closed, CadleRock filed a motion to reopen.” (Id. at 2).
The Bankruptcy Court ultimately held that “CadleRock is not
permitted to sue or seek damages from the trustee or her
special counsel.” (Id. at 3).
CadleRock’s Initial Appeal
CadleRock appealed the denial of the Motion to Reopen.
(Doc. # 2-12). That appeal was assigned to Judge Moody under
Case No. 8:14-cv-3212-JSM. After holding oral argument, Judge
Moody affirmed the Bankruptcy Court in an Order dated May 18,
2015. (Doc. # 2-20). However, Judge Moody explained: “it would
have been futile for the court to reopen the case for Creditor
to pursue a civil remedy; but this does not preclude Creditor
from pursuing a different avenue of relief in the Bankruptcy
Court.” (Id. at 8). Judge Moody also noted: “the implications
of Creditor’s allegations are quite troublesome and, had they
been properly raised, the contentions certainly would have
warranted consideration by the Bankruptcy Court. . . . Of
course, Appellant is free to file another motion to reopen to
seek sanctions.” (Id. at 10).
CadleRock’s Second Request for Sanctions and Motion
to Recuse Judge May
On July 16, 2015, in response to Judge Moody’s Order,
CadleRock returned to the Bankruptcy Court and filed its
second Motion to Reopen the Case for the purpose of filing a
Motion for Sanctions against the Trustee and Special Counsel.
(Doc. # 2-21).
In conjunction with the filing of the second
Motion to Reopen the case, CadleRock filed a Motion to Recuse
(Doc. # 4-31), “based on concerns that Judge May might not be
able to remain impartial and decide this matter solely on the
merits.” (Doc. # 3 at 13).
The Motion to Recuse was filed
pursuant to 28 U.S.C. § 455 and alleged, inter alia:
Herendeen, Lash, and LW&G have appeared in the
past, and continue to appear, before Judge May in
numerous cases. Herendeen is appointed as Trustee
by Judge May, and her continuing status as a
bankruptcy trustee in the Middle District of
Florida is dependent upon his support.
Lash and LW&G can only appear as special counsel
for debtors in cases assigned to Judge May where
Judge May appoints them. . . . The facts and
circumstances surrounding the relationship between
Judge May, Herendeen, Lash and LW&G would lead a
reasonable person to believe that Judge May’s
involvement in the respective appointments of
Herendeen, Lash and LW&G would make fair judgment
(Doc. # 4-31 at 1-2).
On August 25, 2015, the Bankruptcy Judge held a hearing
on the second Motion to Reopen the case and the Motion to
Recuse. (Doc. # 4-54).
At the hearing, the Bankruptcy Judge
granted the second Motion to Reopen the case for the purpose
of seeking sanctions (Doc. # 4-55), but denied the Motion to
Recuse. (Doc. # 4-56).
On August 27, 2015, CadleRock filed a
Motion for Sanctions against the Trustee and Special Counsel
seeking the disbarment of Attorney Lash from the Middle
District of Florida, the permanent termination of Herendeen as
a Trustee, disgorgement of attorneys’ fees, referral to the
U.S. Department of Justice, as well as other monetary and nonmonetary sanctions. (Doc. # 4-64).
The Motion for Sanctions
Assertion of CadleRock’s Present Appeal
denying the Motion to Recuse.
(Doc. # 1). That appeal has
been assigned to this Court and is fully briefed. (Doc. ## 3,
10, 11, 12).
The crux of CadleRock’s argument regarding
recusal is: “in light of the longstanding relationship and
interaction between Judge May and Herendeen, Lash, and LW&G,
CadleRock is concerned that it will not receive a fair and
impartial ruling on its Motion for Sanctions.” (Doc. # 3 at
The Trustee and Special Counsel assert that this Court
lacks jurisdiction over the appeal and, in the alternative, in
the instance that the Court exercises jurisdiction over the
appeal, asserts that this Court should affirm the Bankruptcy
Court’s denial of the Motion to Recuse.
As discussed below,
the Court determines that it lacks jurisdiction over this
Jurisdiction over “Final” Judgments, Orders, and Decrees
jurisdiction of district courts over appeals from orders of a
(a) The district courts of the United States shall
have jurisdiction to hear appeals
from interlocutory orders and decrees
issued under section 1121(d) of title 11
increasing or reducing the time periods
referred to in section 1121 of such
with leave of the court, from other
interlocutory orders and decrees . . . of
bankruptcy judges entered in cases and
proceedings referred to the bankruptcy
judges under section 157 of this title.
An appeal under this subsection shall be
taken only to the district court for the
judicial district in which the bankruptcy
judge is serving.
28 U.S.C. § 158(a).
An order denying a motion to recuse is not among the
interlocutory orders referred to in 11 U.S.C. § 1121. McCallan
v. Hamm, 502 B.R. 245, 247 (M.D. Ala. 2013).
Nor does an
order denying a motion to recuse fall under the ambit of the
bankruptcy court’s jurisdiction over core and no-core matters
under 28 U.S.C. § 157. (Id.).
Thus, the possible scope of
this Court’s appellate jurisdiction is limited to either 28
U.S.C. § 158(a)(1) -– for final judgments, orders, and decrees
-- or § 158(a)(3) -– for interlocutory orders with leave of
As noted, 28 U.S.C. § 158(a)(1), offers an avenue for
appellate jurisdiction over “final judgments, orders, and
decrees” of the bankruptcy court. Generally speaking, a final
order is one that “ends the litigation on the merits and
leaves nothing for the court to do but execute the judgment.”
Catlin v. United States, 324 U.S. 229, 233 (1945).
In the Eleventh Circuit, a more flexible approach is
applied in the context of bankruptcy appeals. As explained in
Barben v. Donovan, 532 F.3d 1134, 1136 (11th Cir. 2008),
“Finality is given a more flexible interpretation in the
aggregation of controversies and suits.”
“[i]ncreased flexibility in applying the finality doctrine in
bankruptcy does not render appealable an order which does not
Id. (internal quotation marks omitted). Rather, a final order
in bankruptcy is one that “completely resolves all of the
issues pertaining to a discrete claim, including issues as to
the proper relief.” In re Atlas, 210 F.3d 1305, 1308 (11th
Here, the Bankruptcy Court’s denial of the Motion to
Recuse did not resolve any discrete claim, and is not a final
judgment, order, or decree -- even when judged under the
flexible approach outlined above.
As stated in McCallan, 502
B.R. at 247, “It is well-settled in the Eleventh Circuit that
an order denying a motion to recuse in an interlocutory,
rather than a final order.”
CadleRock cites various cases for the proposition that
“the Eleventh Circuit of Appeals has resolved on the merits
appeals involving a Bankruptcy Court’s ruling on a motion for
recusal.” (Doc. # 12 at 6).
However, in those cases, the
appeal as to the denial of recusal was taken at the conclusion
of the proceedings.
Tucker v. Mckamal, 616 Fed. Appx. 969
(11th Cir. 2015)(appeal as to denial of recusal resolved after
case closure); Cummings v. Cummings, 277 Fed. Appx. 946 (11th
Cir. 2008)(appeal as to denial of recusal resolved after the
bankruptcy court rendered its dischargeability determination);
Gwynn v. Walker, 532 F.3d 1304 (11th Cir. 2008)(appeal as to
denial of recusal resolved after monetary sanctions imposed).
In contrast, in this case, the appeal of the denial of
the Motion to Recuse was filed prior to the resolution of the
looming motion for sanctions and resolution of the case.
After careful consideration, the Court determines that it does
not have jurisdiction over the appeal of the denial of the
Motion to Recuse as a “final” judgment, order, or decree under
III. Jurisdiction over Interlocutory Orders
28 U.S.C. § 158(a)(3) confers jurisdiction on district
courts to hear appeals from “other interlocutory orders and
decrees” of a bankruptcy court “with leave of the court.”
Appeals of interlocutory orders pursuant to Section 158(a)(3)
require the filing of a motion for leave to appeal in addition
to the filing of a notice of appeal. Fed. R. Bankr. P.
8004(b). That Rule explains that such a motion for leave to
appeal must include (1) the facts necessary to understand the
question presented; (2) the question itself; (3) the relief
sought; (4) the reasons why leave to appeal should be granted;
and (5) a copy of the interlocutory order in question.
Here, CadleRock did not file a motion for leave to
requested that the Court “treat the Notice of Appeal as a
Motion for Leave to Appeal and thereafter grant the same.”
(Doc. # 12 at 7).
As explained below, even if the Court were
to exercise its discretion to accept CadleRock’s Notice of
Appeal and construe it as a motion for leave to appeal, the
Court would nevertheless decline to exercise jurisdiction over
interlocutory appeals from the orders of a bankruptcy court if
the district court grants leave.
28 U.S.C. § 158(a)(3).
Because the statute does not provide criteria for determining
whether a district court should exercise its discretionary
authority to grant leave, courts look to 28 U.S.C. § 1292(b),
which governs discretionary interlocutory appeals from the
district courts to the courts of appeals.
In re The Charter
Co., 778 F.2d 617, 620 n.5 (11th Cir. 1985).
The pertinent factors under 28 U.S.C. § 1292(b) are (1)
whether the order involves a controlling question of law as to
which there is substantial ground for difference of opinion
and (2) whether an immediate appeal from the order may
materially advance the ultimate termination of the litigation.
McFarlin v. Conseco Servs., 381 F.3d 1251, 1264 (11th Cir.
An order involves a controlling question of law when it
addresses an “abstract legal issue or what might be called one
of pure law, matters the court of appeals can decide quickly
and cleanly without having to study the record.” McFarlin, 381
F.3d at 1258 (internal quotation marks omitted).
question is one to which there is substantial ground for
difference of opinion if an appellate court would disagree on
the meaning of the relevant legal principle rather than on its
application to the facts.” McCallan, 502 B.R. at 248-49.
A controlling question of law materially advances the
litigation if it would serve to avoid a trial or otherwise
substantially shorten the litigation.
McFarlin, 381 F.3d at
Interlocutory appeals “were intended, and should be
reserved, for situations in which the court of appeals can
rule on a pure, controlling question of law without having to
delve beyond the surface of the record in order to determine
the facts.” Id.
This Court agrees with the court’s pronouncement in
McCallan, that “The issue of whether the bankruptcy judge
should have recused himself does not involve a controlling
question of law as to which there is substantial ground for
difference of opinion.” 502 B.R. at 249.
As was the case in
McCallan, the parties in this case do not disagree as to the
bankruptcy judge’s application of the particular case-specific
facts to the governing recusal standard, leading to his
determination that recusal was not warranted.
underscore the fact-specific nature of these proceedings.
Among other contentions, CadleRock posits that the Bankruptcy
Judge should have recused himself because the Trustee and
Special Counsel appear before him frequently; he expressed
“hesitancy or unwillingness to accept the findings of Judge
Moody in the first appeal;” and he “consistently expressed
doubt regarding the scope and merit of Appellant’s claims
against the Appellee.” (Doc. # 12 at 10, 12-13).
of these allegations, CadleRock has provided this Court with
specific statements by the Bankruptcy Judge that CadleRock
asserts show that the Bankruptcy Judge “has already prejudiced
this matter in favor of Appellees without considering, or even
allowing Appellant to conduct discovery to obtain, all of the
relevant evidence.” (Id. at 13).
consideration on the basis of an interlocutory appeal. Rather
than presenting a pure question of law, the appeal requires
this Court “to delve beyond the surface of the record in order
to determine the facts.” McFarlin, 381 F.3d at 1258; see also
In re Ad Hoc Comm. of Tort Victims, No 04-cv-8934, 2005 U.S.
Dist. LEXIS 1540, at *13 (S.D.N.Y. Feb. 3, 2005)(declining to
hear interlocutory appeal over a bankruptcy judge’s denial of
a motion to recuse
and describing the appeal as “a fact-
resolution after the final judgment.”).
As stated in Coopers & Lybrand v. Livesay, 437 U.S. 463,
475 (1978), the moving party has “the burden of persuading the
court that exceptional circumstances justify a departure from
the basic policy of postponing appellate review until after
the entry of final judgment” and “district courts should allow
interlocutory bankruptcy appeals sparingly since interlocutory
bankruptcy appeals should be the exception, not the rule.” In
re Lorenzo, No. 13-23688, 2014 U.S. Dist. LEXIS 8820, at *5
demonstrated that it is appropriate for the Court to consider
the denial of the Motion to Recuse on an interlocutory basis,
and the Court accordingly declines to exercise jurisdiction
over the appeal.
Accordingly, it is now
ORDERED, ADJUDGED, and DECREED:
This appeal is DISMISSED for lack of jurisdiction.
The Clerk is directed to transmit a copy of this Order to
the Bankruptcy Court and is thereafter directed to CLOSE
DONE and ORDERED in Chambers, in Tampa, Florida, this
30th day of March, 2016.
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