The Mortgage Specialists, Inc. et al v. NH Banking Department, Commissioner

Filing 30

ORDER denying 20 Motion for Recusal of Hon. Judge Joseph N. LaPlante. The motion lacks merit, and is denied. For other reasons, however, the court sua sponte recuses itself. So Ordered by Chief Judge Joseph N. Laplante.(jb)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE

The Mortgage Specialists, Inc.,
et al.
v.

Civil No. 13-cv-00156-JL

NH Banking Department,
Commissioner
RECUSAL ORDER
Before the court is the plaintiffs’ motion for the court to
recuse itself from the above captioned matter (doc. no. 20).
motion lacks merit, and is denied.

The

For other reasons, however,

the court sua sponte recuses itself.
The plaintiffs advance two reasons in support of their
request for recusal:

(1) the court, between 1990 and 1993, was

employed as an associate in a law firm where Attorney L. Jonathan
Ross worked as a partner; and (2) the court has exhibited “bias
and prejudice” against the plaintiffs and their case.

Although

Attorney Ross (who represented one of the plaintiffs in his
divorce) is not a party in this litigation, plaintiffs’ counsel
has represented that he is a potential witness based on his role
in a rather vast civil conspiracy alleged by the plaintiffs.
Attorney Ross’s involvement in the case, as a basis for
recusal, requires little discussion.

It has been 20 years since

the court worked with or for Attorney Ross.

The court and

Attorney Ross have only infrequent contact, sometimes going years

without running across each other or speaking.

While the court

holds Attorney Ross in high professional regard, the same can be
said for many members of the New Hampshire bar.

The court’s only

contact with Attorney Ross in recent years has involved their
participation in efforts, through various entities affiliated
with the bench and bar, to increase access to justice for the
indigent.

Nothing about this relationship requires this court’s

recusal.
The plaintiffs’ allegation of “bias and prejudice,” however,
requires further discussion.

It is true, as represented in the

plaintiffs’ motion, that the court referred plaintiffs’ counsel
to the Rules of Professional Conduct during a telephone
conference regarding the plaintiffs’ request for temporary and
preliminary injunctive relief.

That suggestion, however, was not

based on skepticism regarding the plausibility of the civil
conspiracy alleged in the complaint, as plaintiffs suggest, or
any other bias or prejudice toward their case.1

Rather, it was

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The court’s understanding of the alleged conspiracy (or
conspiracies) is as follows:
Plaintiffs The Mortgage Specialists, Inc. (“MSI”) and
Michael Gill, president and majority owner of MSI, allege that
the New Hampshire Banking Department engaged in a “longstanding
conspiracy” with a number of attorneys, including the plaintiffs’
own former counsel Alexander Walker and his colleagues at Devine
Millimet & Branch, PA, “to engage in tortious conduct designed to
put MSI out of business and to cover up the Department’s own
oversight failures.” These include, among other things, the
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Department’s failure to detect the wrongdoing of Financial
Resources Mortgage, Inc. (“FRM”), a New Hampshire-based mortgage
originator that collapsed in 2009. By undertaking and
publicizing an investigation of MSI, the plaintiffs contend, the
Department was able “to distract attention from the unfolding
issues surrounding the Department’s lack of oversight of FRM.”
According to the plaintiffs, Attorney Walker used his “close
personal contact” with the Department to engineer this
investigation. Attorney Walker did so, the plaintiffs assert, to
distract Gill from (a) his wholly separate conspiracy with the
counsel involved in his divorce--Attorney Ross, whom Gill had
retained at Attorney Walker’s recommendation, and Stephen Tober,
the attorney for Gill’s wife--“to churn and bill excessive and
unnecessary legal fees,” and (b) their joint “destruction of
computer and other evidence in the divorce case.” Prior to
enlisting the help of the Department to cover up this conspiracy,
the plaintiffs claim, Attorney Walker had “steered” Gill to
several other attorneys--James Tenn of Tenn & Tenn, PA; R. David
Depuy of McLane, Graf, Raulerson & Middleton, PA; and Timothy
Coughlin of Couglin, Rainboth, Murphy & Lown, PA--who were
“friends or close associates” of Attorney Walker and, acting at
his direction, assisted him in both prolonging the divorce action
in order to generate additional legal fees and concealing the
misconduct that had previously occurred.
In pursuit of their conspiracy, the Department, Attorney
Walker, and his firm, in addition to scheming to investigate MSI,
allegedly disclosed confidential information belonging to MSI.
They did this by enlisting an employee of Proficio Mortgage, a
competitor of MSI and respondent in another case before the
Department, to post the information (along with supposedly
defamatory statements about MSI) on a web site. Shortly after he
did so, the Department allegedly dismissed the charges against
Proficio. While Gill and MSI encouraged Attorney Walker and the
Department to investigate the disclosure of this information,
Attorney Walker and the Department took what the plaintiffs claim
were only halfhearted efforts to do so, in an attempt to prevent
their conspiracy from being discovered.
More recently, the Department has undertaken what the
plaintiffs claim is an abusive audit of MSI, demanding four
months’ worth of the company’s e-mails and threatening to suspend
the company’s license if it does not comply. The plaintiffs also
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suggested in response to counsel’s repeated claims of ignorance
regarding the facts alleged in that complaint, and further claims
that he was not its author (although the amended complaint bears
his signature) and was new to both his employment in the
plaintiffs’ company and his representation of the company in this
litigation.

These claims of ignorance and disavowal of

responsibility for the allegations in this lawsuit are difficult
to square with counsel’s duty to inform himself of the facts of
his clients’ case and only press non-frivolous claims, see N.H.
R. of Prof. Conduct 3.1, and his duty of candor toward the court,
see N.H. R. of Prof. Conduct 3.3.

It was not the court’s

intention to threaten or attempt to intimidate plaintiffs’
counsel, or to dissuade him or the plaintiffs from further
pursuing this case.
Nonetheless, the court’s careful review of the complaint
reveals that there are several other New Hampshire attorneys
alleged to have some role in the civil conspiracy, at least one
of whom (unlike Attorney Ross) is on this court’s recusal list.
While the court is certain that it could preside impartially over

assert that the Department has enlisted the New Hampshire
Department of Labor to institute an inspection of MSI “in a
further effort to harass MSI and to dissuade MSI from pursuing
information concerning the conspiracy between the Department and
MSI's former counsel.”
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this case, in an abundance of caution and deference to the
applicable standards set forth under 28 U.S.C. § 455(a) and Canon
3(c)(1) of the Code of Conduct for United States Judges, it sua
sponte recuses itself from this case.
SO ORDERED.

Joseph N. Laplante
United States District Judge
Dated:
cc:

May 10, 2013

Michael S. Parousis, Esq.
Nancy J. Smith, Esq.

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