SMITH v. MANASQUAN SAVINGS BANK et al

Filing 31

OPINION filed. Signed by Judge Joel A. Pisano on 9/20/2012. (eaj)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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Appellant,
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v.
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MANASQUAN SAVINGS BANK, et al., :
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Appellee.
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LYNN Z. SMITH,

Civil Action No. 12-00085 (JAP)
OPINION

PISANO, District Judge:
This matter comes before the Court as an Appeal of United States Bankruptcy Court
Judge Raymond T. Lyon’s Order of December 7, 2011, which denied Debtor/Appellant Lynn Z.
Smith’s (the “Appellant”) Motion for Reconsideration of a prior Order. In the prior Order, the
Bankruptcy Court denied Appellant’s Motion to Stay enforcement of two previous Orders,
which, among other things, vacated the automatic stay as to the Chief of the New Jersey Bureau
of Securities (the “Bureau”) and the Manasquan Savings Bank (“Manasquan Bank”). After the
Bankruptcy Court denied Appellant’s Motion to Stay and Appellant’s Motion for
Reconsideration, this Appeal followed. The Court exercises appellate jurisdiction in this matter
under 20 U.S.C. § 158(a). See Matter of Halvajian, 216 B.R. 502, 508 (D.N.J. 1998), aff’d, 168
F.3d 478 (3d Cir. 1998) (citing 28 U.S.C. § 158(a)(1)).
Also before the Court is: (i) Appellant’s Motion for Recusal of Presiding Judge [docket
entry no. 15]; (ii) Appellant’s Motion to Subpoena Documents and Records [docket entry no.
17]; and (iii) Appellant’s Motion for an Order Granting Stay Pending Decision on the above

motions and Application for Pro Bono Counsel [docket entry no. 19]. The Bureau and
Manasquan Bank oppose these motions. In addition, Manasquan Bank has filed a Cross-Motion
to Dismiss the Appeal based on Appellant’s failure to file an appellate brief [docket entry no.
20]. The Court decides these motions without oral argument as permitted by Federal Rule of
Civil Procedure 78.
For the reasons discussed below, the Court shall remand the matter to the Bankruptcy
Court for elaboration of its reasoning in issuing the November 2 Order and the December 7
Order. Manasquan Bank’s Cross-Motion to Dismiss is denied without prejudice. Appellant’s
Motion for Recusal, Motion to Subpoena Documents and Motion for a Stay are also denied.
I.

Background
Appellant filed a Chapter 13 bankruptcy petition on March 18, 2011. The case was

assigned to Judge Lyons. Appellant filed her original Chapter 13 plan on March 18, 2011
[Bankruptcy docket entry no. 2].
On May 10, 2011, the Bureau filed an objection to Appellant’s proposed plan because,
among other things, it failed to include a plan for payment of $809,237 to the Bureau
[Bankruptcy docket entry no. 15]. Over the next several weeks, the Bureau engaged in
negotiations with Appellant’s then-attorney and ultimately, the Bureau and Appellant reached an
agreement to resolve the Bureau’s objection. Therefore, on June 22, 2011, the Bankruptcy Court
entered an Order, which: 1) withdrew the Bureau’s objection to the proposed plan; 2) deemed the
Bureau’s proof of claim for $809,237 to be non-dischargeable; and 3) vacated the automatic stay
as to the Bureau [Bankruptcy docket entry no. 26].
Meanwhile, on May 18, 2011, Manasquan Bank filed a motion for relief from the
automatic stay based on Appellant’s failure to make payments to the bank in accordance with her

proposed plan [Bankruptcy docket entry no. 16]. After negotiations with Appellant’s thencounsel, Manasquan Bank and Appellant reached an agreement, whereby Appellant would
immediately begin making payments to the bank. An Order was entered on June 30, 2011,
which confirmed this agreement and set forth a schedule for such payments [Bankruptcy docket
entry no. 29]. The Order also contained a thirty-day default clause, which entitled Manasquan
Bank to obtain relief from the automatic stay by filing a certification of default, in the event that
Appellant failed to abide by the terms of the Court’s Order. Appellant did not make the required
payments to the bank and on July 7, 2011, Manasquan Bank filed a certification of default
[Bankruptcy docket entry no. 34]. On July 22, 2011, the Bankruptcy Court entered an Order
vacating the automatic stay as to Manasquan Bank [Bankruptcy docket entry no. 45].
Several months later, on October 3, 2011, Appellant moved the Bankruptcy Court to stay
enforcement of these two orders [Bankruptcy docket entry no. 59]. The Bureau and Manasquan
Bank opposed the motion and on November 2, 2011, the Bankruptcy Court denied Appellant’s
Motion to Stay (the “November 2 Order”) [Bankruptcy docket entry no. 69]. On November 15,
2011, Appellant moved the Bankruptcy Court for reconsideration of the November 2 Order
[Bankruptcy docket entry no. 73]. The Bureau and Manasquan Bank opposed the motion and on
December 7, 2011, the Bankruptcy Court denied Appellant’s Motion for Reconsideration (the
“December 7 Order”) [Bankruptcy docket entry no. 84].
On January 5, 2012, Appellant’s Notice of Appeal was entered in this Court. In light of
Appellant’s pro se status, the Court granted Appellant three separate extensions of time to file
her appellate brief [docket entry nos. 6, 12, 16]. By Order dated March 26, 2012, the Court gave
Appellant until May 1, 2012 to file her brief and informed her that she would receive no further
extensions. To date, Appellant has not filed an appellate brief in support of her Appeal.

On March 26, 2012, Appellant filed a Motion for Recusal of Presiding Judge Pisano
[docket entry no. 15]. Appellant subsequently filed a Motion to Subpoena Documents and
Records [docket entry no. 17], as well as a Motion for a Stay Pending Decision on these motions
and an Application for Pro Bono Counsel [docket entry no. 19]. The Bureau and Manasquan
Bank opposed the motions and Manasquan Bank cross-moved to dismiss the Appeal based on
Appellant’s failure to file an appellate brief [docket entry no. 20]. This Opinion addresses each
of these motions.
II.

The Appeal and Cross-Motion to Dismiss the Appeal
A.

Standard of Review

Federal Rule of Bankruptcy Procedure 8013 provides in pertinent part: “On appeal the
district court . . . may affirm, modify, or reverse a bankruptcy judge’s judgment, order, or decree
or remand with instructions for further proceedings.” Fed. R. Bankr. P. 8013. Appellate courts
review “the bankruptcy court’s legal determinations de novo, its factual findings for clear error
and its exercise of discretion for abuse thereof.” In re: United Healthcare Sys., Inc., 396 F.3d
247, 249 (3d Cir. 2005) (quoting In re: Trans World Airlines, Inc., 145 F.3d 124, 130-31 (3d Cir.
1998)).
B.

The Appeal

The Court has reviewed the parties’ submissions and the record from the Bankruptcy
Court proceedings. At this time, the Court is unable to address the merits of Appellant’s appeal
and Manasquan Bank’s Cross-Motion to Dismiss the Appeal because the Bankruptcy Court did
not include any explanation of its reasoning in issuing the December 7 Order, which denied
Appellant’s Motion for Reconsideration. Nor did it include an explanation of its reasoning in

issuing the November 2 Order denying Appellant’s Motion for Stay, which formed the basis of
Appellant’s subsequent Motion for Reconsideration.
The absence of a reasoned explanation of the Bankruptcy Court’s action, demonstrating
that the parties’ arguments were considered, makes it impossible for the Court to conclude that
the denial of the Motion for Stay and Motion for Reconsideration was proper in this case. See,
e.g., Vadino v. A. Valey Eng’rs, 903 F.2d 253, 258-59 (3d Cir. 1990) (noting that lower court’s
failure to include an explanation for its reasoning in granting summary judgment motion
interfered with the appellate court’s ability to exercise its statutory function of appellate review).
Absent an explanation of the Bankruptcy Court’s reasoning, the Court cannot fully address the
merits of the Appeal. Accordingly, the Court shall remand this matter to the Bankruptcy Court
for elaboration of its reasoning in issuing the November 2 Order and the December 7 Order.
III.

Appellant’s Motion for Recusal

Appellant seeks the Court’s recusal from this action based on the purported “appearance
of bias and impropriety” that arises from the fact that Judge Pisano graduated from Seton Hall
Law School (“Seton Hall”), as did other judges that have presided over Appellant’s various legal
matters.
A. Legal Standard
The decision of whether to recuse lies within the discretion of the district judge. United
States v. Wilensky, 757 F.2d 594, 599-600 (3d Cir. 1985). Two statutes govern the issue of
recusal; a party may move for recusal under either 28 U.S.C. § 144 or 28 U.S.C. § 455. Section
144 provides that a district court judge should recuse if the party seeking recusal submits a
“timely and sufficient affidavit” illustrating that the judge has a personal bias or prejudice
towards a party. Appellant has not submitted an affidavit pursuant to § 144 and does not

specifically refer to either statute in her Motion for Recusal. In light of Appellant’s pro se status,
however, the Court will consider Appellant’s request pursuant to both statutes. Section 455(a)
provides that “[a]ny . . . judge of the United States” must be disqualified “in any proceeding in
which his impartiality might reasonably be questioned.” 28 U.S.C. § 455(a). Further, §
455(b)(1) provides that a judge must be disqualified where he “has a personal bias or prejudice
concerning a party . . . .” Id. § 455(b)(1). Section 455(b)(1) is similar in substance to § 144 and
the two sections are construed in pari materia. See Apple v. Jewish Hosp. & Med. Ctr., 829 F.2d
326, 333 (2d Cir. 1987).
If a party claims that a judge should recuse under § 455(a) because his “impartiality
might reasonably be questioned,” the test that applies 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, 301 (3d Cir. 2004). This is an objective
inquiry that considers not only whether a judge is actually impartial but whether there is an
appearance of impartiality. See In re: Cmty. Bank of N. Va., 418 F.3d 277, 320 (3d Cir. 2005).
Furthermore, if a party claims that a judge should recuse because of a personal bias or
prejudice, she must show that such bias or prejudice is grounded in extrajudicial sources, such as
personal animus, rather than judicial actions that can be corrected on appeal. See Smith v.
Danyo, 585 F.2d 83, 87 (3d Cir. 1978). Extrajudicial bias “refers to a bias that is not derived
from the evidence or conduct of the parties that the judge observes in the course of the
proceedings.” Johnson v. Trueblood, 629 F.2d 287, 291 (3d Cir. 1980). In the absence of
extrajudicial bias, a party seeking recusal must show that a judge has a “deep-seated and
unequivocal antagonism that would render fair judgment impossible” to obtain recusal. Liteky v.
United States, 510 U.S. 540, 555-556 (1994) (“[O]pinions formed by the judge on the basis of

facts introduced or events occurring in the course of the current proceedings, or of prior
proceedings, do not constitute a basis for a bias or partiality motion unless they display a deepseated favoritism or antagonism that would make fair judgment impossible”).
B. Merits of Appellant’s Motion
The Court finds no merit to the Appellant’s Motion for Recusal. Appellant asserts that
the Court’s impartiality might reasonably be questioned because Judge Pisano graduated from
Seton Hall, as did other judges that have presided over Appellant’s various legal proceedings. In
particular, Appellant contends that Judge Pisano “attended class with . . . and/or was instructed
by the husband of” New Jersey Superior Court Judge Thomas W. Cavanagh, Jr., New Jersey
Supreme Court and Appellate Division Judge Dorothea O’C. Wefing, and United States
Bankruptcy Court Judge Lyons [docket entry no. 15]. Appellant further argues that this
classmate connection creates “an appearance of bias and impropriety” and that Judge Pisano
“favors lawyers that he knows.” Id.
Judge Pisano graduated from Seton Hall in 1974. The other federal and state judges
identified in Appellant’s motion also graduated from Seton Hall in the 1970s. The mere fact that
Judge Pisano attended law school with these judges nearly forty years ago is insufficient to
warrant the Court’s recusal from this matter. See, e.g., Okpor v. Rutgers, State Univ. of N.J., 196
Fed. Appx. 129, 132 (3d Cir. 2006) (holding that a trial judge was not required to recuse from a
civil rights action against the judge’s alma mater); Jersey Asparagus Farms, Inc. v. Rutgers
Univ., 2011 U.S. Dist. LEXIS 44929, at *5-6 (D.N.J. 2011) (finding that recusal was not
warranted where judge graduated from the law school of defendant university and her spouse
was an adjunct professor at the law school). See also Tonkovich v. Kansas Bd. Of Regents, et al.,
924 F. Supp. 1084, 1086-87 (D. Kan. 1996) (holding that judge’s spouse’s adjunct teaching of

courses at law school did not create appearance of bias). “Inconsequential alumni contacts of
this type would not cause a reasonable person to question the court's impartiality.” United States
v. Adams, 2009 U.S. Dist. LEXIS 1287, at *6 (E.D. Pa. 2009).
Further, except for a vague reference to a “significant number of comments online,”
Appellant provides no support for her contention that Judge Pisano favors lawyers that he knows.
Such unsupported allegations do not warrant the Court’s recusal from this matter. See United
States v. Cerceda, 188 F.3d 1291, 1293 (11th Cir. 1999) (holding that judge was not required to
recuse himself under § 455(a) where party seeking recusal set forth conjecture and speculation,
but no facts, in support of judge’s partiality); Cooney v. Booth, 262 F. Supp. 2d 494, 508 (E.D.
Pa. 2003) (“It is, thus, ‘vital to the integrity of the system of justice that a judge not recuse
himself on unsupported, irrational or highly tenuous speculation.’ ” (quoting Hinman v. Rogers,
831 F.2d 937, 939 (10th Cir. 1987))). Accordingly, the Court will not recuse itself based on its
graduation from Seton Hall and familiarity with other judges in this state. Appellant’s Motion
for Recusal is denied with prejudice.
IV.

Motion to Subpoena Documents and Records
Appellant seeks to subpoena documents and deposition testimony from: 1) Judge

Cavanagh; 2) Judge Wefing; 3) Judge Lyons; 4) Peter M. Brown, President & CEO of
Manasquan Bank; and 5) Carol D. Roberts, of Manasquan Bank. Manasquan Bank opposes the
motion and argues that discovery at this stage is inappropriate because the Court is limited to
consideration of the record from the Bankruptcy Court and therefore, any newly discovered
materials are irrelevant. Manasquan Bank further argues that the subpoenas are improper
because they were signed by Appellant’s husband, instead of Appellant, and they seek
documents that have no bearing on the proceedings in the Bankruptcy Court.

A. Legal Standard
Federal Rule of Bankruptcy Procedure 8006 provides that “[t]he record on appeal shall
include the items so designated by the parties, the notice of appeal, the judgment, order, or
decree appealed from, and any opinion, findings of fact, and conclusions of law of the court.”
Fed. R. Bankr. P. 8006. In applying this rule, district courts reviewing a bankruptcy court’s
decision on appeal will not consider new evidence, which was not part of the factual record
before the bankruptcy court. See In re: Websci Techs., Inc., 234 Fed. Appx. 26, 31 (3d Cir.
2007) (holding that the district court did not err by refusing to permit appellant who challenged
bankruptcy court decision to supplement record with materials relating to allegations of fraud
and concealment, because such evidence was not part of the bankruptcy court’s record).
B. Merits of Appellant’s Motion
The Court finds that Appellant’s Motion to Subpoena Documents and Records should be
denied. The documents and testimony that Appellant seeks to discover were not considered by
the Bankruptcy Court in deciding Appellant’s Motion for Reconsideration. Nor were they
considered by the Bankruptcy Court in deciding Appellant’s Motion for Stay. Accordingly, the
Court cannot these additional materials on appeal and there is no basis for Appellant to engage in
far-reaching discovery on unrelated matters, which are not properly before the Court. See id.
See also In re: Medford Crossings North, LLC, 2012 U.S. Dist. LEXIS 76341, at *13-14 (D.N.J.
2012) (holding that appellant could not supplement the record on appeal with materials that were
nonexistent at the time of the bankruptcy court proceedings ); Kabayan v. Yepremian, 116 F.3d
1295, 1297 (9th Cir. 1997) (finding that deposition and other testimony taken after bankruptcy
court had granted summary judgment were not part of record on appeal and could not be

considered by the district court pursuant to Rule 8006). Therefore, the Motion to Subpoena
Documents and Records is denied with prejudice.
Furthermore, Manasquan Bank is correct that the subpoenas were improper because they
were signed by Appellant’s husband. As the Court explained to Appellant in its Order dated
March 26, 2102, Federal Rule of Civil Procedure 11 requires all documents filed with the Court
to be signed by an attorney of record in the case, or if the party is unrepresented, by the party
personally. Fed. R. Civ. P. 11(a). The Court reminds Appellant that her husband may not file
documents on her behalf.
V.

Motion for Stay and Application for Pro Bono Counsel
A.

Motion for Stay Pending Decision

Appellant moves to stay these proceedings pending a determination of her Motion for
Recusal and Motion to Subpoena Documents and Records. The Bureau and Manasquan Bank
oppose the motion and argue that Appellant’s request in fact constitutes a request for an
additional extension of time to file her appellate brief. Because the Court has denied these
motions with prejudice, the Motion to Stay is denied as moot.
B.

Application for Pro Bono Counsel

Appellant also requests the appointment of pro bono counsel. There is no absolute
constitutional right to appointed counsel in a federal civil proceeding. See Parham v. Johnson,
126 F.3d 454, 456 (3d Cir. 1997). Pursuant to 28 U.S.C. § 1915(e)(1), however, the Court may
appoint counsel for indigent persons in civil litigation proceedings if it determines that the
circumstances warrant it.
In determining whether to appoint counsel to civil litigants proceeding in forma pauperis,
a court should consider the following factors:

As a preliminary matter, the plaintiff’s claim must have some merit in fact and
law.... If the district court determines that the plaintiff’s claim has some merit,
then the district court should consider the following factors:
(1) the plaintiff’s ability to present his or her own case;
(2) the complexity of the legal issues;
(3) the degree to which factual investigation will be necessary and the
ability of the plaintiff to pursue such investigation;
(4) the amount a case is likely to turn on credibility determinations;
(5) whether the case will require the testimony of expert witnesses;
(6) whether the plaintiff can attain and afford counsel on his own behalf.
(Tabron v. Grace, 6 F.3d 147, 155-56, 157 n.5 (3d Cir. 1993), cert.
denied, 510 U.S. 1196 (1994)). This list of factors is not exhaustive, but instead
should serve as a guide post for the district courts.
Correspondingly, courts should exercise care in appointing counsel
because volunteer lawyer time is a precious commodity and should not be wasted
on frivolous cases. Id. at 157.
Parham, 126 F.3d at 457-58.
Analysis of these factors reveals that appointment of counsel is not appropriate at this
time. As discussed above, the record on appeal is insufficient for the Court to determine whether
Appellant’s claim has any merit in law or fact. It appears from her multiple submissions thus far,
however, that Appellant is able to present both the factual and legal arguments relevant to her
Appeal. Accordingly, the Application for Pro Bono Counsel is denied without prejudice to
Appellant or the Court revisiting the issue at a later date should circumstances warrant.
Should Appellant wish to reapply for pro bono counsel at a later date, the proper
procedure is to file an application to proceed in forma pauperis in accordance with the
instructions outlined in the “Procedural Guide for Pro Se Litigants,” which is available on this
Court’s website and will be provided to Appellant, along with this Opinion.
VI.

Conclusion
For the foregoing reasons, this matter is remanded to the Bankruptcy Court for further

elaboration of the Bankruptcy Court’s reasoning in issuing the November 2 Order and the
December 7 Order. Appellee Manasquan Bank’s Cross-Motion to Dismiss is denied without

prejudice. The Appellant’s Motion for Recusal, Motion to Subpoena Documents and Records
and Motion for Stay Pending Decision and Application for Pro Bono Counsel are also denied.
An appropriate order follows.
/s/ Joel A. Pisano
JOEL A. PISANO
United States District Judge
Dated: September 20, 2012