Summary
noting that the estate representative had commenced over 1,000 adversary proceedings and filed 1,000 claims objections in the bankruptcy court after the case was confirmed
Summary of this case from In re Oversight Control Com. of AvánzitOpinion
Case No. 01-12974 (SMB).
February 3, 2005
Denise L. Savage, Esq., Michael K. Gertzer, Esq., Of Counsel, SAVAGE ASSOCIATES, P.C., White Plains, New York, Attorneys for Movant.
DAVID N. KELLEY, United States Attorney for the Southern District of New York, David J. Kennedy, Assistant United States Attorney, Of Counsel, New York, New York, Attorney for the United States Department of the Treasury, Internal Revenue Service the Federal Communications Commission and the United States Postal Service.
David J. Adler, Esq., Of Counsel, McCARTER ENGLISH, LLP, New York, New York, Attorneys for First Union National Bank, as Indenture Trustee.
MEMORANDUM DECISION AND ORDER DENYING RECUSAL MOTION
During the past eighteen months, the Court has presided over more than 1,000 adversary proceedings brought by Savage Associates, P.C. as the Unsecured Claim Estate Representative (the "Representative") as well as another 1,000 claims objections. With only forty-six lawsuits remaining, and virtually all of the claims objections resolved, the Representative moved to disqualify the Court for bias. The United States Government, party to three pending adversary proceedings, filed a response opposing the motion. The First Union National Bank, as Indenture Trustee, joined in the Government's opposition, and advanced several additional arguments against the motion. For the reasons that follow, the motion is denied.
See Joint Objection of the United States Department of the Treasury, Internal Revenue Service, the Federal Communications Commission, and the United States Postal Service to Motion by the Unsecured Claims Estate Representative Pursuant to 28 U.S.C. § 144 and 455 (I) Seeking Mandatory Recusal of the Honorable Stuart M. Bernstein from all Teligent Avoidance Actions and Claims and (II) Requesting Suspension of Proceedings in the Teligent Adversary Avoidance Actions and Claims Pending the Entry of a Final Order Herein, dated Jan. 27, 2005 (ECF Doc. # 2208).
See Joinder of First Union National Bank as Indenture Trustee to the Joint Objection of the United States Government Entities to the Motion of the Unsecured Claims Estate Representative Seeking Mandatory Recusal of the Honorable Stuart M. Bernstein from All Teligent Avoidance Actions and Claims and Requesting Suspension of Proceedings Pending the Entry of a Final Order, dated Jan. 31, 2005 (ECF Doc. # 2212).
BACKGROUND
A. The Teligent Case
At all relevant times, Teligent, Inc. was engaged in the business of providing telecommunications services to wholesale and resale customers. In re Teligent, Inc., 282 B.R. 765, 766-67 (Bankr. S.D.N.Y. 2002). Like many other telecommunications companies, Teligent wound up in this Court when it and numerous affiliates filed chapter 11 petitions on May 21, 2001. Teligent, Inc. and its affiliates are referred to collectively as "Teligent." At the time of the filings, Teligent owed approximately $800 million to its banks and another $740 million to its public noteholders (the "Noteholders") pursuant to two series of notes issued under two Indentures. Id. at 767. First Union National Bank is the Indenture Trustee under both Indentures.
Despite significant obstacles, including administrative insolvency, Teligent confirmed a plan (the "Plan") on or about September 6, 2002. See id. at 767-70. The Plan established the Representative and authorized her to prosecute the chapter 5 causes of action for the benefit of the unsecured creditors. The Plan also empowered the Representative to object to unsecured claims. All other property and causes of action vested in Reorganized Teligent. B. The Representative
The provisions of the Plan, and the Representative's powers and duties, are discussed in more detail in In re Teligent, Inc., 306 B.R. 752, 755-56 (Bankr. S.D.N.Y. 2004).
Savage Associates, P.C. was eventually appointed to serve as the Representative. The Court did not play any role in her selection or appointment. After conducting discovery pursuant to FED. R. BANKR. P. 2004, she commenced over 1,000 adversary proceedings to recover money in accordance with the authority granted under the Plan. (See Affidavit of Denise L. Savage [etc.], sworn to Jan. 6, 2005 ("Savage Affidavit"), at ¶ 7) (attached to ECF Doc. # 2190.) I presided over all of these litigations, conducting scores of conferences, hearings and one trial. As a result of court-ordered mediation, litigation, and settlement, the Representative has recovered almost $10 million, and only forty-six adversary proceedings remain unresolved. (Id., at ¶ 8.) The Representative also filed five omnibus objections seeking to expunge over 1,000 claims, and virtually all have been resolved.
Although the Representative is a corporate entity, its sole principal, Denise Savage, has borne that responsibility. Hence, this decision uses the pronoun "she" rather than the impersonal "it" to refer to the Representative. For similar reasons, the pronoun "I' is used to refer to this "Court."
The Court subsequently recused itself in two cases, and they were reassigned to other judges.
The instant recusal motion was prompted by the decision (the "Decision") denying the Representative's motion to expunge the Noteholders' $740 million claim (the "Noteholder Objection"). Implying that the Decision was the proverbial straw that broke the camel's back, the Representative has now identified a handful of other instances, some dating back over one year, which, she contends, show the pervasive bias or deep-seated antagonism on my part that is generally required to support recusal. The specific charges are discussed below.
The Decision is annexed as Exhibit C to the Savage Affidavit.
DISCUSSION
Disqualification for bias is governed by 28 U.S.C. § 455 which is made applicable to this case and these proceedings by FED. R. BANKR. P. 5004(a). Section 455 states, in pertinent part:
The Representative also invoked 28 U.S.C. § 144 which addresses the procedure for disqualifying a district judge for personal bias or prejudice. Section 144 does not apply to bankruptcy judges. In re Smith, 317 F.3d 918, 932 (9th Cir. 2002), cert. denied, 538 U.S. 1032 (2003); Dubnoff v. Goldstein, 385 F.2d 717, 720 (2d Cir. 1967). Nevertheless, the standards for disqualification under §§ 144 and 455(b)(1) are the same. Liteky v. United States, 510 U.S. 540, 548 (1994);Bin-Wahad v. Coughlin, 853 F. Supp. 680, 682-83 (S.D.N.Y. 1994).
(a) Any justice, judge, or magistrate [judge] of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.
(b) He shall also disqualify himself in the following circumstances:
(1) Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding. . . .
Recusal motions are committed to the trial court's discretion.Apple v. Jewish Hospital and Medical Center, 829 F.2d 326, 333 (2d Cir. 1987). The court applies an objective test. The appearance of impropriety must be determined "by examining the record facts and the law, and then deciding whether a reasonable person knowing and understanding all of the relevant facts would recuse the judge." In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1313 (2d Cir. 1988); accord United States v. Lovaglia, 954 F.2d 811, 815 (2d Cir. 1992); Apple, 829 F.2d at 333.
"The alleged bias and prejudice sufficient to warrant disqualification must stem from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case." United States v. Grinnell Corp., 384 U.S. 563, 583 (1966); accord Lewis v. Tuscan Dairy Farms, Inc., 25 F.3d 1138, 1141 (2d Cir. 1994). "[J]udicial rulings alone almost never constitute a valid basis for a bias or partiality motion." Liteky v. United States, 510 U.S. 540, 555 (1994); see United States v. Colon, 961 F.2d 41, 44 (2d Cir. 1992); Schiff v. United States, 919 F.2d 830, 834 (2d Cir. 1990), cert. denied, 501 U.S. 1238 (1991).
Moreover, the opinions that a judge forms in the course of the proceedings do not constitute the basis for a bias or partiality motion unless they display a deep-seated antagonism that makes fair judgment impossible. Liteky, 510 U.S. at 555; United States v. Conte, 99 F.3d 60, 65 (2d Cir. 1996). Thus, expressions of impatience, dissatisfaction or annoyance, or critical or disapproving remarks about counsel, a party or the case, will not support a charge of bias unless they derive from "an extra-judicial source or display such a high degree of favoritism or antagonism as to make fair judgment impossible." 12 JAMES WM. MOORE, MOORE'S FEDERAL PRACTICE § 63.21[3], at 63-38 to 63-39 (15 ed. rev. 2004); see Liteky, 510 U.S. at 555-56.
A. The Noteholders Objection
As noted, the impetus to the recusal motion was the Decision overruling the Noteholder Objection. Briefly, the Representative objected to two claims filed by the Indenture Trustee in the aggregate principal sum of $740 million. (See Unsecured Claims Estate Representative's Objection to Claims 2220 and 2221 of First Union National Bank as Indenture Trustee of Certain Noteholders, dated Oct. 13, 2004) (ECF Doc. # 2013.) She argued that the claims should be recharacterized as equity or subordinated to the payment of the remaining unsecured claims. I heard oral argument on December 2, 2004. With the parties' consent, the motion was treated as one for summary judgment, and the objection was overruled from the bench (the "Bench Ruling").
The matter is now on appeal, and it is not my intention to invade the province of the District Court. Nevertheless, some comment on the merits of the ruling is unavoidable.
The Bench Ruling is part of the December 2, 2004 transcript. The transcript is annexed as Exhibit B to the Savage Affidavit, and the Bench Ruling appears at pages 84-94.
The Decision, filed four days later, memorialized the Bench Ruling for the reasons stated in the Decision. During those four days, the Court reviewed the full version of two publically filed SEC documents that the Representative had attached to the Noteholder Objection in extracted form. The Decision included references to both documents as additional support for the conclusions reached on December 2nd.
The Representative has never suggested that the Bench Ruling was the product of bias or partiality. Instead, she claims that after the Bench Ruling, I conducted an improper extrajudicial investigation by reviewing the SEC filings and preparing the Decision to bolster the Bench Ruling. (See Savage Affidavit, ¶¶ 18, 24.) She also contends that the Court "sandbagged" her by treating the December 2, 2004 date as a hearing on a motion for summary judgment rather than as a status conference. (Id., ¶ 24 (2nd bullet point).) In addition, she says that the Court discussed some arguments that the Noteholders never raised. (Id., ¶¶ 20, 24.) Finally, she accuses me of violating her right to due process by suggesting that the Noteholders seek sanctions under FED. R. BANKR. P. 9011. (Id., ¶¶ 21, 24.) Although her points are arguments for reversal rather than recusal, a brief response is warranted.
1. The Decision
The Representative contends, in the main, that the Court showed bias by independently reviewing two public SEC filings connected, albeit in different ways, with her contention that the Noteholders held equity interests rather than claims against Teligent. Obviously, the Decision was not the product of extrajudicial conduct, but rather, was based on my participation in the case. More troubling, however, her argument reflects a careless review of the record.
a. The Recharacterization Claim
The Representative argued that the Noteholders' claims should be recharacterized as equity. Exhibit G to the Noteholder Objection, (see ECF Doc. # 2013), consisted of excerpts of an SEC filing, the TELIGENT, INC., FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, at 7 (May 21, 1998) ("1998 REGISTRATION STATEMENT"). The excerpt included a statement, quoted by the Representative, that Teligent needed the borrowing to meet its "capital requirements." This statement was the sole support for her position.
The Court dismissed the recharacterization claim from the bench. (See Savage Affidavit, Ex. B, at 87-89.) Before memorializing the Bench Ruling, the Court reviewed the full version of the 1998 REGISTRATION STATEMENT which was available on line. I discovered that other parts of the 1998 REGISTRATION STATEMENT, omitted from the Representative's excerpts, further undercut the recharacterization argument. These additional references were cited in the written decision. (See Decision at 7 nn. 5, 6.)
The Representative argues that I am biased because I perused SEC documents, including the 1998 REGISTRATION STATEMENT, which, she insists, were not annexed to any filing, (Savage Affidavit, ¶ 15), or introduced into evidence. (Id., ¶ 17.) This is an irresponsible statement given that the Representative attached an excerpt to her objection. Her suggestion that the 1998 REGISTRATION STATEMENT was dredged up by the Court although the parties ignored it twists the very record she created. Furthermore, by excerpting and quoting selected portions, she put the entire document into issue. See Kramer v. Time Warner, Inc., 937 F.2d 767, 774 (2d Cir. 1991) (on a motion to dismiss a complaint that quotes selected portions of a document, court may consider the entire document). It is worth noting, in this regard, that Paragraph 3 of the Court's General Order M-242, dated Jan. 19, 2001 (Electronic Means for Filing, Signing, and Verification of Documents), provides that an attorney can attach the relevant excerpt of a lengthy exhibit to her papers, but "the complete exhibit must be made available forthwith to counsel and the Court on request." Since the document was available on line, it was unnecessary to ask the Representative to produce a copy.
To similar effect, FED. R. EVID. 106 provides:
When a writing or recorded statement or part thereof is introduced by a party, an adverse party may require the introduction at that time of any other part or any other writing or recorded statement which ought in fairness to be considered contemporaneously with it.
Equally perplexing, the Representative asserts that the Bench Ruling did not refer to the 1998 REGISTRATION STATEMENT. (See Savage Affidavit, ¶ 17.) To the contrary, the Bench Ruling specifically referred to and quoted from the excerpts of the 1998 REGISTRATION STATEMENT attached to her papers. (Id., Ex. B, at 88-89.) b. The "Pledged Securities" Argument
The Representative also argued that the Noteholders claims should be treated as equity based upon certain provisions of the Plan. The dispute turned on the nature of securities pledged as collateral (the "Pledged Securities") to secure the payment of the first six interest payments under one of the Indentures. The Representative asserted, as a fact, that the Pledged Securities were securities in Teligent or its affiliates, and as a result, the Noteholders held equity interests.
The only factual evidence in the record showed that the securities were Government securities, rendering her entire argument specious. (Decision at 3.) Furthermore, the first six interest payments had been made five months before the bankruptcy was filed, and the pledge agreement terminated at that time. (Id.) The Representative insisted, at oral argument, that the composition of the Pledged Securities was a disputed factual issue, and she needed discovery to test the veracity of the Noteholders' position. (Savage Affidavit, Ex. B, at 37-38.)
Her request raised a question about the adequacy of her preparation. Before filing the Noteholder Objection, she presumably conducted a reasonable investigation, and presumably alleged only those facts that had evidentiary support, or were likely to have such support after discovery. See FED. R. BANKR. P. 9011(b)(3). Consequently, when the Representative said she needed discovery, I asked her why she did not already have sufficient evidence that the Pledged Securities consisted of Teligent stock to meet the motion. (Savage Affidavit, Ex. B, at 39.)
This led into a discussion of her pre-objection investigation. She said she had spoken with two Teligent lawyers who were unfamiliar with the matter, and ultimately, she "also reviewed all of the public documents that were filed by Teligent, including their prospectus, their annual reports for all of the respective years." (Id., Ex. B, at 39-41.) She even consulted the SEC EDGAR web site, but could not find the pledge agreement. (Id., Ex. B, at 41.) Nevertheless, she eventually conceded that she had no basis to allege that the Pledged Securities consisted of Teligent stock:
THE COURT: Well, so far you've told me all the things that the public filings don't show. So what made you think that it was Teligent's security? That's all I'm asking.
MS. SAVAGE: Because it didn't identify that the securities were anything other —
THE COURT: But what made you think they'd be Teligent securities?
MS. SAVAGE: I don't know, your Honor.
(Id., Ex. B, at 42.)
Since the Representative had no support for her factual position and never did, she was not granted the opportunity to go on a fishing expedition, and hold up the motion, in the unlikely hope of substantiating that position.
After the oral argument, the Court went to the SEC EDGAR web site, and reviewed the TELIGENT, INC., AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, at 105 (November 21, 1997) ("AMENDMENT NO. 5"). The document stated that the "Pledged Securities" consisted of Government securities, the precise position taken by the Noteholders. This simply confirmed that she had not conducted the investigation that she claimed on the record, and this reference was included in the Decision. (Decision at 4-5 n. 3.)
In addition, Teligent's Annual Report (Form 10-K) for 1997 included several references to the Pledged Securities as consisting of U.S. Treasury obligations.
Like the 1998 REGISTRATION STATEMENT, the Representative attached an excerpt from AMENDMENT NO. 5 to her objection. Exhibit F was the first page of the Prospectus, dated Nov. 21, 1997, pertaining to the Senior Notes due 2007. (See ECF Doc. # 2013, Ex. F.) The full Prospectus was filed as AMENDMENT NO. 5. As with the 1998 REGISTRATION STATEMENT, the use of the excerpt subjected the entire Prospectus to scrutiny. Had the Representative read beyond the first page attached as Exhibit F to the Noteholder Objection, she would have discovered that the Pledged Securities consisted of Government securities.
AMENDMENT NO. 5 also included seven pages of information in Part II that was not part of the Prospectus. The Prospectus nevertheless comprised over 95% of AMENDMENT NO. 5, and the Decision cited only to that portion.
In the end, the Representative's charge of bias confuses a one-sided investigation with one-sided evidence. She has failed to identify any favorable information in any SEC filing that was ignored. Moreover, the Court did not rely on the SEC documents to resolve disputed issues of material fact. A summary judgment motion asks whether disputed factual issues exist. Here, the Representative failed to make a prima facie showing for relief in her favor, or to identify a material factual dispute warranting the denial of relief to the Noteholders.
Finally, the Representative's memorandum of law includes speculation and innuendo that merit comment. She expresses "greater concern" that I reviewed other "extrajudicial" information to resolve disputed factual issues resulting in the "deprivation of the Representative's right to be provided with an opportunity to respond to the documents used by the Court in its Revised Decision from its improper, extrajudicial search." (Unsecured Claims Estate Representative's Application and Memorandum of Law in Support of Its [Recusal] Motion [etc.], dated Jan. 6, 2005, at 29) (attached to ECF Doc. # 2190.) Her statement equates the review and written discussion of public SEC information with secret meetings between the trial judge and court-appointed experts to discuss the merits of a litigation — the facts underlying the disqualification in Edgar v. K.L., 93 F.3d 256 (7th Cir. 1996), her only authority.
The Representative knows exactly what was reviewed because the Decision spells it out. Furthermore, that review entailed public information subject to judicial notice, see Kramer, 937 F.2d at 774, not secret information. Her fear that she is the victim of the Star Chamber, and the resulting innuendo, stems from an inability or refusal to make a distinction that should have been apparent. 2. "Sandbagging"
Next, the Representative wrongly contends that she was "sandbagged" when the Court treated her objection as a motion for summary judgment, and heard oral argument. The position ignores an essential fact; she consented. Although the December 2, 2004 hearing was originally scheduled as a status conference, the parties had, by that date, filed voluminous papers. The Court stated at the conference that the case was based on documents, no material factual issues were evident, and the objection would be treated as a motion for summary judgment. (Savage Affidavit, Ex. B, at 36-37, 43.)
The Representative was then offered additional time to put in a supplemental response. As the following colloquy shows, she declined and insisted on going forward immediately:
THE COURT: Well, why don't we do this? Here's what I'm going to do: I'm going to direct that this be treated as a motion for summary judgment and I'm going to give you an opportunity to put in a response. Okay?
MS. SAVAGE: On which particular —
THE COURT: Do you want to put in any further response?
MS. SAVAGE: No. You want to argue it, I'll argue it. Let's go. Let's go.
THE COURT: All right, so there's a consensus —
MS. SAVAGE: Let's go.
THE COURT: So there's a consensus I can treat this as a motion for summary judgment?
MR. ADLER: Yes, Your Honor. . . .
Mr. Adler represented the Noteholders.
(Id., Ex. B, at 43.)
The Representative got what she demanded, and has no cause to complain.
3. Discussing Arguments Not Raised
According to the Representative, I have a "troubling history of essentially acting as a supplemental advocate for the defendants." (Savage Affidavit, ¶ 20.) This criticism is directed, in the first instance, to the Noteholder Objection. The Representative's attempt to subordinate the Noteholders' claims ignored the Plan provision that unambiguously waived all subordination claims and rights. The Noteholders did not ignore it, and argued that the subordination claim was barred by the Plan. (See Response of First Union National Bank to the Objection of the Unsecured Claims Estate Representative to Claims 2220 and 2221, dated Nov. 29, 2004, at ¶ 25) (ECF Doc. # 2140.) Although the argument could have been made more forcefully, it clearly implicated the well-settled rule that a confirmed plan binds "debtors and creditors as to all the plan's provisions, and all related, property or non-property based claims which could have been litigated in the same cause of action." Sure-Snap Corp. v. State Street Bank Trust Co., 948 F.2d 869, 873 (2d Cir. 1991) (emphasis in original); accord I. Appel Corp. v. Val Mode Lingerie, Inc., No. 97 Civ. 6938 (LMM), 2000 WL 231072, at *3 (S.D.N.Y. Feb. 28, 2000); Traub v. JC's East, Inc. (In re JC's East, Inc.), No. 95 Civ. 1870 (MGC), 1995 WL 555765, at *2 (S.D.N.Y. Sept. 19, 1995), aff'd, 84 F.3d 527 (2d Cir. 1996); Bonwit Teller, Inc. v. Jewelmasters, Inc. (In re Hooker Inv., Inc.), 162 B.R. 426, 433 (Bankr. S.D.N.Y. 1994). The Representative is a successor to Teligent, and, therefore, bound by the Plan.
The Representative responded in her reply brief and repeated at oral argument that "a plan may not be used to terminate or modify a subordination agreement among creditors." (Savage Affidavit, Ex. B, at 66.) Hence, the waiver was "not enforceable anyway," and "void ab initio." (Id., Ex. B, at 67.) The Court disagreed, and expressed the view at oral argument that the Representative's contention was foreclosed by the Second Circuit's decision in Corbett v. MacDonald Moving Servs., Inc., 124 F.3d 82 (2d Cir. 1997). (See id., Ex. B, at 67.)
Corbett is a stark example of how the res judicata effect of a confirmed plan will bar the type of challenge made by the Representative to the Plan's subordination waiver. In Corbett, a confirmed plan released the non-debtor defendant from withdrawal liability. Following confirmation, the trustees of an employee benefit fund sued the defendant to recover the withdrawal liability. They argued, inter alia, that the bankruptcy court lacked the power to release the defendant.Corbett, 124 F.3d at 87. Rejecting the argument, the Court of Appeals ruled that the res judicata effect of the confirmed plan barred the collateral attack against the release, even if the challenge implicated the subject matter jurisdiction of the bankruptcy court. Id. at 88-89. The release in Corbett was analogous to the subordination waiver in the Plan, and the Decision included a discussion of this principle. (Decision at 8-9.)
The Representative complains that the Court, rather than the Noteholders, raised this issue. (See Savage Affidavit, ¶ 24 (3rd bullet point).) This, however, ignores the purpose for the Noteholders' quotation of the pertinent Plan provision dealing with the subordination waiver. Rather than concede the point, the Representative nevertheless pressed her challenge, and urged for the first time in her reply brief that the subordination waiver was unenforceable and void. The Noteholders did not file a surreply — none was authorized — and the issue of res judicata was raised before they argued in opposition to the objection. It is doubtful that the Noteholders intended to abandon their reliance on the Plan in the face of her opposition.
4. Sanctions
The Decision included a footnote reference to FED. R. BANKR. P. 9011, preceded by the signal "cf." (See Decision at 5 n. 3.) As discussed earlier, the Representative's pre-objection investigation became an issue when she insisted on discovery into the make up of the Pledged Securities. The written reference reinforced the colloquy regarding the lack of a pre-filing investigation and the refusal to permit discovery. The Court's remarks obviously implied criticism of the Representative's performance, but no sanctions were requested or awarded. B. The Representative's Other Examples of Bias
Impelled by the Decision, the Representative has now belatedly identified several rulings or actions over the past eighteen months that, she maintains, demonstrate my penchant for bias. These are discussed immediately below.
1. The "Standing" Issue
The Representative complains that in three separate cases that she brought, respectively, against BLR Services, Mandl andHughes Network Systems, the Court raised the issue of her standing to prosecute the particular claim sua sponte. (Id., ¶ 26 (1st, 2nd and 3rd bullet points).) It bears repeating that the Plan vested the chapter 5 causes of action in the Representative, and the balance of the causes of action in Reorganized Teligent. The Representative, therefore, lacks standing to assert pre-petition (or post-petition) common law claims that belonged to Teligent, and vested, post-confirmation, in Reorganized Teligent. See Savage Associates, P.C. v. BLR Servs. SAS (In re Teligent, Inc.), 307 B.R. 744, 747-48 (Bankr. S.D.N.Y. 2004).
On a few occasions (she identified three), the Representative stepped over the line and sued on what appeared to be a claim that belonged to Reorganized Teligent. Her standing presented a threshold issue, and was raised sua sponte with the parties. See Pashaian v. Eccelston Properties, Ltd., 88 F.3d 77, 82 (2d Cir. 1996) (discussing the court's obligation to examine the issue of standing sua sponte when it emerges from the record). In every case, the parties were given the opportunity to brief the issue. 2. The Invitation to Sanctions
More generally, a court must manage its calendar and use judicial resources efficiently. Toward that end, pre-trial conferences are used to flesh out the issues, focus the parties and promote the effective presentation of the case. See FED. R. CIV. P. 16(c). A court's comments directed at the strength or weakness of the parties' positions do not constitute coaching or reflect bias. See FDIC v. Glickman, 450 F.2d 416, 419 (9th Cir. 1971); Barna v. Haas (In re Haas), 292 B.R. 167, 178 (Bankr. S.D. Ohio 2003).
The Representative points to two cases (Nazuruk, Nortel Networks) in which the Court invited a motion for sanctions, and one case (Patton Boggs) in which the Court raised the potential "consequences" for misciting a document. (Savage Affidavit, ¶ 25.) In Nazaruk, the plaintiff sought to amend her complaint, and the defendant argued, inter alia, that the amendment was both futile and frivolous. The issue was resolved by authorizing the plaintiff to amend the complaint without prejudice to the defendant's right to seek sanctions under Rule 9011. (Id., Ex. H, at 10-13.)
In Nortel Networks, the Representative designated a single witness in response to Nortel's notice to take a deposition under FED. R. CIV. P. 30(b)(6). The notice contained eleven categories, and Nortel complained that the witness was unprepared to answer questions in many of these categories. Nortel was directed to make a motion for sanctions, i.e., under FED. R. CIV. P. 37, the appropriate means to test the sufficiency of the designation. (See id., Ex. I, at 101-02.)
The Representative further complains that while Nortel was invited to move for sanctions, the Court reopened the deposition of a Nortel witness under allegedly similar circumstances. (Id., ¶ 25.) The circumstances were hardly similar. In the latter case, Nortel produced a handful of documents after an otherwise completed deposition, and contended that it did not have certain other documents that the Representative insisted it had. The deposition was reopened to give the Representative the chance to question the witness about the tardily produced documents, and to adduce testimony about the non-existence of the other documents. (See id., Ex. J, at 98-105.)
Finally, in the case of Patton Boggs, the Court did not even invite sanctions, and granted the Representative's motion to amend her complaint over the defendant's objection.
The "misciting" issue referred to by the Representative was more serious than she suggests. Her motion to amend her complaint materially misquoted Patton Bogg's retention application. I requested an explanation, she gave it, I accepted it and we moved on. (Savage Affidavit, Ex. K, at 78-81.)
In a different case, Nortel's attorney produced two sets of the same invoices but with different dates. Nortel was directed to produce a witness to explain it, and in the absence of an explanation, the Court said it would select the date most favorable to the Representative or preclude Nortel from using the invoices to support its defense. (See id., Ex. J, at 107-110.) In other words, Nortel was warned that it might face "consequences."
The Representative's recusal motion overlooks a salient fact. Only one motion was made against the Representative seeking sanctions under Rule 9011, and it was denied. See Savage Assocs., P.C. v. Banda 26 S.A. (In re Teligent, Inc.), Adv. Proc. No. 03-3577, 2004 WL 724945, at *7 (Bankr. S.D.N.Y. Mar. 30, 2004), appeal denied, No. 04 Civ. 5394 (DLC), 2004 WL 1921851 (S.D.N.Y. Aug. 30, 2004).
3. Miscellaneous Complaints
The Representative has identified a few instances in which she disagreed with a ruling, or implied that she suffered disparate treatment or was criticized. These included the following:
a. The Court denied her motion to preclude an insufficient expert report and related expert testimony in the APAC Teleservices case, and sua sponte granted the defendant leave to file a new expert report. (Savage Affidavit, ¶ 26.) The bench ruling is found at Savage Affidavit, Ex. M., at 26-33, and the Representative is free to appeal it at the appropriate time. The Court also granted to the Representative costs and reasonable attorneys fees sua sponte. (Id., Ex. M, at 33.) The Representative has now submitted a request for an award of $11,726.50. (See (Affidavit of Denise L. Savage [etc.], sworn to Jan. 11, 2005), filed in Savage Associates, P.C. v. APAC Teleservices, Inc. (In re Teligent, Inc.), Adv. Proc. No. 03-3215) (ECF Doc. # 58.)
b. The Court made "gratuitous findings" in the Banda 26 case that the contents of documents the Representative attached to her sur-reply did not show the defendant's minimum contacts with the United States. (Savage Affidavit, ¶ 25.) In other words, the decision included dicta.
I also granted the Representative leave to replead, and "cull sufficient jurisdictional facts from the documents she attached to her submissions to plead a prima facie case."Banda 26, 2004 WL 724945, at *6.
c. On one occasion involving a motion for summary judgment made by Four Times Square Associates, the Court criticized the Representative's Local Bankruptcy Rule 7056-1 counter-statement of disputed facts because her statements were written in the form of questions, and did not refer to the record. (Id.) Yet, argues the Representative, the Court treated the Noteholder Objection as a summary judgment motion, and dispensed with the Local Bankruptcy Rule 7056-1 Statement altogether. As noted, the Representative insisted on arguing the Noteholder Objection immediately, and declined the invitation to submit additional papers.
d. The Court admonished but did not otherwise sanction Nortel's lawyer for contacting a court reporter ex parte to express the view that something had been transcribed incorrectly. The Representative implies that she would have been sanctioned more severely under similar circumstances. Putting such speculation to one side, the Representative ultimately admitted that the change proposed by counsel to the court reporter was immaterial. (Id., Ex. J, at 124.) The matter was resolved with a warning to Nortel's counsel not to do it again. (Id., Ex. J, at 124-25.)
e. Lastly, the Court refused to accept her word "as an officer of this Court" that she had filed a certificate attesting to the service of a notice of deposition in theSprint case. (Id., ¶ 27.) Prior to the hearing, I had checked the electronic file, but could not locate the affidavit. I advised the Representative of my unsuccessful search, and asked her to provide a copy of her affidavit. (Id., Ex. I, at 40.) Instead of simply giving me a copy, she insisted that I take judicial notice of the affidavit of service filed on the electronic docket, to which I replied: "I can't take judicial notice of something I can't see." (Id., Ex. I, at 40.)
CONCLUSION
In summary, the Court has presided over 1,000 adversary proceedings and another 1,000 claims objections brought by the Representative. After eighteen months, only forty-six adversary proceedings remain, and all but a handful of the objections have been resolved. At this late stage, the Representative now argues that this Court is biased because in the instances she identified, I criticized the quality of sub-par work, made my own judgments regarding what was relevant or material, or ruled against her. Suffice it to say that the Representative has failed to demonstrate that any reasonable person could question my impartiality or conclude that I am biased.
Accordingly, the Representative's motion is denied. She is directed to serve a copy of this decision and order within five days on the same persons that she served with the recusal motion, (see Certificate of Service, dated Jan. 10, 2005) (ECF Doc. # 2195), and on any other parties to pending adversary proceedings or unresolved objections. She is further directed to file proof of service within three days thereafter.
So ordered.