Opinion
NOT FOR PUBLICATION
Argued and Submitted at Sacramento, California: October 26, 2007
Appeal from the United States Bankruptcy Court for the Eastern District of California. Honorable Robert S. Bardwil, Bankruptcy Judge, Presiding. Bk. No. 06-22225.
Before: JURY, NAUGLE[ and MONTALI, Bankruptcy Judges.
Hon. David N. Naugle, U.S. Bankruptcy Judge for the Central District of California, sitting by designation.
MEMORANDUM
I. INTRODUCTION
Debtor filed motions to (1) transfer venue of her chapter 7 bankruptcy case from the Eastern District of California to the Central District of California (EC-07-1163), (2) disqualify the bankruptcy judge (EC-07-1174), and (3) dismiss her bankruptcy case (EC -07-1203). The bankruptcy court denied the motions. Debtor timely appealed. Because the orders appealed from were interlocutory, we granted debtor leave to appeal. We find the bankruptcy court did not abuse its discretion and therefore AFFIRM.
Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. § § 101-1532, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9036, as enacted and promulgated on the effective date of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119 Stat. 23 (generally October 17, 2005).
II. FACTS
Debtor is a former attorney who practiced law in California from 1975 until 1991 when she was disbarred. In February 1989, she started a business, Lawyer Defend Yourself, which assisted California lawyers with law office management plans, probation compliance, and ethics and provided briefs and motions for attorneys who represented themselves. Debtor sold her business in May 2006 to Michael A. Doran, who had a law office in Redding, California. Debtor moved to Redding at about the same time to assist Doran in developing expertise for handling professional responsibility issues for attorneys.
Debtor filed her voluntary chapter 7 petition on June 26, 2006. Linda Schuette was appointed trustee. Debtor attended her first 341a meeting of creditors, but failed to produce documents pursuant to the trustee's request. The trustee renewed her request for documents and orally continued the 341a meeting. Debtor never appeared at the continued 341a meeting. The record reflects, and the trustee's attorney confirmed at oral argument on this appeal, that the creditors meeting is still being continued without her attendance.
At the time of her filing, debtor was being prosecuted for the unauthorized practice of law in the Santa Clara County Superior Court. Debtor was convicted and sentenced to electronic monitoring for nine months in Santa Clara County. Her house arrest commenced on August 28, 2006.
A. Debtor Moved to Terminate the Appointment of the Trustee and Disbar the Trustee's Attorney
On October 30, 2006, the debtor sought to remove the trustee and have the trustee's attorney disbarred by sending an ex parte letter complaint to the bankruptcy judges in the Eastern District of California. The judge assigned to her bankruptcy case converted her letter complaint into a motion, and sua sponte set the matter for briefing and a hearing. Following a hearing, the bankruptcy court denied her motion on January 22, 2007, in its Findings of Fact and Conclusions of Law, and subsequently denied her motion for reconsideration. We have affirmed these rulings in debtor's related appeals EC-07-1068 and EC-07-1119.
B. Debtor Moved to Transfer Venue of her Bankruptcy Case
One week after the court issued its ruling denying debtor's motion to remove the trustee and disbar the trustee's attorney, and seven months after her case was filed, debtor filed a motion to change the venue of her bankruptcy case. Debtor alleged venue was improper because she did not reside in, or do business in, the Eastern District of California for 180 days prior to the filing of her petition. She also alleged that the bankruptcy judge assigned to her case was biased, she was disabled and could not travel to the Eastern District since she was under house arrest in Santa Clara County, and she could not afford to fly witnesses to the Eastern District. The court heard the motion on April 25, 2007, and denied debtor's motion at the hearing.
C. Debtor Moved to Disqualify the Bankruptcy Judge
On February 28, March 14, and March 16, 2007, debtor filed numerous pleadings seeking to disqualify the bankruptcy judge assigned to her case. The bankruptcy judge construed the debtor's affidavit as a motion to disqualify him. The court issued an order that required the debtor to give notice to the trustee, the United States Trustee, and other parties in interest, and set a briefing schedule.
Following a hearing, the bankruptcy court denied debtor's motion on April 13, 2007, issuing detailed Findings of Fact and Conclusions of Law.
D. Debtor Moved to Dismiss her Bankruptcy Case
On April 25, 2007, debtor filed a notice of motion and motion to dismiss her petition on the grounds that she was never presented with, never saw, and never signed her bankruptcy petition. According to the debtor, her former attorney, or one of his staff members, forged her signature on the petition. She maintained that her creditors were better served by letting her work out her own solutions with them. She set forth 39 errors on her petition and contends that she never would have signed such a " outrageously inaccurate petition."
Without reaching the merits, the bankruptcy court denied debtor's motion because she failed to (1) serve creditors as required by Rule 2002(a)(4); (2) file a separate notice of hearing per Local Bankruptcy Rule 9014-1(d)(2); and (3) provide proper notice for the time period for filing opposition per Local Bankruptcy Rule 9014-1(f)(1)(ii).
III. JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. § § 1334 and 157(b)(1) and (2). We have jurisdiction under 28 U.S.C. § 158.
IV. ISSUES
1. Whether the court erred in finding that debtor waived her right to object to the venue of her bankruptcy case in the Eastern District.
2. Whether the court erred in denying debtor's motion to transfer venue based upon the interest of justice or convenience of the parties.
3. Whether the court erred in hearing the motion to disqualify itself.
4. Whether the court erred in denying debtor's motion for disqualification.
5. Whether the court erred in denying, on procedural grounds, debtor's motion to dismiss her petition.
V. STANDARDS OF REVIEW
A decision denying transfer of a bankruptcy case to another district is reviewed for an abuse of discretion. Donald v. Curry (In re Donald), 328 B.R. 192, 196 (9th Cir. BAP 2005).
A bankruptcy court's decision whether to grant a motion for recusal is reviewed for an abuse of discretion. United States v. Wilkerson, 208 F.3d 794, 797 (9th Cir. 2000); Goodwin v. Durkin (In re Goodwin), 194 B.R. 214, 220 (9th Cir. BAP 1996).
A determination whether or not to dismiss a chapter 7 case is reviewed for an abuse of discretion. Mendez v. Salven (In re Mendez), 367 B.R. 109, 113 (9th Cir. BAP 2007).
" A bankruptcy court necessarily abuses its discretion if it bases its ruling on an erroneous view of the law. The panel also finds an abuse of discretion if it has a definite and firm conviction the court below committed a clear error of judgment in the conclusion it reached." Id . (citations omitted).
VI. DISCUSSION
Debtor chose to file her petition in the Eastern District of California. However, once into her bankruptcy, debtor evidently became dissatisfied with the process. Following adverse rulings in her attempt to have the trustee removed and the trustee's attorney disbarred, debtor unsuccessfully moved to have the venue of her case changed, the bankruptcy judge disqualified, and her case dismissed. We discuss each order appealed from separately.
A. Transfer of Venue
1. Applicable Statutes and Standards for Transfer of Venue
The venue options for debtors to select from are set forth in 28 U.S.C. § 1408: (1) domicile; (2) residence; (3) principal place of business in the United States; (4) principal assets in the United States. Proper venue is determined by reference to facts existing within the 180-day period prepetition. See 28 U.S.C. § 1408(1).
Debtor brought her motion to transfer venue pursuant to 28 U.S.C. § 1412, which provides for transfer of a case or proceeding under title 11 to another district, in the interest of justice or for the convenience of the parties. See 28 U.S.C. § 1412; see also Fed.R.Bankr.P. 1014(a). " The party urging a change of venue has the burden of showing, by a preponderance of the evidence, that the transfer is warranted. 'Courts have broad discretion in deciding motions under 28 U.S.C. 1412, and such requests must be reviewed on a case-by-case basis....'" In re Custom Bldg. of Steamboat, Inc., 349 B.R. 39, 42 (Bankr. D. Idaho 2005)(citation omitted).
When venue is improper, 28 U.S.C. § 1406 applies, and in such cases, the court must dismiss, or in the interest of justice, transfer to another federal court. See 28 U.S.C. § 1406(a). " However, there is no bankruptcy-specific venue statute similar to section 1406(a), requiring transfer or dismissal of a case if venue is improper." United States Trustee v. Sorrells (In re Sorrells), 218 B.R. 580, 585 (10th Cir. BAP 1998). Rather, the only bankruptcy-related authority is Rule 1014(a), which governs the dismissal and transfer of cases on the basis of venue. Id . " The majority of courts have held that, if venue is contested and found to be improper, a bankruptcy court may not retain the case, but rather must dismiss it or transfer it pursuant to section 1406(a) and Bankruptcy Rule 1014(a)(2)." Id . at 586 (citations omitted).
Rule 1014(a) provides:
Venue may be waived, however. Hoffman v. Blaski, 363 U.S. 335, 343, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960)(stating that venue, like jurisdiction over the person, may be waived); Block v. Citizens Bank of Tulsa (In re Moss), 267 B.R. 834, 838 (8th Cir. BAP 2001)(same). Therefore, as set forth below, in situations where a party has waived his or her right to object to venue, a court may retain a bankruptcy case.
2. The Bankruptcy Court did not Err in Finding that Debtor Waived Her Right to Object to Venue
A party may waive its right to object to venue by consent or conduct. For example, a debtor may waive any defect in venue by choosing the forum where to file the case. Moss, 267 B.R. at 839 (finding that debtor waives any defect in venue by filing the case in the forum of choice); In re Fishman, 205 B.R. 147, 149 (Bankr. E.D. Ark. 1997)(same); see also In re Peachtree Lane Assocs., Ltd., 206 B.R. 913, 917 (N.D.Ill. 1997)(finding that venue is presumed to be proper in the district where a bankruptcy case is filed, and the burden of proving otherwise is on the party who has moved to transfer or dismiss the case); In re Pettit, 183 B.R. 6, 8 (Bankr. D. Mass. 1995)(same).
We acknowledge that debtor contends that her bankruptcy petition was forged and filed without her consent. However, the bankruptcy court did not reach the merits of her argument due to the procedural defects with her motion to voluntarily dismiss her petition. Therefore, for purposes of this appeal, we must presume that debtor consented to the filing of her petition in the Eastern District of California.
A party's failure to raise the issue of improper venue in a timely manner may also result in a waiver. See Fed.R.Bankr.P. 1014, Advisory Committee Note (1987)(" If a timely motion to dismiss for improper venue is not filed, the right to object to venue is waived."); see also 28 U.S.C. § 1406(b); Donald, 328 B.R. at 199 (noting that objections to venue need to be resolved early in a case and may be waived if not timely raised); Bryan v. Land (In re Land), 215 B.R. 398, 402-03 (8th Cir. BAP 1997)(finding that creditor's motion to change venue after plan confirmation untimely when creditor had actual notice of bankruptcy case). " What constitutes timely filing of such a motion is not governed by a statutory or rule definition; whether a motion to change venue has been timely filed depends on the facts and circumstances presented in the particular case." Blagg v. Miller (In re Blagg), 223 B.R. 795, 802 (10th Cir. BAP 1998)(citations omitted).
Timeliness of the debtor's motion depends upon a number of factors which the bankruptcy court observed. The debtor filed her motion to transfer venue seven months after her filing and, coincidentally, a short time after adverse rulings. Prior to the motion, she participated actively in her Eastern District case. Debtor attended the first 341a meeting of creditors in person without objecting. She filed numerous pleadings regarding the removal of the trustee and the disbarment of the trustee's attorney, all prior to the time she moved for transfer of venue. see In re Pickett, 330 B.R. 866, 871 (Bankr. M.D. Ga. 2005)(finding that United States Trustee's motions to transfer or dismiss debtors' bankruptcy cases for improper venue were untimely where there were sufficiently substantial developments in the cases); In re Deabel, Inc., 193 B.R. 739, 743 (Bankr. E.D. Pa. 1996)(finding that if " a party has submitted itself to the jurisdiction of the court by litigating a matter of substance, or if substantial developments have transpired in the case in general, ...waiver of an objection to venue could be found.").
The court also considered the substantial work done by the trustee and her attorney. See Blagg, 223 B.R. at 802 (" If the transfer would result in fragmentation or duplication of administration, increase expense, or delay closing of the estate, such a factor would bear on the timeliness of the motion.")(citation omitted).
Debtor cites Kiddie Rides USA, Inc. v. Elektro-Mobiltechnik GMBH, 579 F.Supp. 1476, 1479 (C.D. Ill. 1984) for the proposition that a waiver of the right to object to improper venue must be clear and unequivocal. In Kiddie Rides, the district court observed that a clear and unequivocal waiver of the right to removal may occur when a defendant seeks some affirmative action or relief in the state court as opposed to the mere filing of an answer or general defense short of the merits. However, the district court further explained that the " [d]efendant may not, after having argued and lost an issue in state court, remove the action to federal court for what is in effect an appeal of the adverse decision." Id . at 1480 (citations omitted).
The holding of Kiddie Rides supports the bankruptcy court's finding of waiver in this case. Debtor sought relief from her debts by choosing to file her petition in the Eastern District of California. Debtor did more than merely file her petition. She participated in the 341a meeting and affirmatively sought the removal of the trustee and the trustee's attorney. Only after the court denied her motion to remove the trustee and disbar the trustee's attorney, did debtor seek to transfer venue, disqualify the bankruptcy judge and dismiss her case. Given the timing of her motion and her extensive participation in her case, her conduct falls squarely within the parameters of a clear and unequivocal waiver set forth by Kiddie Rides.
In sum, we find no clear error in the bankruptcy court's finding that debtor's motion was untimely and, therefore, she waived her right to object to improper venue.
3. The Bankruptcy Court did not Err in Denying Debtor's Motion to Transfer Venue Based upon the Interest of Justice or Convenience of the Parties.
Whether debtor's case was filed in a proper or improper district, her case may be transferred to any other district if the court determines that the transfer is in the interest of justice or for the convenience of the parties. Fed.R.Bankr.P. 1014(a)(1) and (2); 28 U.S.C. § 1412.
In determining whether to transfer venue of a case, we have said the " analysis of any combination of 'interest of justice' and 'convenience of parties' under § 1412 is inherently factual and necessarily entails the exercise of discretion based on the totality of the circumstances, which includes considerations regarding witnesses and the presentation of evidence." Donald, 328 B.R. at 204. Generally, a totality-of-circumstances analysis for a change of venue include considerations such as (1) proximity of creditors to the court; (2) proximity of debtor to the court; (3) proximity of witnesses necessary to administration of estate; (4) location of assets, (5) economic and efficient administration of case, and (6) need for further administration if liquidation ensues. Id . citing Puerto Rico v. Commonwealth Oil Ref. Co. (In re Commonwealth Oil Ref. Co.), 596 F.2d 1239, 1247 (5th Cir. 1979); see also In re Enron Corp., 284 B.R. 376, 395 (Bankr. S.D.N.Y. 2002)(finding that the " most important of these considerations is the economic and efficient administration of the estate.")(chapter 11 case).
The bankruptcy court correctly viewed the law and analyzed debtor's motion under the totality-of-circumstances test espoused in Donald. Regarding the proximity of creditors to the court, the court reviewed both the number of creditors as well as the amount of their claims. The record shows that of debtor's six listed unsecured creditors, at least three were located outside both the Eastern District and the Central District. For example, one creditor was in San Jose, another in Dallas, and another in San Francisco. The court also noted that the only creditor who had filed a claim, which was substantial, listed its address in Merced, California. The court found that this factor, if anything, supported retaining jurisdiction in the Eastern District since the creditor with the largest claim was close to the court. On this record, we can find no error with the court's decision.
Regarding debtor's proximity to the court, the record shows that debtor listed on her petition her residence address as 2122 E Street, Redding, California. Debtor also showed on her Statement of Financial Affairs prior residences in Long Beach and Ventura in 2005 and showed a business address in Redding from February 1989 through May 2006. The record reflects that debtor was placed under house arrest in Santa Clara County shortly after her filing and was confined there until at least May 2007. Based on these disclosures, the bankruptcy court's finding that there was conflicting evidence regarding debtor's ultimate residence was not clear error.
Regarding the location of assets, the court noted that the trustee had asserted causes of action related to real property in Southern California, but also was investigating assets in Northern California. The record reflects that this factor did not weigh heavily in favor of either retaining debtor's case in the Eastern District or transferring it to the Central District because the trustee's investigation was ongoing.
Lastly, we find that the record supports the court's finding that the economic administration of the estate weighed heavily in favor of retaining debtor's case because the trustee had done substantial work and incurred substantial administrative expense in the Eastern District. The bankruptcy court correctly considered that the learning curve to bring a new trustee up to speed would be duplicative and expensive for the estate. See Enron Corp., 284 B.R. at 404 (noting that in considering both the efficient administration of the estates and judicial economy, it is also necessary to take account of the " learning curve.").
Given the record, we find no error in the bankruptcy court's findings that a transfer of debtor's bankruptcy case to the Central District was unwarranted under the totality-of-circumstances. In sum, debtor failed to carry her burden on any of the factors.
B. Disqualification of the Judge
1. The Bankruptcy Judge did not Err in Hearing the Motion to Disqualify
The debtor contends that the bankruptcy judge whom she sought to disqualify should not have heard her motion. However, in the Ninth Circuit, a motion for disqualification under 28 U.S.C. § 455 is decided by the judge whose disqualification is sought. Bernard v. Coyne (In re Bernard), 31 F.3d 842, 843 (9th Cir. 1994). Therefore, we find that the bankruptcy judge committed no error by hearing debtor's motion to disqualify himself.
2. The Bankruptcy Court did not Err in Denying Debtor's Motion to Disqualify because the Debtor Failed to Demonstrate Bias or Prejudice
We start with the presumption that the bankruptcy judge is impartial. First Interstate Bank of Arizona, N.A. v. Murphy, Weir & Butler, 210 F.3d 983, 987 (9th Cir. 2000). The debtor had the burden to prove otherwise.
Debtor sought disqualification of the bankruptcy judge pursuant to 28 U.S.C. § § 144 and 455. " Any justice, judge, or magistrate judge of the United States shall disqualify [himself] in any proceeding in which [his] impartiality might reasonably be questioned." 28 U.S.C. § 455(a). A judge shall also disqualify himself where he has a " personal bias or prejudice concerning a party." 28 U.S.C. § 455(b)(1). In reviewing the bankruptcy judge's denial of debtor's disqualification motion for abuse of discretion, " [t]he test is 'whether a reasonable person with knowledge of all the facts would conclude that the judge's impartiality might reasonably be questioned.'" Wilkerson, 208 F.3d at 797.
28 U.S.C. § 144 is inapplicable to bankruptcy judges, as it applies only to district court judges. Smith v. Grimmett (In re Smith), 317 F.3d 918, 932 (9th Cir. 2002), cert. denied sub nom, Smith v. Grimmett, 538 U.S. 1032, 123 S.Ct. 2074, 155 L.Ed.2d 1060 (2003).
Generally, debtor infers bias and prejudice from the bankruptcy judge's (1) adverse substantive rulings; (2) failure to read her pleadings; (3) turning her letter complaint in the attorney disciplinary proceeding into a motion; and (4) failure to discuss all her allegations in its decisions regarding removal of the trustee and disbarment of the trustee's attorney. The bankruptcy court, in detailed Findings of Fact and Conclusions of Law, addressed debtor's allegations of bias and prejudice one by one. The judge confirmed that he had read debtor's pleadings, explained his procedural handling of her ex parte letter regarding the termination of the trustee and disbarment of the trustee's attorney, and addressed debtor's contention that he omitted many of her allegations from the opinion. The court also noted that the debtor's arguments were unfounded and demonstrated the debtor's dissatisfaction with the court's rulings.
A review of the record, and debtor's affidavit submitted in support of her motion, demonstrate that debtor's primary reason for seeking the judge's recusal was his adverse rulings against her. It is well settled that adverse rulings by a judge are not a proper ground for disqualification. Liteky v. United States, 510 U.S. 540, 555, 114 S.Ct. 1147, 127 L.Ed.2d 474 (1994). " In and of themselves (i.e., apart from surrounding comments or accompanying opinion), they cannot possibly show reliance upon an extrajudicial source; and can only in the rarest circumstances evidence the degree of favoritism or antagonism required...when no extrajudicial source is involved. Almost invariably, they are proper grounds for appeal, not for recusal." Id .; see also F.J. Hanshaw Enters., Inc. v. Emerald River Dev., Inc., 244 F.3d 1128, 1145 (9th Cir. 2001).
Based upon our review of the record, we conclude that a reasonable person with knowledge of all the facts would neither infer bias or prejudice nor otherwise question the bankruptcy judge's impartiality. Therefore, we find that the bankruptcy court did not abuse its discretion in denying debtor's motion for disqualification.
C. The Bankruptcy Court did not Err in Denying, on Procedural Grounds, Debtor's Motion to Dismiss her Bankruptcy Case
Debtor also moved to have her case dismissed. However, debtor failed to (1) serve her creditors as required by Rule 2002(a)(4); (2) file a separate notice of hearing per Local Bankruptcy Rule 9014-1(d)(2); and (3) provide proper notice for the time period for filing opposition per Local Bankruptcy Rule 9014-1(f)(1)(ii). The rules require that debtor give proper notice to all creditors and give them a proper time period to respond. The bankruptcy court did not deny the motion with prejudice, allowing debtor to renew her motion at any time.
We find the bankruptcy court did not abuse its discretion in denying debtor's motion on procedural grounds.
VII. CONCLUSION
In sum, we find the bankruptcy court did not abuse its discretion -- the standard of review -- for all the motions at issue in this appeal. Accordingly, we AFFIRM.
(a) Dismissal and Transfer of cases (1) Cases filed in proper district. If a petition is filed in a proper district, on timely motion of a party in interest, and after hearing on notice to the petitioners, the United States trustee, and other entities as directed by the court, the case may be transferred to any other district if the court determines that the transfer is in the interest of justice or for the convenience of the parties. (2) Cases filed in improper district. If a petition is filed in an improper district, on timely motion of a party in interest and after hearing on notice to the petitioners, the United States trustee, and other entities as directed by the court, the case may be dismissed or transferred to any other district if the court determines that transfer is in the interest of justice or for the convenience of the parties.