Opinion ID: 2972677
Heading Depth: 2
Heading Rank: 3

Heading: Assessment of prejudgment interest

Text: Heavrin raises, for the first time on appeal, the contention that the bankruptcy court erred in imposing prejudgment interest on the roughly $46,000 in attorney fees that he was required to disgorge. He did not list this as one of the issues to be appealed from the bankruptcy court and did not raise the issue before the district court. The issue is therefore waived. See United States v. Ninety-Three (93) Firearms, 330 F.3d 414, 424 (6th Cir. 2003) (“This court has repeatedly held that it will not consider arguments raised for the first time on appeal unless our failure to consider the issue will result in a plain miscarriage of justice.”) (citation and quotation marks omitted). Even if this claim had not been waived, however, it would have no merit. As Heavrin concedes, the assessment of prejudgment interest is left to the sound discretion of the bankruptcy court. Heavrin was paid over $153,000 in attorney fees by TSR in the year preceding TSR’s filing for bankruptcy, and the bankruptcy court required Heavrin to disgorge less than a third of this amount. This court reviewed the bankruptcy court’s partial disgorgement order in TSR II, No. 04-5330, 2005 WL 1109615, at  (6th Cir. May 10, 2005) (unpublished) (per curiam), and concluded that the bankruptcy court’s “final order was, if anything, unduly generous to Heavrin.” Thus we cannot say that the bankruptcy court abused its discretion in imposing prejudgment interest at a rate of 8% per annum on the approximately $46,000 in attorney fees that Heavrin was required to disgorge. See Henderson v. Kisseberth (In re Kisseberth), 273 F.3d 714, 720 (6th Cir. 2001) (stating that the court “will find an abuse of discretion only upon a definite and firm conviction that the trial court committed a clear error of judgment”) (citation and quotation marks omitted). D. Recusal of the bankruptcy judge The final issue raised on appeal is whether Bankruptcy Judge Stosberg erred in not recusing himself. This court partially addressed the issue in TSR I, Nos. 04-5194/5402, 2005 WL 1140625 (6th Cir. May 10, 2005) (unpublished) (per curiam), when we reviewed the bankruptcy court’s denial of a motion for recusal originally filed by Heavrin in 1995. We affirmed the bankruptcy court’s order denying Heavrin’s motion because it was not timely. Id. at  (“As the bankruptcy court found, the defendants’ motion to recuse was untimely and was therefore properly denied.”). But Heavrin filed a second recusal motion in 2001 that was based on events occurring after his 1995 motion was filed. This second motion was denied by the bankruptcy court on the merits, with no mention made of untimeliness. In the present appeal, we are therefore bound by the decision of this court in TSR I with respect to all arguments raised in Heavrin’s 1995 recusal motion, but we reach the merits of the arguments that Heavrin raises in his 2001 motion. We will uphold a lower court’s denial of a recusal motion so long as the court’s decision does not constitute an abuse of discretion. Youn v. Track, Inc., 324 F.3d 409, 422 (6th Cir. 2003). The relevant federal recusal statute, 28 U.S.C. § 455, provides in pertinent part as follows: (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 . . . . A judge’s unfavorable disposition toward an individual or his case, however, does not typically constitute judicial “bias or prejudice.” See Liteky v. United States, 510 U.S. 540, 550 (1994). Rather, “[t]he words [bias and prejudice] connote a favorable or unfavorable disposition or opinion that is somehow wrongful or inappropriate, either because it is undeserved, or because it rests upon knowledge that the subject ought not to possess . . . or because it is excessive in degree.” Id. (emphasis in original). Bias on the part of a judge commonly stems from an “extrajudicial” No. 04-5297 In re Triple Restaurants, Inc. Page 11 source, meaning knowledge that the judge has acquired that is not based on either the proceedings before him or on other legal proceedings involving the same parties. Id. at 551. In rare cases, a “favorable or unfavorable predisposition can also deserve to be characterized as ‘bias’ or ‘prejudice’ because, even though it springs from the facts adduced or the events occurring at trial, it is so extreme as to display clear inability to render fair judgment.” Id. These rare cases aside, however, opinions held by judges as a result of what they learn in the proceedings at issue or in earlier proceedings are “not subject to deprecatory characterization as ‘bias’ or ‘prejudice.’” Id. (“It has long been regarded as normal and proper for a judge to sit in the same case upon its remand, and to sit in successive trials involving the same defendant.”). Heavrin alleges that Bankruptcy Judge Stosberg was biased against him because of dealings that the two of them had prior to Stosberg’s appointment to the bench, during which Heavrin opposed the payment of $1,400 in fees to then-examiner Stosberg on the basis that Stosberg’s examination was “incompetent, incomplete, and worthless.” This dispute was resolved by the federal district court when the debtor was ordered to pay Stosberg’s fee over the objection of Heavrin. Although the characterization by Heavrin of Stosberg’s work as “incompetent, incomplete, and worthless” might have offended or angered Stosberg at the time, Heavrin’s opposition to the payment of the fees was ultimately unsuccessful, and Bankruptcy Judge Stosberg suffered no pecuniary loss as a result. We thus have no reason to believe that Bankruptcy Judge Stosberg remained so upset by Heavrin’s past opposition to his fee request that he was unable to decide this case on the merits. Heavrin further contends that Bankruptcy Judge Stosberg became biased against him as a result of events that occurred during the TSR bankruptcy proceedings. The bankruptcy court imposed sanctions against David Chinn, a bankruptcy attorney hired by TSR and a tenant in Heavrin’s offices, for paying Heavrin a portion of Chinn’s retainer from TSR as a rent payment. Heavrin was criticized by the court for accepting the payment in light of his status as a TSR insider and because he had referred the case to Chinn. In its opinion, the bankruptcy court described Heavrin’s conduct and characterized his behavior as “deplorable,” but then struck these comments from its modified opinion after Heavrin objected. This characterization of Heavrin’s behavior, however, was an opinion formed by the bankruptcy court during the proceedings involving Heavrin, and can therefore be deemed an indicium of bias only if it is “so extreme as to display clear inability to render fair judgment.” Liteky, 510 U.S. at 551. The bankruptcy court removed the offending language from its opinion at Heavrin’s request, which leads us to conclude that the court’s conduct was not so extreme as to require recusal. Finally, Heavrin contends that Bankruptcy Judge Stosberg exhibited bias by deciding to place the burden on Heavrin to prove that he was entitled to retain the money paid to him by the Trust, rather than on the TSR Trustee to prove that the transfer should be avoided. According to Heavrin, the “trial was little more than a means to an inevitable end, during the course of which the court was openly hostile to counsel and his client.” This argument is without merit not only because we find that the bankruptcy court properly placed the burden of proof on Heavrin, but because Heavrin has failed to produce any concrete examples that demonstrate Bankruptcy Judge Stosberg’s alleged hostility. See Gen. Aviation, Inc. v. Cessna Aircraft Co., 915 F.2d 1038, 1043 (6th Cir. 1990) (requiring the moving party to allege “facts which a reasonable person would believe would indicate a judge has a personal bias against the moving party. Conclusions, rumors, beliefs, and opinions are not sufficient to form a basis for disqualification.”) (citations and quotation marks omitted). None of Heavrin’s three complaints regarding Bankruptcy Judge Stosberg give rise to the necessary “definite and firm conviction that the trial court committed a clear error of judgment.” No. 04-5297 In re Triple Restaurants, Inc. Page 12 Youn, 324 F.3d at 422 (citation and quotation marks omitted). We therefore conclude that the bankruptcy court did not abuse its discretion by denying Heavrin’s motion to recuse.