Court Opinion

ID: 3203456
Source: CourtListenerOpinion
Date Created: 2016-05-13 20:01:16.072696+00
Date Added: 2024-06-11T14:28:28.736937
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            MAY 13 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                           FOR THE NINTH CIRCUIT

In re: SIRFIANI CARLSON,                         No. 14-60002

              Debtor.                            B.A.P. No. 12-1522-KuDTa

JAMES H. MAGEE,
                                                 MEMORANDUM*
              Appellant,

 v.

MICHAEL G. MALAIER, Attorney,
Standing Chapter 13 Trustee; SIRFIANI
CARLSON,

              Appellees.

                         Appeal from the Ninth Circuit
                           Bankruptcy Appellate Panel
              Kurtz, Dunn, and Taylor, Bankruptcy Judges, Presiding

                             Submitted May 2, 2016**
                               Seattle, Washington

        *
         This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
          The panel unanimously concludes that this case is suitable for decision
without oral argument. Fed. R. App. P. 34(a)(2).
Before: GRABER and BERZON, Circuit Judges, and CURIEL,*** District Judge.

      James MaGee appeals from the Bankruptcy Appellate Panel’s ("BAP")

affirmance of a bankruptcy court’s order imposing $2,685 in sanctions and its

denial of his motion for reconsideration. Reviewing the bankruptcy court’s

imposition of sanctions for abuse of discretion, Price v. Lehtinen (In re Lehtinen),

564 F.3d 1052, 1058 (9th Cir. 2009), and its findings of fact for clear error, Murray

v. Bammer (In re Bammer), 131 F.3d 788, 791 (9th Cir. 1997) (en banc), we

affirm.

      1. A court may sanction a lawyer who recklessly misrepresents the law for

an improper purpose. Fink v. Gomez, 239 F.3d 989, 994 (9th Cir. 2001). Here,

the bankruptcy court found that Magee improperly advised his client to conceal

certain tort claims in her bankruptcy. Magee alleges that he lacked knowledge of

the tort claims. But Magee’s client testified that she had asked Magee about the

disclosure and that Magee had advised her to conceal the information. The

bankruptcy court permissibly credited the client’s testimony over Magee’s, despite

discrepancies in her testimony about the date of this conversation. See Anderson

v. City of Bessemer City, 470 U.S. 564, 575 (1985) (holding that when there are

          ***
          The Honorable Gonzalo P. Curiel, United States District Judge for the
Southern District of California, sitting by designation.

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two permissible views of the evidence, a fact-finder’s choice cannot be clearly

erroneous). Accordingly, it was not clear error for the bankruptcy court to

conclude that MaGee had knowledge of the client’s tort claims and that MaGee had

recklessly misrepresented the law. And it was not an abuse of discretion for the

bankruptcy court to sanction MaGee for wrongfully advising his client to conceal

information and for later claiming that he had no recollection of the conversation.

      2. The bankruptcy court’s order confirming the client’s Chapter 13 plan

required that the debtor inform the Trustee "of any changes in circumstances or

receipt of additional income." MaGee asserts that the portion of the tort claim

allocated to lost income, $850, should not be included as income to his client and,

in essence, that the award of a judgment totaling $48,150.92 did not amount to a

change in her circumstances. Those arguments are not persuasive. "[T]he viability

of the system of voluntary bankruptcy depends upon full, candid, and complete

disclosure by debtors of their financial affairs." Searles v. Riley (In re Searles),

317 B.R. 368, 378 (B.A.P. 9th Cir. 2004). A debtor has a statutory duty to disclose

all assets, income, and financial affairs. 11 U.S.C. § 521. The tort judgment here

was substantial; it exceeded the unsecured claims in the bankruptcy. A portion of

the award was designated as income. The bankruptcy court did not abuse its

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discretion in holding that the client’s receipt of this judgment amounted to a

change in circumstance.

       3. MaGee argues that the plan’s requirement to report any change in

circumstances is unconstitutionally vague. But Magee did not raise this issue at the

bankruptcy court or to the BAP. "As a general rule, an appellate court will not hear

an issue raised for the first time on appeal. . . . A workable standard . . . is that the

argument must be raised sufficiently for the trial court to rule on it." Whittaker

Corp. v. Execuair Corp., 953 F.2d 510, 515 (9th Cir. 1992) (citation and internal

quotation marks omitted). Because Magee did not raise the vagueness argument in

any proceeding below, he did not afford an opportunity for the bankruptcy court or

the BAP to rule on it. Accordingly, the issue is waived.

       4. Finally, MaGee alleges that the bankruptcy judge was unfairly prejudiced

against him because of several statements the judge made during the course of the

proceedings.

       [J]udicial remarks during the course of a trial that are critical or
       disapproving of, or even hostile to, counsel, the parties, or their cases,
       ordinarily do not support a bias or partiality challenge. They may do
       so if they reveal an opinion that derives from an extrajudicial source;
       and they will do so if they reveal such a high degree of favoritism or
       antagonism as to make fair judgment impossible.

                                            4
Liteky v. United States, 510 U.S. 540, 555 (1994). Here, although the judge made

critical statements about MaGee during the proceedings, he based these statements

on no extrajudicial source and did not suggest that fair judgment was impossible.

We therefore reject this argument.

      AFFIRMED.

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