515 F.3d 1204 (11th Cir. 2008), 06-11743, In re Walker
|Citation:||515 F.3d 1204|
|Party Name:||In Re: James F. WALKER, Debtor. Linda J. Walden, Plaintiff-Appellant, v. James F. Walker, Defendant-Appellee.|
|Case Date:||January 31, 2008|
|Court:||United States Courts of Appeals, Court of Appeals for the Eleventh Circuit|
[Copyrighted Material Omitted]
Michael Winer, Winer & Associates, P.A., Ft. Lauderdale, FL, for Walden.
Jay Lewis Farrow, Gary J. Rotella, Robert P. Kelly, Gary J. Rotella & Associates, P.A., Ft. Lauderdale, FL, for Walker.
Appeal from the United States District Court for the Southern District of Florida.
Before DUBINA and KRAVITCH, Circuit Judges, and COOGLER[*], District Judge.
KRAVITCH, Circuit Judge:
Linda J. Walden ("Walden") appeals the district court's affirmance of the bankruptcy court's removal orders, removing her as trustee in debtor James F. Walker's ("Walker") Chapter 7 bankruptcy proceeding. This appeal presents three issues of first impression in this circuit: (1) whether this Court has jurisdiction over a district court's affirmance of a bankruptcy court's removal of a trustee, (2) whether a Chapter 7 debtor, with no pecuniary interest in the estate, is a "party in interest" that can seek removal of the trustee, and (3) whether a bankruptcy judge can remove a trustee sua sponte for lying under oath. For the reasons stated below, we affirm.
Walker filed for voluntary bankruptcy in April of 2003 claiming total assets of $101.00 and liabilities of $1,095,257.98. In June of that year, the creditors elected Walden to be the trustee. Walden submitted a Verified Statement to Accompany United States Trustee's Report of Disputed Election Under Bankruptcy Rule 2007.1(b)(3)(B) ("Verified Statement") dated June 12, 2003. In the Verified Statement, Walden stated that she had no connections with any of the creditors except that she was the receiver in another related matter. The Verified Statement read:
I, Linda Walden, the undersigned, hereby state the following under penalty of perjury, 18 U.S.C. Section 1001, in connection with the pending trustee election in this case:
I have the following connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the party in interest, their respective attorneys and accountants, the United States Trustee for Region 21, and/or any person employed in the Office of the United States Trustee: NONE except as disclosed herein:
1. I was appointed and currently serve as State Court Receiver for the Creditors in the matter styled Eleanor C. Cole, Plaintiff, v. James F. Walker, Defendant Case No. 89-21462-09 before the Honorable Circuit Court Judge Andrews currently pending and stayed in the Circuit Court of the Seventeenth
Judicial Circuit in and for Broward County.
On July 9, 2003, the bankruptcy court held a Ratification Hearing. At that hearing, Walker asserted that Walden had a relationship with Carl Shuhi, the president of Florida Caliper Manufacturers ("FCM")1- -the creditor with the second largest claim in the bankruptcy proceeding- -creating a conflict of interest and that Walden was, therefore, disqualified from serving as the trustee. Walden denied having any relationship with Shuhi; she testified as follows:
Q: Have you rendered services on Mr. Shuey's (sic) behalf for any of his entities?
A: No. I do not do personal work for Mr. Shuey (sic).
Q: Have you received any money in any form from Mr. Shuey (sic) at any point in time?
A: Mr. Shuey (sic) does not pay me.
Q: Has Mr. Shuey (sic) given you any money at any point in time?
A: Mr. Shuey (sic) has not given me money.
Q: What is your business relationship with Mr. Shuey (sic), none?
A: I do not have a direct business relationship with Mr. Shuey(sic), other than the fact that he is a creditor in this particular case, and I have met with Mr. Shuey (sic) to get information in the receivership.
Q: In the receivership, you've met with Mr. Sheuy (sic) to get information in the receivership. Under the receivership order, aren't you the fiduciary of Eleanor C. Cole?
A: I am the fiduciary of--I was appointed the receiver for Ms. Cole and the creditors.
Q: So when you say you don't have any direct business relationship with Mr. Shuey (sic), do you have some indirect business relationship?
A: As I said, I was the appointee for the creditors.
Q: Do you render any services for any of Mr. Shuey's (sic) business entities?
A: No, I believe I answered that question.
Walden was then ratified as the trustee. On August 23, 2004, Walker filed an Emergency Motion to Remove the Trustee. He alleged that Walden had a conflict of interest and had lied about it on the Verified Statement and at the July 9, 2004 Ratification Hearing. Specifically, Walker alleged that Walden had performed accounting services for Shuhi and/or his corporate entities, that she had prepared an expert report for Shuhi in a state court action in 2000, and that she served as Registered Agent for two of Shuhi's business entities.
At a hearing on the motion to remove, the following evidence was presented:
Several years prior to the bankruptcy, Shuhi sued the Simon law firm in state court. Utrecht, Shuhi's lawyer in that state court action, testified that in representing Shuhi during that case, Shuhi told Utrecht that Walden would be the expert in the litigation. Utrecht testified that he spoke with Walden and met with her several times for this purpose. Moreover, Elaine Gatsos, an attorney for Shuhi, testified that she became one of Shuhi's attorneys following Walden's referral and introduction in 1999. Gatsos testified that she met with both Walden and Shuhi in February of 1999 for the initial client meeting at
Shuhi's office. Further, Gatsos testified that several times after the initial Gatsos-Walden-Shuhi meeting, Walden indicated that she was filling out answers to expert interrogatories related to the state court action handled by Utrecht.
Particularly damaging to Walden were Shuhi's depositions taken in 1999. In two depositions from that year, Shuhi testified that Walden was the expert in the case and that Walden was both FCM's accountant and Shuhi's personal accountant. On June 28, 1999, Shuhi had testified as follows:
Q [Defense counsel]: Does Florida Caliper Manufacturers file corporate tax returns?
Q: Who files the tax returns, or who prepares them?
Q: What's the name of the present CPA?
A: Linda Walden.
A: I believe so.
Q: Do you file personal tax returns every year?
A: Yes. My CPA does the work.
Q: Who is your personal CPA?
A: Linda Walden.
Q: Do you have a total for the amount of damages that you claimed have resulted from these matters involving the same subject matter being pursued separately?
A: I'd have to refer that to my accountant.
Q: And who is your accountant for this purpose?
A: Linda Walden.
Q: Has Ms. Walden been retained at this point to provide any testimony or calculate any damages with regard to this litigation?
Also, at an August 25, 1999 deposition Shuhi had been asked about damages in the case. Shuhi stated that he could not from his memory discuss the specifics of his basis for damages but referred counsel to his accountant, Linda Walden.
Additionally, Walker introduced a plethora of other evidence indicating that Walden and Shuhi had a pre-existing relationship prior to Walden's submission of the Verified Statement and her oral testimony at the Removal Hearing. This evidence included (1) court documents from the state court action filed with the court in 2000...
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