In re Evergreen Sec., Ltd., No. 08-14064.

Citation570 F.3d 1257
Decision Date11 June 2009
Docket NumberNo. 08-14064.,No. 08-14536.
PartiesIn Re: EVERGREEN SECURITY, LTD., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellants, v. Evergreen Security, Ltd., Defendant-Appellee. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellants, v. Evergreen Security, Ltd., Defendant-Appellee. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellants, v. Evergreen Security, Ltd., Defendant-Appellee. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellants, v. Evergreen Security, Ltd., Defendant-Appellee. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Plaintiff-Appellant, v. Evergreen Security, Ltd., Defendant-Appellee. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellants, v. Evergreen Security, Ltd., Defendant-Appellee. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellees, Lauro Law Firm, Interested Party-Appellee, v. Evergreen Security, Ltd., Defendant-Appellant. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellees, Lauro Law Firm, Interested Party-Appellee, v. Evergreen Security, Ltd., Defendant-Appellant. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellees, Lauro Law Firm, Interested Party-Appellee, v. Evergreen Security, Ltd., Defendant-Appellant. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellees, Lauro Law Firm, Interested Party-Appellee, v. Evergreen Security, Ltd., Defendant-Appellant. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Plaintiff-Appellees, Lauro Law Firm, Interested Party-Appellee, v. Evergreen Security, Ltd., Defendant-Appellant. In Re: Evergreen Security, Ltd., Debtor. Peter R. Ginsberg, Peter R. Ginsberg, P.C., Plaintiffs-Appellees, Lauro Law Firm, Interested Party-Appellee, v. Evergreen Security, Ltd., Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Clifton S. Elgarten, Crowell & Moring, Washington, DC, for Peter R. Ginsberg, peter R. Ginsberg, P.C.

Robert Scott Shuker, Mariane Leight Dorris, Latham, Shuker, Barker, Eden & Beaudine, LLP, Orlando, FL, for Evergreen Security, Ltd.

Gus M. Centrone, Lauro Law Firm, John F. Lauro, John F. Lauro, P.A., Tampa, FL, for Lauro Law Firm.

Appeals from the United States District Court for the Middle District of Florida.

Before BIRCH, HULL and FAY, Circuit Judges.

FAY, Circuit Judge:

Peter R. Ginsberg and Peter R. Ginsberg, P.C. appeal the district court's decision to affirm the bankruptcy court's imposition of sanctions. The bankruptcy court awarded sanctions based on Ginsberg's actions in conjunction with the filing of a Recusal Motion.

Ginsberg asserts three issues on appeal: (1) the district court abused its discretion in affirming the bankruptcy court's Sanctions Order and its imposition of sanctions; (2) the district court abused its discretion in affirming the bankruptcy court's decision not to testify about or discuss the complaint of judicial misconduct; and (3) the district court abused its discretion in affirming the bankruptcy court's denial of Ginsberg's Ore Tenus Motion to Transfer the Sanctions Motion. We affirm the district court which affirmed the bankruptcy court.

I. FACTUAL BACKGROUND

This appeal arises from the adversary proceeding instituted by Evergreen Security, Ltd. ("Evergreen") in the Bankruptcy Court for the Middle District of Florida. Evergreen, deemed a "ponzi scheme," filed a voluntary petition for Chapter 11 bankruptcy ("the main case"). Jon Knight and Anthony Huggins were principal actors in the scheme, both individually and through various corporate entities. R.W. Cuthill was appointed as the Chapter 11 trustee to recover funds belonging to Evergreen in order to pay Evergreen's creditors.

Cuthill instituted an adversary proceeding for $6.5 million fraudulently transferred from Evergreen Trust (an entity wholly owned by Evergreen) to Mataeka, and later to Knight, Huggins, and others.1 This action is referred to as the "Mataeka AP." Judge Briskman served as the bankruptcy judge in the main case and the Mataeka AP. Peter Ginsberg, of Peter R. Ginsberg P.C. (collectively "Ginsberg"), represented Knight. GrayRobinson attorneys Scott Spradley and Maureen Vitucci served as local counsel for Ginsberg, as well as main counsel for Huggins, Mataeka and Atlantic Portfolio Analytics & Management, Inc. ("APAM").2 R. Scott Shuker and his firm Latham Shuker Eden & Beaudine LLP ("Latham") represented Cuthill and Evergreen.

Cuthill prevailed in the Mataeka AP. The court issued a judgment against Knight, Huggins, and Mataeka jointly and severally for nearly $8 million, and against APAM for $2.5 million. In an effort to collect on the Mataeka AP Judgment, Evergreen (through Cuthill) filed three involuntary Chapter 7 bankruptcy petitions against Knight, Huggins and APAM and Judge Briskman appointed an interim trustee in both the Knight and Huggins involuntary actions. On July 26, 2006, the court began the final evidentiary hearing on the involuntary petitions, and Evergreen completed its prima facie case that day.

The next day, on July 27, 2006, Knight, Huggins, Mataeka, and APAM, through counsel Ginsberg, filed a Motion for Recusal, Motion to Disqualify, Disclosure of all Ex-Parte Communications and Revocation of all Prior Orders ("Recusal Motion") in the main case only.3 The parties requested the court recuse itself, disqualify Latham, disclose all ex parte communications and filings, and revoke all orders previously entered in this case and all other adversary proceedings. Less then a month later, Ginsberg filed a Petition for Writ of Mandamus with the district court asking for a stay of all pending proceedings until the resolution of the Recusal Motion. A Supplemental Petition for Writ of Mandamus was filed a week later, seeking Judge Briskman's removal from ruling on the Recusal Motion and all related proceedings. Both of these writs were denied.

On October 10, 2006 Evergreen filed a motion seeking sanctions against attorneys Spradley, Vitucci, and Ginsberg, and the law firms of GrayRobinson and Peter R. Ginsberg, P.C. ("Sanctions Motion"). Ginsberg then filed a third Petition for Writ of Mandamus requesting that the district court compel Judge Briskman to reconsider and reverse the decision to exclude himself as a witness. The district court denied the third Petition for Writ of Mandamus.

Evidentiary hearings on the Recusal Motion were held on November 29, 2006, December 11, 2006 and January 29, 2007. On February 27, 2007 the bankruptcy court denied the Recusal Motion, and on August 17, 2007 Judge Briskman issued an Order to Show Cause whether sanctions should be imposed. On August 28, 2007 Judge Briskman conducted an evidentiary hearing on the Sanctions Motion. The court granted the Sanctions Motion on January 2, 2008. In the Sanctions Order, Judge Briskman imposed monetary sanctions of $371,517.69 against Ginsberg and barred him from practicing before the United States Bankruptcy Court for the Middle District of Florida for a period of five years.4 Ginsberg appealed both Orders. On June 17, 2008, District Court Judge Anne C. Conway entered an order affirming, among other things, the bankruptcy court's denial of the recusal motion and imposition of sanctions.

II. LEGAL STANDARD

Federal courts, including bankruptcy courts, possess inherent authority to impose sanctions against attorneys and their clients. In re Walker, 532 F.3d 1304, 1309 (11th Cir.2008). "This power is derived from the court's need to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases." Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir.2006) (internal citations omitted). Federal statute 11 U.S.C. § 105(a) also gives the court the authority to "sua sponte, tak[e] any action or mak[e] any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process." 11 U.S.C. § 105(a) (2005).

We review the exercise of these powers for abuse of discretion. In re Sunshine Jr. Stores, Inc., 456 F.3d at 1304. Under this standard, "we ask whether [the court] `applie[d] the wrong legal standard or ma[de] findings of fact that are clearly erroneous.'" Id. (quoting Byrne v. Nezhat, 261 F.3d 1075, 1106 (11th Cir.2001)).

III. DISCUSSION

Ginsberg appeals the bankruptcy court's imposition of sanctions for the drafting, filing and litigating of the Recusal Motion. Ginsberg alleges that the district court erred in affirming the sanctions because (1) the Recusal Motion was proper; (2) the bankruptcy court should have disclosed the existence of a complaint of judicial misconduct and testified to its contents; and (3) the bankruptcy court should not have presided over the Sanctions Motion. We address each contention below.

A. Recusal Motion

A party may file a Recusal Motion when a Judge's impartiality may reasonably be questioned. See 28 U.S.C. § 455(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."). "The inquiry of whether a judge's impartiality might reasonably be questioned under § 455(a) is an objective standard designed to promote the public's confidence in the impartiality and integrity of the judicial process." Davis v. Jones, 506 F.3d 1325, 1332 n. 12 (11th Cir.2007) (internal citations omitted). Thus, the court looks to "the perspective of a reasonable observer who is informed of all the surrounding facts and circumstances.'" Cheney v. U.S. Dist. Court for Dist. of Columbia, 541 U.S. 913, 924, 124 S.Ct. 1391, 158 L.Ed.2d 225 (2004) (quoting Microsoft Corp....

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