In re Milbourne

• Decision Date: 19 December 1989
• Docket Number: Adv. No. 89-0199S.,Bankruptcy No. 88-13246S
• Citation: 108 BR 522
• Parties: In re Glorious MILBOURNE,[1] a/k/a Glorious Dillard, Debtor. Glorious MILBOURNE, a/k/a Glorious Dillard, Plaintiff, v. MID-PENN CONSUMER DISCOUNT COMPANY, Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of Pennsylvania

108 B.R. 522 (1989)

In re Glorious MILBOURNE,¹ a/k/a Glorious Dillard, Debtor Glorious MILBOURNE, a/k/a Glorious Dillard, Plaintiff, v. MID-PENN CONSUMER DISCOUNT COMPANY, Defendant.

Bankruptcy No. 88-13246S, Adv. No. 89-0199S.

United States Bankruptcy Court, E.D. Pennsylvania.

December 19, 1989.

Gary Klein, Community Legal Services, Inc., Philadelphia, Pa., for plaintiff, debtor.

Edward Sparkman, Philadelphia, Pa., standing Chapter 13 Trustee.

Arthur J. Matusow, Philadelphia, Pa., for defendant.

OPINION

DAVID A. SCHOLL, Bankruptcy Judge.

A. INTRODUCTION

Before us is another proceeding involving the most prolific protagonist of contests raising thought-provoking issues of interpretation of consumer-law in this court, MID-PENN CONSUMER DISCOUNT COMPANY (hereinafter "Mid-Penn").² As in In re Nichols, Nos. 89-1445 and 89-1474 (3d Cir. Nov. 28, 1989) 893 F.2d 1331 (table), aff'g, C.A. No. 88-1253, 1989 WL 46682 (E.D.Pa. April 28, 1989), aff'g, Bankr. No. 86-05809S, Adv. No. 87-0600S (Bankr.E.D.Pa. Nov. 10, 1987); In re Jones, 79 B.R. 233 (Bankr.E.D. Pa.1987); and In re Tucker, 74 B.R. 923 (Bankr.E.D.Pa.1987), this proceeding raises issues under both the federal Truth-in-Lending Act, 15 U.S.C. § 1601, et seq. (hereinafter "the TILA"), and Pennsylvania state consumer protection laws.

Consistent with the results in Nichols, Jones, and Tucker, as well as our own recent Opinion in In re Perkins, Perkins v. Mid-Penn Consumer Discount Co., 106 B.R. 863 (Bankr.E.D.Pa.1989), Mid-Penn fails in its defense of its refusals to allow rescissions of loans in which it failed to disclose, in its notices of the right to rescind its loan transactions required by the TILA, that it has retained multiple mortgages against the Debtor's residence. As a result of these TILA violations, Mid-Penn suffers loss of its security interests in the Debtor's residence, its entire claim against the Debtor is eliminated, and it becomes liable to the Debtor in the total sum of $4,957.14.

However, also as in Nichols, Jones, and Tucker, Mid-Penn fares much better in the challenges of certain of its alleged practices under state law, here the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1, et seq. (which, since it is generically a law regulating u nfair or d eceptive a cts or p ractices, is referred to hereinafter as "UDAP"). We refuse to find that its failure to disclose its retention of multiple mortgages renders it liable for a violation of UDAP because no actual damages flowing therefrom are proven. We also find that the instant record does not support the Debtor's contention that she was required to buy credit life and disability insurance, causing us to reject all claims made under both UDAP and the TILA involving Mid-Penn's sale of credit insurance to the Debtor. We do find violations of UDAP arising from Mid-Penn's failure to adequately disclose to the Debtor the detrimental aspects of refinancing her loans, as opposed to her making new loans for additional advances of funds. However, we decline to find, on this record, any significant actual damages to the Debtor arising therefrom, and hence we shall award the Debtor only an additional $500 in connection with these violations.

B. PROCEDURAL HISTORY

The Debtor, GLORIOUS MILBOURNE, formerly known as GLORIOUS DILLARD, filed the underlying voluntary case under Chapter 13 of the United States Bankruptcy Code on September 19, 1988. On December 8, 1988, Mid-Penn filed an amended secured Proof of Claim reciting arrearages of $1,320.52 and a sum purportably to be paid directly to Mid-Penn, apparently constituting payments due post-petition, of $3,360.00. Since the inception of this adversary proceeding on March 17, 1989, objecting to that Proof of Claim, it has been the centerpiece of this case, and the delay in its resolution has already resulted in four continuances of the Confirmation hearing since it was originally listed on May 4, 1989, the most recent continuance setting back confirmation until December 19, 1989. In our accompanying Order, we express our intention not to continue this matter again.

At an early stage in this proceeding, on April 4, 1989, Mid-Penn moved to dismiss the Debtor's UDAP claims on the ground that they were not brought within the time of the allegedly-applicable statute of limitations. Mid-Penn argued that the two-year limitation period set forth in 42 Pa.C.S. § 5524(5), relating to actions "for a civil penalty or forfeiture," was applicable to the Debtor's UDAP claims. Observing that UDAP is not a penal statute, we denied Mid-Penn's Motion to Dismiss by Order of April 5, 1989. On April 19, Mid-Penn filed a Motion for Reconsideration of this Order, which we in turn denied by Order dated April 20, 1989. We did explain, in the second Order, that our Orders denying the motion to dismiss were merely meant to defer final resolution of the limitations issue until trial. As it developed, the Debtor has uncovered a decision by the Pennsylvania Superior Court in Gabriel v. O'Hara, 368 Pa.Super. 383, 390-91, 534 A.2d 488, 494-96 (1978), holding that the six-year catch-all limitations period provided in 42 Pa.C.S.A. § 5527(6) applies to actions under UDAP. Applying the six-year limitation period clearly renders the claims raised in this proceeding timely. Mid-Penn therefore does not discuss this issue in its post-trial submissions and apparently has abandoned it.

On May 24, 1989, eight (8) days before the continued trial date of this proceeding, Mid-Penn filed a Motion for Disqualification or recusal of the undersigned. The substantive basis for the motion appeared to relate to certain statements made by this court in the Opinion of June 23, 1987, in Tucker, supra.

We denied the recusal motion on two grounds. Firstly, we determined that it was untimely because Mid-Penn had invoked "participation by the court in pretrial motions and other judicial proceedings between the time it first learned of the asserted prejudice and the time the § 144 motion was filed." Shank v. American Motors Corp., 575 F.Supp. 125, 129 (E.D. Pa.1983). See also Smith v. Danyo, 585 F.2d 83, 86 (3d Cir.1978); and In re Gulph Woods Corp., 84 B.R. 961, 966 (Bankr.E.D. Pa.1988). Here, the "asserted prejudice" was known to Mid-Penn even before the instant proceeding was filed. However, no recusal motion had been filed until after this court had decided two pre-trial motions adversely to Mid-Penn, and no explanation was provided for the belated invocation of this issue.

Secondly, we determined that the motion lacked substance. Its substantive basis appeared to arise from Mid-Penn's belief that the language of this court was overly harsh to Mid-Penn in analyzing the impact of a series of refinancing agreements and characterizing its practices as "flipping" in Tucker, supra, 74 B.R. at 926-27. However, the bias justifying recusal under either applicable statute, i.e., 28 U.S.C. § 144 and 28 U.S.C. § 455(a), must be "personal." See, e.g., In re By-Rite Oil Co., 91 B.R. 771, 774 (Bankr.E.D.Mich.1988); and In re Johnson-Allen, 68 B.R. 812, 817 (Bankr.E. D.Pa.1987), modified, 70 B.R. 350 (E.D.Pa. 1987). The applicable standard for determining whether a judge's "impartiality might reasonably be questioned" under § 455(a) is an objective one, not determined solely by the moving party's subjective belief that a judge's impartiality might be questioned. See By-Rite, supra, 91 B.R. at 774; and Johnson-Allen, supra, 68 B.R. at 817. "In the absence of demonstrated bias, a judge's actions, stated impressions, comments, findings or rulings in judicial proceedings are not grounds for disqualification." By-Rite, supra, 91 B.R. at 774. Cf. Gulph Woods, supra, 84 B.R. at 966.

We noted that, in Tucker, our analysis of the refinancings in issue was principally undisputed mathematical calculations. 74 B.R. at 925-27. Given the facts as adduced there in light of our calculations, we rejected Mid-Penn's contention that our use of the term "flipping" was incendiary or reflective of a bias against refinancing generally, as opposed to its abuses in certain circumstances. We thus concluded that our dictum in Tucker in no sense justified recusal, as it at worst constituted merely a judge's "stated impressions" or "comments." Moreover, our statements were not uttered in the course of the same case in which recusal was sought, as in one authority cited by Mid-Penn, United States v. Grinnell Corp., 384 U.S. 563, 580-83, 86 S.Ct. 1698, 1708-10, 16 L.Ed.2d 778 (1966), nor were they as pointed and acerbic as those of the judge of whom recusal was sought in the Grinnell Corp. Nevertheless, the Court refused to require recusal in that case. No statements in Tucker were in any sense comparable to the comments reflecting the personal bias and prejudice against the Defendant because of his nationality as appeared in the statements which the Court held required recusal in another case relied upon by Mid-Penn, Berger v. United States, 255 U.S. 22, 28-30, 41 S.Ct. 230, 231-32, 65 L.Ed. 481 (1920).

Our Order of May 25, 1989, denying the recusal motion recited that the trial would not be continued beyond June 1, 1989. Nevertheless, in the course of the parties' preparation for trial, discovery problems arose which required that the trial on this matter be again continued until July 25, 1987. At that time it was, in fact, conducted and completed.

At trial, the parties submitted a rather comprehensive Stipulation of Facts, including copies of all relevant loan documents; the following information as to the seven transactions between the parties: the payments made, the cost of insurance, and the rebates of finance charges and insurance charges; and certain undisputed facts elicited in discovery. The Debtor then called six witnesses including herself and five employees of Mid-Penn: Edwin Seave, Esquire, its President; John F. Griffith and Leonard Tench, two of its three Vice-Presidents; and Marian D....