Matter of Plunkett

Decision Date28 February 1985
Docket NumberAdv. No. 84-0003.,Bankruptcy No. 82-01119
Citation47 BR 172
CourtU.S. Bankruptcy Court — Eastern District of Wisconsin
PartiesIn the Matter of Oliver PLUNKETT, Monica Plunkett, Debtors. Ralph C. ANZIVINO, Trustee, Plaintiff, v. COMMERCIAL SERVICES CORPORATION and Gene Sehrt, Defendants.

Bruce Arnold, Whyte & Hirschboeck, Milwaukee, Wis., Attorney for Creditors' Committee.

William Steinmetz, Reinhart, Boerner, Van Deuren, Norris & Rieselbach, Milwaukee, Wis., for trustee.

Gene Sehrt, pro se.

MEMORANDUM DECISION AND ORDER

C.N. CLEVERT, Bankruptcy Judge.

The Official Unsecured Creditors' Committee and the Bankruptcy Trustee in the Chapter 11 case of Oliver and Monica Plunkett have filed a joint motion seeking costs and attorneys' fees against Gene Sehrt and Commercial Services Corporation as a result of the defendants' bad faith conduct in the above-captioned adversary proceeding. This matter was heard on May 10, 1984, and the following appearances were made: the official unsecured creditors' committee appeared by its counsel Bruce Arnold of the law firm of Whyte & Hirschboeck; the trustee, Ralph Anzivino, appeared by his counsel, William Steinmetz, of the law firm of Reinhart, Boerner, Van Deuren, Norris & Rieselbach; and Gene Sehrt appeared pro se.

The question to be decided in this action is whether the defendants' Motion to Disqualify the Honorable Charles N. Clevert on the grounds of bias was brought or conducted in bad faith, vexatiously, or with the wanton intent to interfere with the administration of the bankruptcy case, as well as the above-captioned adversary proceeding, pursuant to 28 U.S.C. § 1927 and Bankruptcy Rule 9011.

FACTS

On January 9, 1984, the above-captioned adversary proceeding was filed by the trustee seeking a determination that Gene Sehrt (Sehrt) and Commercial Services Corporation (Commercial) have no claim against the estate of Oliver and Monica Plunkett or Real Estate Resources, Inc. (RERI), based on certain purported contracts executed by Oliver Plunkett and Sehrt. In response to this complaint, Sehrt filed a motion entitled "Special Appearance Motion to Disqualify Judge and to Dismiss Adversary Proceeding." In this motion, Sehrt, on behalf of himself and Commercial Services requested "an out of district judge to hear the evidence for such removal and a jury of twelve to determine the facts reasonably create the appearance of bias to a reasonable man. . . ." sic (Motion to Disqualify, February 9, 1984). In the supporting brief, Sehrt discussed issues pending on appeal in bankruptcy cases involving Plunkett, the legislative history of the Bankruptcy Reform Act of 1978, Northern Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), and accused two bankruptcy judges of favortism:

The acts and decisions of bankruptcy judges Charles N. Clevert and James Shapiro, in matters involving Oliver Plunkett are replete with acts unexplainable to this author by any rationale short of actual judicial favoritism to "bankruptcy ring" insiders for some potential influence or benefit to those granting the favortism in exchange for present economic gain to those receiving it. These acts include blatent disregard of the Rules of Bankruptcy, evidentiary facts, fraudulent assertions, Bankruptcy and substantive state law and equity, and the apparent intentional ignoring and thereby the sanctioning of repeated violations of both civil and criminal law by at least one trustee and the staff of the Clerk of the Bankruptcy Court, which collectively allow the trustee and attorneys employed by him to reap a huge economic harvest in collusion with him, without any ability of affected creditors or the debtor to monitor the misconduct, or stop it. (Memorandum Brief in Support of Defendants\' Special Appearance)

On February 14, 1984, this court held a pretrial conference in the above-captioned adversary proceeding. During this conference, the court ordered Sehrt to file specific factual grounds to support his motion for recusal and to serve a copy of these on counsel for the trustee no later than 12:00 P.M. on February 20, 1984. (Pretrial Transcript 29, 30). The court then scheduled an evidentiary hearing for February 21, 1984, to consider Sehrt's written specifications for recusal. All other matters, including Sehrt's motion challenging the court's jurisdiction, were adjourned to that date. The court also gave Sehrt an opportunity to document his proof of claim pursuant to Bankruptcy Rule 3001(e)(1) and to obtain legal counsel for Commercial on or before the hearing date.1

The February 21st hearing was held as scheduled. Contrary to the court's directive, Sehrt failed to file specifications for recusal. He also failed to document his proof of claim or obtain counsel for Commercial. Instead, at the beginning of the hearing, Sehrt asked for and was granted a recess "to consult with new counsel that has been obtained and to file some papers, papers requested by the Court." (Evidentiary Hearing Transcript, p. 3). Immediately thereafter, Sehrt returned to the courtroom without counsel for himself or Commercial Services and filed a motion for continuance. When asked to advise the court as to the absence of counsel, Sehrt began talking about the canons of ethics, the complexities of the Plunkett case, the difficulty of finding competent counsel, the jurisdiction of the court, and the alleged criminal conduct of the trustee, the attorneys and the court in this case.

In his affidavit in support of the motion for a continuance, Sehrt blamed the court for his failure to prepare for the recusal motion. He also stated in his affidavit that he was involved in

at least 5 appeals and 3 post judgment motions and an adversary action and 5 and prospectively bankruptcy filings and at least 4 civil actions and certain criminal matters arising directly as a result of the actions of the Hon. Charles Clevert and his trustee and his and the creditor\'s committee attorneys improper and biased acts in the Plunkett and Resources cases, and the collaborative acts of others in concert with them. . . . (Affidavit attached to Motion for Continuance, 2/12/84).

He also continued to accuse the court of bias:

The bias of the Hon. Charles Clevert in favor of the trustee and his and the creditor\'s committee counsel, and against affiant is clearly evident from a pattern of actions set forth in substantial detail in affidavits filed in other proceedings in the Plunkett and Resources cases, and the transcripts of the pretrial conference in the adversary action, which actions include the overloading with work which can not be completed within the time required, which includes the papers required in these two hearings on the adversary and the misconduct of the judge and trustee et al in the expenses proceeding, two briefs due last Friday on appeals of biased Clevert decisions in favor of the trustee and his and creditor\'s committee attorneys, and the research and learning of the entire issues of law surrounding the bankruptcy, partnership and personal services contracts and constitutional subject matter jurisdiction issues within the inordinately short times required by Hon. Charles Clevert and the Rules of Bankruptcy or lose all rights. (Affidavit attached to Motion for Continuance, 2/21/84).

As the hearing continued, the court gave Sehrt additional opportunities to submit his written specifications for recusal or to explain his failure to do so:

MR. SEHRT: Mr. Steinmentz also argues that our list of wrongs committed by the Honorable Charles Clevert and his trustee and his trustee\'s lawyers and the Creditors\' Committee lawyers were due yesterday, and it\'s true and we tried to have them in yesterday, but unfortunately when we came, we found the door to the courthouse locked.
THE COURT: Do you have your written specifications now, Mr. Sehrt?
MR. SEHRT: No. As a matter of fact, the affidavit filed with the Motion of Continuance you will note indicates in paragraph 5 that all papers and records with respect to those matters and except for a few papers in this briefcase have been stolen, and so far while we have endeavored to determine the ability to recover them and to recover them, we have been unable to, and, in fact, I appeared here today in some rather casual clothing because even the clothing has been stolen. It\'s clearly a matter beyond our control, not of our doing or contemplation—
THE COURT: Mr. Sehrt, you just suggested you came here yesterday to file papers and could not. Then you make reference to your affidavit which says papers were stolen on Saturday. Now, did you have the papers yesterday and, if so, where are they and if you do not have the papers today, I would like for you to place on the record the specifications that formed the basis for your motion, and I am going to place you under oath for that purpose. (Evidentiary Hearing Transcript, pp. 12-13).

The court then placed Sehrt under oath. Nonetheless, Sehrt refused to support any of his allegations with specific facts:

MR. SEHRT: As I have explained to Your Honor, I am without records with which to be able to flush out facts and to recall the numerous situations. It is my reflection that there are some 75 different instances that we have records of and files on that we believe constitute improper conduct by this Court. It was my statement previously that in light of the circumstances the best I could do at this time is to provide the basis as set forth in these affidavit. I have not paraphrased or quoted these affidavits. I have attempted to flush them out with facts. It is my judgment that the best interest of the judiciary somewhat less than enthusiastically praised by the citizenry of this nation as noted recently by Chief Justice Warren Burger require the disqualification of a judge when even the appearance of bias to a reasonable man is present. IBM held that. It is clear in this matter that there is more
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