Petition for Writ of Mandamus and Prohibition, Related to W.D. Bankruptcy No. 82-3265.
Becker, Hutchinson and Cowen, Circuit Judges.
This opinion addresses a mandamus petition filed in the terminal stages of a protracted bankruptcy case. The case was before the district court, the reference to the bankruptcy court having been withdrawn. The petition arises from discomfiting circumstances, for it requests that the assigned district judge be ordered to vacate various comments and fact findings that impugned the integrity of counsel for the Bankruptcy Trustee. The petition also requests that we vacate all of the actions of the district judge (including the statements) that followed his announcement that he intended to recuse himself from the case after he had entered an order converting the bankruptcy proceedings from Chapter 11 to Chapter 7. Neither the actual recusal, which was ultimately effected, nor the conversion order is the subject of an appeal, and it is not contended that the mandamus petition is a surrogate therefor.
Unfortunately, although no one is challenging the substance of the conversion order, we will be obliged to vacate it and also all other orders entered after the date of the judge's recusal declaration, made at a hearing on January 29, 1988. Deferring to the judge's own repeated acknowledgements at the hearing that his impartiality could reasonably be questioned, we conclude that the judge should have recused at that time and that he was not empowered to perform judicial actions thereafter. We find no basis on this record for the judge's conclusion that his impartiality could be questioned only after he entered the conversion order, and with respect to proceedings to follow. Moreover, even though a recused judge can enter "housekeeping" orders until a successor judge is assigned, the orders entered here -- the conversion order, orders disqualifying counsel and setting aside a fee agreement -- and the challenged fact findings, were clearly not of a "housekeeping" variety. The petition for mandamus will therefore be granted.
The bankruptcy case commenced on October 4, 1982, when an involuntary bankruptcy petition was filed against Jeannette Corporation in the Bankruptcy Court for the Western District of Pennsylvania, pursuant to Chapter 7 of the Bankruptcy Code. On December 10, 1982, on motion of the debtor, the bankruptcy proceeding was converted from Chapter 7 to Chapter 11. Four and a half years later, on February 2, 1987, John Polojac and the American Flint Glass Workers Union of North America, Local No. 535, creditors of the bankrupt debtor, moved to reconvert the proceeding from Chapter 11 to Chapter 7. On March 10, 1987, the District Court for the Western District of Pennsylvania entered an order withdrawing the reference from the Bankruptcy Court.
On December 17, 1987, counsel for the Bankruptcy Trustee wrote the district judge stating that the Trustee took no position on the reconversion issue. Later, in an undated motion, the Trustee advocated extending the claims bar date in lieu of converting the proceeding from Chapter 11 to Chapter 7.
Although no formal recusal motion was ever filed, several days prior to January 29, 1988, the date on which the hearing on the Chapter 7 conversion motion was to be held, the district judge received another letter from counsel for the Trustee, this time suggesting that the judge might have a conflict of interest in the case because the judge's daughter worked for Mellon Bank, one of Jeannette Corporation's 882 unsecured trade creditors.
At the very outset of the January 29 hearing the judge brought this letter to the fore, reading significant portions of it into the record including the following:
The Court may be unaware of the fact that Mellon Bank has a claim in Jeannette's bankruptcy case of $338,622.26, making it the second largest of the unsecured creditors. Prominent in the class of unsecured creditors, Mellon's interests will likely conflict with those of the Pension Benefit Guaranty Corporation and the former hourly employees.
He then commented extensively on the recusal issue, adverting at one point to "ethical considerations," and ultimately announced his intention to recuse himself from the case because of the potential Mellon Bank conflict. He repeated that this was his intention on some seven occasions during the course of the hearing.*fn1
Furthermore, during the hearing it was brought to the judge's attention that there might be a conflict arising from a personal injury action that the judge and his wife had recently filed in the Court of Common Pleas of Allegheny County, Pennsylvania. Two of the defendants in this (bankruptcy) case are represented by the same law firm that is representing a defendant in the personal injury action. Furthermore, another defendant in the personal injury suit is represented by a law firm in which the wife of an attorney for the trustee is employed.*fn2 Upon hearing this, the judge stated "I ought to get out of this case." [Petitioner's Exhibit E, at 148-49]
Notwithstanding his repeated declarations about the necessity for recusal,*fn3 the judge decided that he would recuse himself only after he had acted ...