At issue were presentations made at two conferences, the State Bar of Texas Advanced Consumer Bankruptcy Conference and one held at the LSU Law School. The motion was based on written materials and oral statements made at the two conferences. However, it turns out that Judge Bohm was not the author of written materials for either forum. In the first case, Judge Bohm was a substitute for Judge Marvin Isgur, who authored in the materials. In the second case, Judge Elizabeth Wall Magner presented a powerpoint which she prepared after which Judge Bohm spoke.
In his Dallas discussion, Judge Bohm began with a rather straightforward discussion of construction of Bankruptcy Rule 2016 and 11 U.S.C. Sec. 1322(b)(2) as they relate to post-petition fees and charges assessed by mortgage creditors. The positions articulated by Judge Bohm, namely, that Rule 2016 applies to mortgageholder fees, that Sec. 1322(b)(2) does not preclude review of the reasonableness of fees and that Sec. 105 allows redress for debtors charged unreasonable fees were not anything that he hadn't ruled previously.
However, the judge did not stop there. He proceeded to lecture both debtor's lawyers and creditors about practices in the industry. Speaking to debtor's lawyers, he said "if you are zealously representing your client, then you want to focus like a laser beam, it seems to me, on what some creditors are doing in terms of charging your clients after they have filed a petition." He also suggested that debtor's lawyers to write a monthly letter to the creditors' attorney stating:
Dear attorney for home lender in chapter 13, I am writing you this letter to inquire as to whether your client is charging any fees and expenses now that my client has filed for bankruptcy. Please advise. Because if I find out that you are and you haven't disclosed it, I'm going to scream bloody murder in bankruptcy court.401 B.R. at 855.
I think you ought to send that letter once every month. that might get the attention of some creditors' lawyers. And it might--and I say might get the attention of some lenders.
Judge Bohm was just warming up. In closing, he got on his soapbox and articulated the following:
Why do I cite these newspapers to you? Freddie Mac, Fannie Mae, AIG and the Lehman Brothers. I don't think I cited Washington Mutual, but I'll cite them. What are they all? They're all creditors. I used to represent creditors. I used to be a banker before I went to law school. Well, I am finding since I've been on the bench on the creditors' side is that we've got a culture going of arrogance and hubris. We have forgotten how to be thorough and how to pay attention to detail, and it's coming home to roost in spades.401 B.R. at 857-58.
I mean, think about it folks, Freddie Mac and Fannie Mae, FDR would be turning over in his grave if he could see those institutions today. The directors, the dispute that's going on right now is, are we going to pay the two presidents of these institutions golden parachutes of millions of millions of dollars? This, for while they were head of their ships, ran aground.
We've got AIG going belly up. By the way, Freddie Mac and Fannie Mae, the institutions that are about buying loans portfolios for loans that never should have been made. That's why I say we've got--we have lost the need--the paying attention to detail.
* * *
I'm policing my docket. You're going to get more opinions, at least from me, and I assume the true--same will be true for at least Judge Isgur and Judge Magner. We want to see the I's dotted and T's crossed, and if they're not, then as I've said, 105 sanctions will be--will be used.
I hate to end on that kind of note, but given where we are with a lot of the institutions that I just cited, I don't know how else to express my frustration with some--not all, of the mortgage lenders in my court. I wish to emphasize that I--I think highly of most, virtually all, of the attorneys who appear in my court these days, so I don't want you to leave this seminar thinking that I am upset with you, but do please convey to your clients tht I feel very strongly that the rules and the statutes need to be complied with.
The Dallas conference did not single out Wells Fargo. However, one slide in Judge Magner's powerpoint did:
Wells Fargo manages 7.7 million loans. If only one $15 fee were charged per year on each loan, its revenue would be $115 million.401 B.R. at 859.
Meanwhile, Judge Bohm was presiding over a class action sought brought against Wells Fargo alleging that it charged improper fees in chapter 13 bankruptcy cases. Judge Bohm's candor apparently made Wells Fargo feel that he had targeted a bulls eye on them. They filed a motion to recuse. However, as noted by Judge Bohm, a motion to recuse "is committed to the discretion of the targeted judge." This leaves the judge in the unusual position of sitting as trier of fact with regard to his own impartiality.
In his ruling, Judge Bohm discussed several legal principles applicable to disqualification:
1) Under 28 U.S.C. Sec. 455(a), a judge "shall disqualify himself in any proceeding in which he is presiding in which his impartiality might reasonably be questioned."
2) The movant must establish that a judge is not qualified by clear and convincing evidence.
3) "(A) judge's comment is disqualifying only if it connotes . . . a closed mind on the merits of the case."
4) Recusal based on bias may be based on "a danger that the judge will rely on an extrajudicial source for his rulings" or "where the judge displays such a high degree of favoritism or antagonism as to make fair judgment impossible."
These principles appear to be in conflict. The statute speaks in terms of situations in which "his impartiality might reasonably be questioned." This language, particularly in its use of the words "might" and "reasonably" suggests a low standard, one in which the mere appearance of partiality is sufficient to bring about disqualification. However, the requirement of proof by clear and convincing evidence (which must be established to the judge being questioned) and the requirement of a closed mind on the particular case set a very high bar. Indeed, it might be suggested that a motion for recusal should never be necessary, since the conduct demanding recusal should be so obvious to the judge that he should have voluntarily removed himself prior to any motion being filed.
Judge Bohm continued with a very thorough analysis of what comments made outside of the courtroom would merit recusal. Generally, comments made to legal education seminars on general legal issues are permissible, while statements to a newspaper about the merits of a pending case are not. Since Judge Bohm did not single out Wells Fargo or talk about any specific pending case, much less the Wellborn v. Wells Fargo case, recusal was not appropriate.
How Educational Do You Want Your CLE To Be?
Given that recusal requests are addressed to the judge sought to be recused and that judges are given wide latitude, the result in this case is not particularly surprising. The larger question is, should judges be speaking so freely about issues that will come up in their courtrooms? Should they be so blunt, including giving advice to one side about what they should be doing to zealously represent their clients?
With one limited exception, I say preach on Brother Bohm. I say this as an attorney who is more likely to appear in front of His Honor as a creditors' lawyer than representing a debtor. In fact, I fully expect that I will appear in front of him on one of his hot button issues. It is just a question of when.
When I appear in front of a judge, I want to know as much as possible about his thinking. I am going to study his rulings and talk to attorneys who have appeared in front of him. If I'm going to listen to him speak at a conference, I don't want to hear namby-pamby platitudes. I want to hear the good stuff. I want to hear the good stuff because it is useful intelligence.
On the other hand, it does give me pause when the judge starts dictating letters for debtor's lawyers to use, especially when the debtor's lawyer is invited to scream bloody murder to the bankruptcy court. It almost comes off as a wink, wink, nudge, nudge, follow this procedure and I will sock it to the mortgage company. The issue of disclosure of post-petition fees and charges is a legitimate one and one which is being addressed by amended Rule 2016. It is a bit unseemly for the judge to be encouraging lawyers to engage in guerilla tactics rather than looking for a systemic response. However, beyond that, the judge did not talk about cases currently pending before him or call out lawyers he was unhappy with. Indeed, he went so far as to express his respect for the bar.
On balance, the benefit of getting inside the judge's head is worth more to me than the risk that he will engage in cheerleading for the other side. I won't always agree with Judge Bohm, but I will always find him passionate and informative.