FILED
NOT FOR PUBLICATION
MAY 13 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: SIRFIANI CARLSON, No. 14-60002
Debtor. B.A.P. No. 12-1522-KuDTa
JAMES H. MAGEE,
MEMORANDUM*
Appellant,
v.
MICHAEL G. MALAIER, Attorney,
Standing Chapter 13 Trustee; SIRFIANI
CARLSON,
Appellees.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kurtz, Dunn, and Taylor, Bankruptcy Judges, Presiding
Submitted May 2, 2016**
Seattle, Washington
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes that this case is suitable for decision
without oral argument. Fed. R. App. P. 34(a)(2).
Before: GRABER and BERZON, Circuit Judges, and CURIEL,*** District Judge.
James MaGee appeals from the Bankruptcy Appellate Panel’s ("BAP")
affirmance of a bankruptcy court’s order imposing $2,685 in sanctions and its
denial of his motion for reconsideration. Reviewing the bankruptcy court’s
imposition of sanctions for abuse of discretion, Price v. Lehtinen (In re Lehtinen),
564 F.3d 1052, 1058 (9th Cir. 2009), and its findings of fact for clear error, Murray
v. Bammer (In re Bammer), 131 F.3d 788, 791 (9th Cir. 1997) (en banc), we
affirm.
1. A court may sanction a lawyer who recklessly misrepresents the law for
an improper purpose. Fink v. Gomez, 239 F.3d 989, 994 (9th Cir. 2001). Here,
the bankruptcy court found that Magee improperly advised his client to conceal
certain tort claims in her bankruptcy. Magee alleges that he lacked knowledge of
the tort claims. But Magee’s client testified that she had asked Magee about the
disclosure and that Magee had advised her to conceal the information. The
bankruptcy court permissibly credited the client’s testimony over Magee’s, despite
discrepancies in her testimony about the date of this conversation. See Anderson
v. City of Bessemer City, 470 U.S. 564, 575 (1985) (holding that when there are
***
The Honorable Gonzalo P. Curiel, United States District Judge for the
Southern District of California, sitting by designation.
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two permissible views of the evidence, a fact-finder’s choice cannot be clearly
erroneous). Accordingly, it was not clear error for the bankruptcy court to
conclude that MaGee had knowledge of the client’s tort claims and that MaGee had
recklessly misrepresented the law. And it was not an abuse of discretion for the
bankruptcy court to sanction MaGee for wrongfully advising his client to conceal
information and for later claiming that he had no recollection of the conversation.
2. The bankruptcy court’s order confirming the client’s Chapter 13 plan
required that the debtor inform the Trustee "of any changes in circumstances or
receipt of additional income." MaGee asserts that the portion of the tort claim
allocated to lost income, $850, should not be included as income to his client and,
in essence, that the award of a judgment totaling $48,150.92 did not amount to a
change in her circumstances. Those arguments are not persuasive. "[T]he viability
of the system of voluntary bankruptcy depends upon full, candid, and complete
disclosure by debtors of their financial affairs." Searles v. Riley (In re Searles),
317 B.R. 368, 378 (B.A.P. 9th Cir. 2004). A debtor has a statutory duty to disclose
all assets, income, and financial affairs. 11 U.S.C. § 521. The tort judgment here
was substantial; it exceeded the unsecured claims in the bankruptcy. A portion of
the award was designated as income. The bankruptcy court did not abuse its
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discretion in holding that the client’s receipt of this judgment amounted to a
change in circumstance.
3. MaGee argues that the plan’s requirement to report any change in
circumstances is unconstitutionally vague. But Magee did not raise this issue at the
bankruptcy court or to the BAP. "As a general rule, an appellate court will not hear
an issue raised for the first time on appeal. . . . A workable standard . . . is that the
argument must be raised sufficiently for the trial court to rule on it." Whittaker
Corp. v. Execuair Corp., 953 F.2d 510, 515 (9th Cir. 1992) (citation and internal
quotation marks omitted). Because Magee did not raise the vagueness argument in
any proceeding below, he did not afford an opportunity for the bankruptcy court or
the BAP to rule on it. Accordingly, the issue is waived.
4. Finally, MaGee alleges that the bankruptcy judge was unfairly prejudiced
against him because of several statements the judge made during the course of the
proceedings.
[J]udicial remarks during the course of a trial that are critical or
disapproving of, or even hostile to, counsel, the parties, or their cases,
ordinarily do not support a bias or partiality challenge. They may do
so if they reveal an opinion that derives from an extrajudicial source;
and they will do so if they reveal such a high degree of favoritism or
antagonism as to make fair judgment impossible.
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Liteky v. United States, 510 U.S. 540, 555 (1994). Here, although the judge made
critical statements about MaGee during the proceedings, he based these statements
on no extrajudicial source and did not suggest that fair judgment was impossible.
We therefore reject this argument.
AFFIRMED.
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