Bankr. W.D.N.C.: Murrell v. First Horizon (In re Durrell)- Judicial Recusal not Required when Party is Represented by Former Law Clerk

 Summary: Prior to filing their first bankruptcy, Murrell deeded his home to the Phoenician Irrevocable Trust, in an unsuccessful attempt to prevent foreclosure by Bayview, now First Horizon. When the foreclosure sale was allowed, Murrell filed Chapter 13 on the 9th day of the 10-day upset period, but since the property was no longer owned by the Murrell, the bankruptcy court held that foreclosure was not stayed by their filing. Murrell then brought suit in federal district court, alleging fraud in the foreclosure, but such case was dismissed for failure to state a claim. Simultaneously, Murrell brought a small claims action seeking to evict Bayview, with that also being quashed. Then Murrell filed a second bankruptcy, bring an adversary proceeding again seeking to set aside the foreclosure. Prior to hearing the Motion to Dismiss by Bayview, however, Murrell reached a settlement with Bayview, wherein he agreed to dismiss all pending actions, not to file any future actions, and to grant relief from the stay to Bayview. Murrell then sought to overturn the Settlement, arguing that he had not been advised that Bayview's attorney had previously clerked for the bankruptcy judge, that he had not been fully advised of the extent of this waiver of claims, and lastly that he had been intimidated and coerced by the attorney for Bayview into settling. The court held that under neither 28 U.S.C. §455 nor the Canon of Judicial Conduct is a former law clerk disqualified from practicing before a judge, nor is the judge required to recuse himself or make the disclosure and seek a waiver from the parties. In re EBW Laser, Inc., 2012 WL 3490018, 1 (Bankr. M.D.N.C. Aug. 14, 2012). For a copy of the opinion, please see: Murrell v. First Horizon (In re Durrell)- Judicial Recusal not Required when Party is Represented by Former Law Clerk