On Tuesday, President Trump nominated Neil M. Gorsuch from the 10th Circuit Court of Appeals to fill Justice Antonin Scalia’s now long-vacant seat on the U.S. Supreme Court. The Gorsuch coverage is already deafening, but, unsurprisingly, there’s little about Judge Gorsuch’s bankruptcy opinions. However, unlike Judge Merrick Garland, former President Obama’s last nominee, Judge Gorsuch has heard many bankruptcy appeals in Denver.
By our count, Judge Gorsuch has written 13 bankruptcy opinions and sat on a panel in 30 other bankruptcy appeals. Unfortunately, he did not opine on many Chapter 11 cases, but we’ll take what we can get. Faithful to our niche, we’ll leave the prospect of a “contested confirmation,” Judge Gorsuch’s “Biggest Cases,” and even coverage of his business opinions to others (like Sara Randazzo of the Wall Street Journal).
Instead, we’ll cover his bankruptcy opinions–every single one of them! However, rather than doing a “deep dive” into their substance, we’ve mined them for something more interesting: Judge Gorsuch’s colorful style and refreshing tone, even in our area.
But first, we’ll plant this video of last night’s announcement in the unlikely event that you missed it. Should the White House release a “promo video” like it did for Judge Garland, we’ll add it.
Apparently, if you want a preview of how Judge Gorsuch will approach cases, then you need not look any further than Justice Scalia for a model. Indeed, as much as Judge Gorsuch’s career is linked to Justice Kennedy (and others), much of the pomp and circumstance of Tuesday night, with Justice Scalia’s widow in the front row, centered on the symbolism of Judge Gorsuch inheriting and sitting down very comfortably in Justice Scalia’s empty seat on the Court.
As the New York Times reported yesterday, President Trump chose a judge “who not only admires” Justice Scalia, “but also in many ways resembles him. He shares Justice Scalia’s legal philosophy, talent for vivid writing and love of the outdoors.” As you’ll see below, “Dewsnuppian departure” is Judge Gorsuch’s “argle-bargle.”
Similarly, and perhaps more definitively, Mark Citron of Scotusblog writes that Judge Gorsuch is “celebrated as a keen legal thinker and a particularly incisive legal writer, with a flair that matches—or at least evokes—that of Justice Scalia. According to one study, writes Mr. Citron, Judge Gorsuch is the “most natural successor” to Justice Scalia, “both in terms of his judicial style and his substantive approach.” And now, it appears, he will in all likelihood be that successor.
Mr. Citron summarizes it best:
Gorsuch’s opinions are exceptionally clear and routinely entertaining; he is an unusual pleasure to read, and it is always plain exactly what he thinks and why. Like Scalia, Gorsuch also seems to have a set of judicial/ideological commitments apart from his personal policy preferences that drive his decision-making. He is an ardent textualist (like Scalia); he believes criminal laws should be clear and interpreted in favor of defendants even if that hurts government prosecutions (like Scalia); he is skeptical of efforts to purge religious expression from public spaces (like Scalia); he is highly dubious of legislative history (like Scalia); and he is less than enamored of the dormant commerce clause (like Scalia). In fact, some of the parallels can be downright eerie.
We’ll let the administrative law experts go back and forth about where Gorsuch and Scalia might depart on “Chevron deference.” (See Gutierrez-Brizuela v. Lynch wherein Judge Gorsuch criticizes the very doctrine that Justice Scalia had long defended.)
Suffice it to say, particularly for our emphasis on bankruptcy, there is likely no reason to expect that Judge Gorsuch will, if confirmed, approach bankruptcy cases any differently than Justice Scalia approached them. For that matter, there is likely no reason to expect that he’ll approach bankruptcy cases differently than the other Justices, regardless of their differing ideologies. The Justices often agree on bankruptcy issues and other esoteric areas that they like to avoid.
In that regard, we’ll crib off of our Scalia Tribute from last year:
In Theory and Practice of Statutory Interpretation, Prof. Frank Cross submits that “research has shown a very significant association between ideology and judicial votes.” However, he also points out that the “ideological” or “attitudinal” model does not “predict outcomes in numerous statutory areas” (including antitrust, ERISA, and bankruptcy).
For example, our review of Justice Scalia’s bankruptcy opinions revealed that bankruptcy did not lend itself to the polemic, 5-4 decisions that he was so famous for. And when there was a Scalia bankruptcy dissent, it often involved issues of statutory construction rather than substantive bankruptcy issues. As one panel put it, bankruptcy cases “often serve as a crucible for competing theories of statutory interpretation.” (Again, we’re reusing some of our Scalia Tribute because it should apply rather equally to Judge Gorsuch.)
Finally, our review of Judge Gosuch’s bankruptcy cases reveals an attitude towards bankruptcy that’s less condescending than Justice Scalia’s attitude and, for that matter, the attitudes of other Justices (save, perhaps, Justice Thomas, who claims to like bankruptcy). Or, using Yury Kapgan’s dichotomy, Judge Gorsuch is less a “scolding pedagogue” than Justice Scalia.
With that in mind, the Bankruptcy Bar can sit back, relax, and enjoy Judge Gorsuch’s wit, style, clarity, and easy tone–characteristics that even dry bankruptcy issues can’t suppress. The other practice areas can clamor about the hot-button issues. Bankruptcy will be okay.
We’ll cover 5 cases in Part 1 and 5 cases in Part 2, saving the “best” for last.
10. The “Appellate Procedure is Hard” Line of Cases
Judge Gorsuch might be a cordial judge, but at least 3 bankruptcy appellants–two of them pro se–learned the hard way that federal appellate courts tend to enforce strictly the Federal Rules of Appellate Procedure.
In In re Tollefsen (2009), Mr. Tollefsen learned that providing the Court with an “adequate appendix” is essential. Without it, he “forfeited his right to a review” of the Bankruptcy Appellate Panel’s (BAP’s) decision. Relying on Federal Rules of Bankruptcy Procedure 8009(b) and 8001(a), Judge Gorsuch’s panel affirmed the BAP’s dismissal.
Rejecting Mr. Tollefsen’s “good faith” argument, Judge Gorsuch explained, mostly politely, that “Mr. Tollefsen’s good faith before the BAP is neither in doubt nor does it do anything to undermine the propriety of the BAP’s decision to enforce its procedural rules.” That said, Judge Gorsuch was prickly on one issue: Tollefsen’s argument, “inadequate” as it was, only appeared for the first time in a reply brief. Not good.
More of the same in In re Martel (2009),wherein Judge Gorsuch affirmed the dismissal of a pro se BAP appeal after the appellant, with plenty of formal notice, still failed to pay or seek a waiver of the required fees. While sensitive to the “unfortunate” result “for a potentially curable procedural fault,” the “BAP is not free to ignore Congress’s direction” on fees, especially after repeated notices, writes Gorsuch.
This record suggests not an abuse of discretion, but appropriate consideration both to the needs of a pro se litigant and the requirements of Congress’s statute.
See also Patriot Mfg., LLC v. Hartwig, Inc. (2015) (Judge Gorsuch affirmed, refusing to consider judicial estoppel arguments that were new on appeal).
[Let’s be clear–these were perfectly reasonable, uncontroversial decisions–so much so, that Judge Gorsuch’s wit had nowhere to attach. Hence, the #10 ranking.]
Things get a little more interesting in Taumoepeau, a Chapter 13 appeal.
First, Judge Gorsuch discusses extensively the “separate document rule” and the timing and method of appeal notices in BAP cases. Basically, the BAP had entered a combined order and judgment. Therefore, the debtor had 180 days to provide a notice of appeal to the BAP. And because the debtor had 180 days, rather than 30 days, it didn’t matter that the debtor had incorrectly lodged the original appeal notice in the District Court rather than giving it to the BAP clerk. The debtor later provided the notice to the BAP and, thus, the appeal was still timely. In short, Judge Gorsuch appears to really enjoy appellate rule intricacies.
Second, and perhaps less interesting for Judge Gorsuch, Judge Gorsuch held that a pre-confirmation stipulation survived confirmation of a Chapter 13 plan. That is, the Chapter 13 plan could not be used to invalidate a creditor’s foreclosure on the debtor’s property. Whereas the stipulation addressed how the debtor would catch-up pre-petition mortgage arrears and contemplated foreclosure as a remedy, the Chapter 13 plan addressed post-confirmation payments, only. Therefore, Judge Gorsuch read the 2 documents “harmoniously.”
Apparently, judicial estoppel, in the context of undisclosed claims, is a frequent issue on Judge Gorsuch’s panels. In Ardese, Judge Gorsuch explains the doctrine and lists the 10th Circuit’s prevailing elements. Specifically, judicial estoppel is an “equitable doctrine intended” to “protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment.” (internal quotations omitted).
There are 3 elements: (1) “party’s subsequent position must be clearly inconsistent with its former position”; (2) a “court should inquire whether the suspect party succeeded in persuading a court to accept that party’s former position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled”; and (3) the “court should inquire whether the party seeking to assert an inconsistent position would gain an unfair advantage in the litigation if not estopped.”
Pretty standard. And ultimately, the discharged Ch. 7 debtor, who had later sued her employer on undisclosed claims, lost. Although I now realize that Judge Gorsuch was only quoting his colleagues from another case (Eastman if you’re in the 10th Circuit), this casual quote is amusing:
We then categorically held that the argument that a debtor “simply did not know better and [her bankruptcy attorney] attorney ‘blew it’ is insufficient to withstand application of the doctrine.”
Finally, if you deal with clients who forget to tell you stuff before you file a bankruptcy case (that never happens to us), then I found this interesting and useful on the subject of proactive bankruptcy amendments (as opposed to those inspired by a creditor’s detective work):
Additionally, unlike the omission in this case, the omission in Archuleta was not corrected only in response to prodding from an opposing party in the form of a motion for summary judgment. Voluntary amendment presents quite a different equitable scenario than that presented here, where Ms. Ardese was “forced to [amend her bankruptcy petition] by the actions of her civil opponent.”
Judge Gorsuch’s wit and colorful style begin to emerge in our Top 10 with Krause, a case involving the IRS and fraudulent transfers by a Chapter 7 debtor. Ultimately, Judge Gorsuch’s panel affirmed that various transfers were fraulent and found that the debtor’s children lacked standing to challenge the bankruptcy court’s sanction order.
To be sure (a phrase that Judge Gorsuch uses constantly, but which my colleagues scold me for), it’s an in-depth decision regarding federal tax liens, alter egos, veil piercing; “badges of fraud”; standing; etc. But for our purposes, we’ll quote Judge Gorsuch’s introduction–does any judge have better intros?
Can a taxpayer avoid the IRS by moving money to a “diet cookie” company and then destroying records that might show the company to be a sham? Or by transferring assets to his “children’s trusts” only to use the trusts to pay for his country club membership, buy cars, and fund his lifestyle? The answer, of course, is no. Why this is so takes a bit more explanation.
[The intros will only get better in Part 2.]
Some more colorful phrasing: “feud with the IRS”; “the settlement settled nothing”; “Mr. Krause wears these badges [of fraud] boldly”; “[w]hen the facts are bad, they say, argue the law”; “[n]o court must do the same thing twice.”
We round out Part 1 with Woolsey, a Chapter 13 case. Woolsey is another very detailed opinion and, like many of Judge Gorsuch’s opinions, is long on appellate procedure and substantive law. And, arguably, it is the bankruptcy opinion that best summarizes Judge Gorsuch’s approach to statutory interpretation. Good luck working through its many layers.
In a nutshell, it’s a two-part case. The first part will tell you more about interlocutory appeals than you’d ever want to know. The second part covers lien-stripping under Chapter 13 plans.
[Lots of Dewsnup and Scalia talk–see our Scalia Tribute for background on his dissent in Dewsnup. Judge Gorsuch is not shy about his own criticism of Dewsnup. #AppellateTwitter needs to run a pool on whether Dewsnup comes-up during confirmation–not holding our breath!]
However, we’ll focus on neither. Instead, we’ll mine Woolsey for the fun parts:
Like so many these days, Stephanie and Kenneth Woolsey owe more money on their home than it’s worth…Before us, though, the Woolseys don’t just shrink from, they repudiate the only possible winning argument they may have had. They choose to pursue instead and exclusively a line of attack long foreclosed by Supreme Court precedent. To be sure, the Woolseys argue vigorously and with some support that the Supreme Court has it wrong. But, as Justice Jackson reminds us, whether or not the Supreme Court is infallible, it is final.
- “there’s a jurisdictional snarl we have to untangle first”
- “Do we have the power to hear an interlocutory appeal of an interlocutory appeal?” (!)
- the “multi-layered appellate world of bankruptcy practice”
- we’re able, “ultimately and after the application of some elbow grease, to untie the jurisdictional knot”
- the “Dewsnuppian departure” which “warped” the Code’s “straight path into a crooked path”
- “the Woolseys invite us to hand Dewsnup a loss even on its home court,” an invitation that Gorsuch admits “has its attractions”
- “Dewsnup may be a gnarled bramble blocking what should be an open path. But it is one only the Supreme Court and Congress have the power to clear away”
And the Court took the distinctly unusual step of finding the liberating ambiguity based on no more than the fact the litigants before it happened to disagree over the statute’s meaning—an ailment surely afflicting most every statutory interpretation question in our adversarial legal system.
Finally, Judge Gorsuch shows that he understands bankruptcy’s struggle with finality:
Indeed, in the world of bankruptcy proceedings—a world where cases continue on in many ways for many years and lack the usual final judgment of a criminal or traditional civil matter—confirmation of an amended plan “is as close to the final order as any the bankruptcy judge enters.” (quoted cites omitted).
That’s all for today. We’ll pick back up soon with Part 2 and the Top 5 Judge Gorsuch bankruptcy opinions, 30 year old “Pontiac Trans Ams” and all.