Labankoff et al v. GMAC et al

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1 	This disposition is not appropriate for publication.
Although it may be cited for whatever persuasive value it may have
(see Fed. R. App. P. 32.1), it has no precedential value. 	See
9th Cir. BAP Rule 8013-1.
2 	Appellees GMAC Mortgage, LLC, ETS Services, LLC, and
Homecomings Financial appeared and filed a single brief through
counsel. 	Appellees Investors Trust Mortgage Corp. and David Izett
did not appear or file a brief, and mail sent by the Clerk to the
address provided by Appellants was returned as undeliverable.
Appellants designated U.S. Trustee as an Appellee in the notice of
appeal, but U.S. Trustee has not appeared or filed a brief, and we
can discern no reason why it would have an interest in the outcome
of this appeal. 	The Panel has therefore deleted U.S. Trustee as
an Appellee in the caption of this Memorandum.
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UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: 	) BAP No. NC-09-1294-PaJuKw
)
FRED G. LABANKOFF, 	) Bk. No. 09-10970
)
Debtor. 	) Adv. No. 09-1048
___________________________________)
)
)
FRED G. LABANKOFF, SWETLANA 	)
LABANKOFF, LUDMILA SHPITJ, and 	)
SHPITJ LABANKOFF GENERAL TRUST, 	)
) M E M O R A N D U M1
Appellants, 	)
)
v. 	)
)
GMAC MORTGAGE, LLC, ETS SERVICES, 	)
LLC, and HOMECOMINGS FINANCIAL, 	)
LLC, INVESTORS TRUST MORTGAGE 	)
CORP., and DAVID IZETT, 	)
)
Appellees. 2 	)
___________________________________)
Argued and Submitted on May 18, 2010
at San Francisco, California
Filed - June 14, 2010
FILED
JUN 14 2010
SUSAN M SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
Entered on Docket
June 14, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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3 	The Honorable Robert N. Kwan, United States Bankruptcy
Judge for the Central District of California, sitting by
designation.
4 	Unless otherwise indicated, all chapter, section and rule
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 and
to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
The Federal Rules of Civil Procedure are referred to as Civil
Rules.
5 	Appellants’ brief contains numerous arguments relating to
a separate appeal before this Panel concerning conversion of
Debtor’s bankruptcy case from a chapter 11 case to chapter 7,
Labankoff v. U.S. Trustee, (BAP no. NC–09-1300), which we dispose
of in a separate Memorandum. 	We therefore focus in this
Memorandum solely on issues relating to the adversary proceeding.
6 	Appellants have not complied with several Rules relating
to bankruptcy appeals, nor with several BAP Rules. 	In particular,
their brief violates BAP Rules 8010(a)(1) and (c)(1) limiting
(continued...)
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Appeal from the United States Bankruptcy Court
for the Northern District of California
Honorable Alan Jaroslovsky, Bankruptcy Judge, Presiding
Before: PAPPAS, JURY and KWAN 3, Bankruptcy Judges
Chapter 7 4 debtor Fred G. Labankoff (“Debtor” and together
with other appellants, “Appellants”) appeals the bankruptcy
court’s order abstaining from deciding an adversary proceeding
commenced by Appellants against Appellees GMAC Mortgage, LLC
(“GMAC”), ETS Services, LLC (“ETS”) and Homecomings Financial, LLC
(“Homecomings” and together, “Appellees”), and dismissing the
adversary proceeding without prejudice. 5 	We AFFIRM.
FACTS
These facts are reconstructed from the bankruptcy court’s
docket and the excerpts of record submitted by Appellees. 6
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6(...continued)
opening briefs to 30-pages, double spaced, with 14-point type.
The document submitted was 34 pages, single spaced, with 12-point
type. 	Given the circumstances of this appeal, and because
Appellees have not objected, the Panel has accepted and considered
Appellants’ brief.
7 	From the record, it is unclear what role ETS Services,
LLC, plays in this drama. 	ETS is represented by the same counsel
in this appeal as GMAC and Homecomings, and so we assume that ETS’
interests are aligned with GMAC and Homecomings. 	The two non-
appearing appellees, Investors Trust and David Izett, were
apparently loan brokers involved in the financing of one or other
of the deeds of trust.
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This appeal apparently deals with disputes between Appellants
and GMAC and Homecomings, the holders of the first and second
deeds of trust on residential property owned by Appellants. 7
Appellant Shpitj Labankoff Trust (the “Trust”) was created on
August 28, 1978; Debtor is trustor and trustee; and Debtor and
Appellants Swetlana Labankoff and Ludmilla Shpitj are
beneficiaries of the Trust.
In November, 2000, Debtor purchased a residence in Santa
Rosa, California (the “Property”) using his personal funds
received in a settlement of a personal injury claim. 	Appellants
assert that the Trust purchased the Property from Debtor on
December 22, 2000. 	Appellants also assert that the Property is
titled in Debtor as trustee under the Trust.
On December 27, 2005, Debtor as trustee transferred the
Property to himself as an individual. 	That same day, a deed of
trust was recorded in Sonoma County on the Property in
consideration for a loan of $650,000 to Debtor from Primary
Residential Mortgage, Inc.(the “First Deed of Trust”). 	Then, also
on December 27, 2005, Debtor as individual transferred 	title to
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8 	It is also unclear whether Debtor defaulted in his
capacity as trustee of the Trust or in his personal capacity as
owner of the Property. 	This goes to the merits of the dispute,
which we do not address in this appeal.
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the Property back to the Trust. 	The beneficial interest under the
First Deed of Trust was later assigned to GMAC at some unspecified
time.
On March 13, 2007, Debtor as trustee again transferred the
Property to himself as an individual. 	That same day, a deed of
trust was recorded in Sonoma County on the Property in
consideration for a home equity line of credit of $150,000 to
Debtor from Homecomings (the "Second Deed of Trust"). 	Appellees
contend that also on March 13, 2007, Debtor recorded transfer of
title to the Property back to the Trust, but documentation of that
transfer is not in the record.
Appellants admit that Debtor defaulted under the First Deed
of Trust but the date of default is not clear in the record. 8
Debtor filed his a chapter 11 bankruptcy petition on
April 9, 2009. 	Then, on May 4, 2009, Appellants filed a complaint
commencing the adversary proceeding that is the focus of this
appeal. 	The complaint states claims by Appellants against
Appellees for breach of contract, fraud, violation of various
truth-in-lending and business practices laws, quiet title and
rescission of contract, and various tort and other state law
remedies. 	The docket of the adversary proceeding reflects that
the complaint was served on GMAC’s and Homecomings’ attorney, but
not on GMAC and Homecomings.
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9 	As discussed below, there is considerable dispute among
the parties concerning the filings on June 25, 2009.
10 	Adversary Proceeding Docket no. 20.
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On June 12, 2009, Appellants filed a motion for entry of a
default judgment against Appellees because they had not answered
the complaint. 	See Civil Rule 55(a), incorporated by Rule 7055.
On June 25, 2009, Appellants filed several documents in
support of their motion for entry of default judgment. 9 	One
document was the affidavit of debtor in support of the motion, in
which he indicated that service of process was accomplished on
May 11, 2009 on all defendants, and that GMAC and Homecomings were
served through their attorney.
On July 17, 2009, Appellees moved to dismiss the adversary
proceeding under Civil Rule 12(b)(6), incorporated in Rule 7012,
arguing that Appellants’ complaint failed to state a claim upon
which relief could be granted. 	As to the federal claims,
Appellees alleged all were time-barred by the relevant statutes of
limitation.
On July 21, 2009, Appellants filed a motion to recuse the
bankruptcy judge because he was alleged to be biased against
Debtor and because of various allegedly wrongful acts by
bankruptcy court staff committed against Debtor that were done
with the knowledge and consent of the bankruptcy judge. 	The
bankruptcy court denied the motion to recuse on August 6, 2009,
stating the “allegations [are] not true, [and] would not permit
recusal even if true. 	Denied.” 10 	This denial of recusal has not
been appealed.
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On August 6, 2009, Appellants responded to Appellee’s motion
to dismiss, principally arguing that they were under no obligation
to respond because the Appellees were in default for failure to
answer the complaint. 	Appellants later did respond to the motion
to dismiss, generally disputing the assertions of Appellees.
A hearing on the motion to dismiss was held on September 4,
2009. 	Appellees were represented by counsel and Debtor appeared
pro se. Debtor repeated the objection to the motion to dismiss
that Appellees were in default for not answering the complaint.
The bankruptcy court corrected Debtor, stating that no default had
been entered. 	Hr’g Tr. 3:11 (September 4, 2009). 	There was no
further argument and the bankruptcy court indicated that a
decision would be forthcoming.
On September 4, 2009, the bankruptcy court entered its
memorandum regarding the motion to dismiss. 	In it, the court
concluded that Appellants’ complaint was patently defective under
Rule 7008 for having failed to state whether the proceeding was
core or non-core and, if noncore, whether the Appellants would
consent to entry of final judgment by the bankruptcy court. 	The
bankruptcy court indicated that the proceeding was classically
non-core in that it arises out of pre-bankruptcy action, was not
based on bankruptcy law, and could have been prosecuted in a
nonbankruptcy court.
The bankruptcy court also ruled that Appellees were not in
default because Appellants had failed to effect valid service on
them. 	See Beneficial Cal., Inc. v. Villar (In re Villar),
317 B.R. 88, 93 (9th Cir. BAP 2004). 	Although the bankruptcy
court agreed with Appellees that the complaint failed to
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articulate appropriate grounds for relief, the court found it
better to exercise its discretion to permissively abstain.
The bankruptcy court entered its order on September 4, 2009,
abstaining and dismissing the proceeding without prejudice.
Appellants filed a timely appeal of that order on September 11,
2009.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
and 157(b)(1) or (c)(1).
Appellees challenge the jurisdiction of this Bankruptcy
Appellate Panel to hear and decide an appeal of the bankruptcy
court’s order for permissive abstention. 	Appellees based their
challenge on 28 U.S.C. § 1334(d), which provides:
Any decision to abstain or not to abstain made under
subsection (c) (other than a decision not to abstain in
a proceeding described in subsection (c)(2)) is not
reviewable by appeal or otherwise by the court of
appeals under section 158(d), 1291, or 1292 of this
title or by the Supreme Court of the United States under
section 1254 of this title.
By its terms, this statutory prohibition on review of a
bankruptcy court’s permissive abstention decision applies only to
appeals to the United States Courts of Appeals under 28 U.S.C.
§§ 158(d), 1291, and 1292, or to the United States Supreme Court
under 28 U.S.C. § 1254. 	The statute does not prohibit district
courts or bankruptcy appellate panels from hearing and deciding
appeals from abstention decisions under § 28 U.S.C. 158(a) and
(c). 	Indeed, the Panel has previously held that identical
language in § 305(c) prohibiting the courts of appeals and the
Supreme Court from hearing appeals from a bankruptcy court’s
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decision to abstain from the entire bankruptcy case under § 305(a)
does not apply to district courts or bankruptcy appellate panels.
Eastman v. Eastman (In re Eastman), 188 B.R. 621, 624 (9th Cir.
BAP 1997). 	For the same reasons, we conclude that the Panel has
jurisdiction to hear and decide this appeal of an order entered
under 28 U.S.C. § 1334(c)(1).
ISSUES
1. 	Whether the bankruptcy court abused its discretion in
permissively abstaining from deciding the adversary
proceeding.
2. 	Whether the bankruptcy court was biased against Debtor.
STANDARD OF REVIEW
A bankruptcy court’s decision to abstain is reviewed for
abuse of discretion. 	Transcorp/Wilbur S. Avant, Jr. M.D. Rollover
I.R.A. v. Pioneer Liquidating Corp. (In re Consolidated Pioneer
Mortg. Entities), 205 B.R. 422, 424 (9th Cir. BAP 1997).
Federal judges are granted broad discretion in supervising
proceedings, and a judge's behavior during proceedings justifies
reversal if he abuses that discretion by exhibiting bias. 	Price
v. Kramer, 200 F.3d 1237, 1252 (9th Cir. 2002).
In applying an abuse of discretion test, we first "determine
de novo whether the [bankruptcy] court identified the correct
legal rule to apply to the relief requested." 	United States v.
Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009). 	If the bankruptcy
court identified the correct legal rule, we then determine whether
its "application of the correct legal standard [to the facts] was
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(1) illogical, (2)implausible, or (3) without support in
inferences that may be drawn from the facts in the record." Id.
(internal quotation marks omitted). 	If the bankruptcy court did
not identify the correct legal rule, or its application of the
correct legal standard to the facts was illogical, implausible, or
without support in inferences that may be drawn from the facts in
the record, then the bankruptcy court has abused its discretion.
Id.
DISCUSSION
I.
The bankruptcy court did not abuse its discretion in
abstaining in and dismissing the adversary proceeding.
A bankruptcy court may abstain from hearing an adversary
proceeding under 28 U.S.C. § 1334(c)(1), which states in relevant
part: “[N]othing in this section prevents a district court in the
interests of justice, or in the interest of comity with State
courts or respect for State law, from abstaining from hearing a
particular proceeding arising under title 11, or arising in or
related to cases under title 11.”
The Ninth Circuit has provided guidelines for consideration
by bankruptcy courts to determine if permissive abstention is
appropriate. 	The non-exclusive list of factors by which
permissive abstention is proper are:
(1) the effect or lack thereof on the efficient
administration of the estate if a Court recommends
abstention, (2) the extent to which state law issues
predominate over bankruptcy issues, (3) the difficulty
or unsettled nature of the applicable law, (4) the
presence of a related proceeding commenced in state
court or other nonbankruptcy court, (5) the
jurisdictional basis, if any, other than 28 U.S.C. §
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1334, (6) the degree of relatedness or remoteness of the
proceeding to the main bankruptcy case, (7) the
substance rather than form of an asserted "core"
proceeding, (8) the feasibility of severing state law
claims from core bankruptcy matters to allow judgments
to be entered in state court with enforcement left to
the bankruptcy court, (9) the burden of [the bankruptcy
court's] docket, (10) the likelihood that the
commencement of the proceeding in bankruptcy court
involves forum shopping by one of the parties, (11) the
existence of a right to a jury trial, and (12) the
presence in the proceeding of nondebtor parties.
Christensen v. Tucson Estates (In re Tucson Estates), 912 F.2d
1162, 1167 (9th Cir. 1990).
The bankruptcy court’s memorandum identified several reasons
justifying its decision to permissively abstain, and they are
consistent with the Tucson Estates factors.
First, the bankruptcy court noted that the complaint was
classically non-core, in that all the alleged claims against
Appellees arose out of prebankruptcy conduct and transactions,
were not based on bankruptcy law, and could have been prosecuted
in a nonbankruptcy court. 	Indeed, the claims described in the
complaint were principally state law claims that could have been
pursued in state court. 	In addition, three of the four named
plaintiffs in the action, and likely at least two of the
defendants, were neither debtors nor creditors in Debtor’s
bankruptcy case.
Although the bankruptcy court did not comment on the impact
its adjudication of this action might have on the efficient
administration of the bankruptcy estate, or any burden it might
impose on the bankruptcy court’s docket, it did observe in the
memorandum that Debtor “has done anything he can think of to
remove the undersigned from the case.” 	This observation is not
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11 	We take judicial notice that Debtor filed a civil suit
against the bankruptcy judge, other judicial officers and court
staff, and attorneys for Appellees in the District Court on
January 7, 2010, alleging that the defendants violated his civil
rights under 42 U.S.C. § 1983 and 1985(3) by their conduct in
bankruptcy case 09-10970 and the adversary proceeding before us on
appeal. 	The District Court dismissed the complaint, holding that
the court and its staff had immunity from liability for any acts
performed in their official capacity, Stump v. Sparkman, 435 U.S.
349, 356-57 (1978) (judge is absolutely immune), Mullis v. U.S.
Bankruptcy Court, 828 F.2d 1385, 1394 (9th Cir. 1987) (extending
judicial immunity to court staff). 	The attorneys’ conduct in the
course of litigation is privileged, Franklin v. Terr, 201 F.3d
1098, 1102 (9th Cir. 2000), Cal. Civ. Code § 47(b). 	Labankoff v.
Jaroslovsky, case no. C-10-0089 SBA (N.D. Cal. March 26, 2010).
This order has been appealed to the Ninth Circuit, case no.
10-16045.
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without support in the record as shown by Debtor’s numerous
motions for recusal, appeals, and lawsuits. 11 	Moreover, the
vitriolic rhetoric employed by Debtor in this appeal, charging the
bankruptcy judge and court staff not just with error, but with
criminal behavior, can not serve to advance the best interests of
the creditors and the bankruptcy estate and must constitute a
burden on the bankruptcy court to endure. 	As discussed below, the
bankruptcy court has not exhibited bias or prejudice against
Debtor, although Debtor believes that to be the case. 	All of this
considered leads us to concur with the bankruptcy court that
prosecution of this action in a different forum would be
consistent with Tucson Estate’s concern for the administration of
the case and avoiding any undue burden on the busy bankruptcy
court.
In sum, the bankruptcy court did not abuse its discretion
when it decided it should permissively abstain from entertaining
this action, under 28 U.S.C. § 1334(c)(1) and the factors as
articulated in Tucson Estates.
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II.
Appellants have not shown that the bankruptcy
court erred in refusing to enter default against
Appellees, or that the bankruptcy court
was biased against Debtor.
Appellants’ briefs focus almost exclusively on two arguments:
Appellees were in default for failing to answer the complaint, and
the bankruptcy court exhibited bias against Debtor.
A.
As to whether the bankruptcy court correctly declined to hold
Appellees in default, the court repeatedly explained to Debtor at
the hearing that mailing the summons and adversary complaint to
the creditors’ attorney did not satisfy the requirements for
effective service of process. 	Of course, the bankruptcy court was
correct. 	Under Rule 7004(b)(3), a summons and complaint must be
served “[u]pon a domestic . . . corporation . . . by mailing a
copy of the summons and complaint to the attention of an officer,
a managing or general agent, or to any other agent authorized by
appointment or by law to receive service of process and, if the
agent is one authorized by statute to receive service and the
statute so requires, by also mailing a copy to the defendant.”).
Therefore, without proof that the attorney has been designated as
an agent of the defendant corporation to accept process, service
on the attorney is not adequate. 	In re Villar, 317 B.R. at 93.
Appellants bear the burden of proving that an attorney is an
agent authorized to receive service of process for a corporation.
Weston Funding, LLC v. Consorcio G. Grupo Dina, S.A. de C.V.,
451 F.Supp.2d 585 (S.D.N.Y. 2006). 	Appellants assert that a
“Request for Special Notice,” filed by GMAC’s and Homecomings’
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12 	Requests for notice of this sort are common in bankruptcy
cases. 	Rule 2002(g)(1) provides that notices of the events in
bankruptcy cases governed by that Rule are to be mailed to parties
at the address the party “directed in its last request filed in
the particular case.” 	However, Rule 2002 notices deal with events
and proceedings such as court hearings, assets sales, claims
filing deadlines, and other administrative matters. 	See
Rule 2002(a) and (b). 	The requirements for service of process in
an adversary proceeding are established by Rule 7004, not
Rule 2002.
13 	Indeed, the notice request could actually be interpreted
as barring the attorneys from accepting service of process. The
last line of the request provides that Appellees’ rights are
“expressly reserved . . . with no purpose of confessing or
conceding jurisdiction in any way by this filing.” 	Acceptance of
process by the attorney would be a concession of one of the
elements of personal jurisdiction over the Appellees. Rubin v.
Pringle (In re Focus Media Inc.), 387 F.3d 1077, 1081 (9th Cir.
2004).
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attorney in the main bankruptcy proceeding on April 23, 2009,
allowed them to serve only the attorney. 	In that document, GMAC
and Homecomings requested that copies of any notices or other
filings in the bankruptcy case be sent to its attorneys, Pite
Duncan, LLP. 12 	However, the notice request contained no explicit
grant of authority for the attorneys to accept service of process
in an adversary proceeding, and Appellants provide no other
justification for their service on Appellees’ attorney rather than
on Appellees. 13
Our court of appeals has considered the circumstances under
which an attorney can be considered an implied agent for service
of process initiating a bankruptcy adversary proceeding. 	Rubin v.
Pringle (In re Focus Media Inc.), 387 F.3d 1077 (9th Cir. 2004).
In Focus Media, the trustee commenced an adversary proceeding
against Focus Media’s principal shareholder, Rubin. 	The summons
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and complaint were served on Rubin’s attorney, Mousseau, because
the trustee did not have an address for Rubin. 	The court ruled,
We hold today that in an adversary proceeding in
bankruptcy court, a lawyer can be deemed to be the
client's implied agent to receive service of process
when the lawyer repeatedly represented that client in
the underlying bankruptcy case, and where the totality
of the circumstances demonstrates the intent of the
client to convey such authority.
Id. at 1079 (emphasis added). 	The Focus Media court applied this
holding to the facts in that case:
First, as found by the bankruptcy court, Mousseau was
extensively involved in the underlying bankruptcy
proceeding and on several occasions participated on
Rubin's behalf. . . . 	Second, there is evidence that
Rubin previously had been served with papers in the
bankruptcy proceeding in care of Mousseau, and there is
no record of Rubin objecting. 	Finally, and most
importantly, Rubin's own declaration filed in a state
court proceeding and signed shortly before the
commencement of the adversary proceeding, states:
‘Geoffrey C. Mousseau, Attorney at Law has been general
counsel for Thomas Rubin since September 27, 2000. In
his capacity as my general counsel, Geoffrey Mousseau
has been consulted on a variety of legal matters and has
been made privy to confidential financial, tax and legal
information related to myself, the dba and Focus. 	Mr.
Mousseau has assisted me with respect to the pending
Focus bankruptcy, as well as the prior actions brought
by Sears and other media outlets in State Court.’
Id. at 1083-84.
Unlike the Focus Media case, the attorneys in this appeal
were not “extensively involved” in the bankruptcy case. 	Indeed,
the only appearance of Appellees’ attorneys in the main bankruptcy
case before service of process on them was the request for notice
on April 23, 2009, a mere eighteen days before service on them was
attempted. 	There was never any service on the attorneys in lieu
of their clients in the main bankruptcy case before the attempted
service in the adversary proceeding.
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14 	Although Focus Media dealt with service of process on the
attorney for an individual, the court made no distinction between
service on the attorney for an individual and service on attorney
for a corporation. 	The court cited as persuasive the opinion of
the Federal Circuit in United States v. Ziegler Bolt & Parts Co.,
111 F.3d 878 (Fed. Cir. 1997), a case where the attorney for a
corporation was served and the Federal Circuit ruled, "Defendant's
attorney probably will not be deemed an agent appointed to receive
process absent a factual basis for believing that an appointment
of this type has taken place." 	Id. at 881.
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And, in the words of the court of appeals, “most
importantly,” there was direct evidence in the Focus Media case
from the principal, Rubin, that impliedly conferred agency
authority on the attorney. 	The court of appeals left no ambiguity
on this point: “An agent’s authority to act cannot be established
solely from the agents actions. 	Rather, the authority must be
established by an act of the principal. 	Rubin’s declaration . . .
manifests the requisite evidence of authority conveyed by the
principal.” 	Id. at 1084. 	There is no evidence in the record of
this appeal or the bankruptcy court dockets directly from GMAC or
Homecomings discussing their relationship or conferring any agency
authority on their attorneys. 14
Although Appellants have consistently and principally argued
that service of process on the attorneys for GMAC and Homecomings
satisfied Rule 7004(b)(3)’s requirements for service on a
corporation, they have also sporadically argued a Supplemental
Certificate of Service (“Supplemental Certificate”) exists showing
that GMAC and Homecomings were served on May 13, 2009, at their
proper addresses, on corporate officers, including the chief
executive, and on agents authorized to receive process. 	However,
our review of the record shows no probative evidence to support
the actual existence or validity of this document.
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15 	Affidavit in support of application for entry of default.
Entered June 25, 2009. Dkt. no. 10.
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As noted earlier, an Alias Summons was issued by the Clerk on
May 5, 2009, against Appellees. 	An executed Certificate of
Service was filed on May 18, 2009, certifying that Nino Gulordava
mailed the summons and complaint by first class mail to GMAC and
Homecomings at their attorney’s address on May 11, 2009.
The next relevant entry in the bankruptcy court’s docket after the
May 11 certificate was on June 12, 2009, when Debtor filed his
request for entry of default. 	Although in his request Debtor does
not refer specifically to the date when service was accomplished,
his affidavit states that “more than 30 days” had passed since
GMAC and Homecomings had been “served.” 	In Debtor’s second
affidavit, attached to Form B-261, also dated June 12, 2009,
Debtor states “31 days has expired since service was
accomplished.” 	Both of these references can only apply to service
on the attorney accomplished on May 11, 2009.
The next relevant entries in the docket are for June 25,
2009. 	Debtor has alleged in his briefs in this appeal (but never
in an affidavit or sworn declaration to the bankruptcy court or
this Panel) that a clerk of the bankruptcy court’s staff had
destroyed or falsified documents, including the alleged May 13,
2009 Supplemental Certificate. 	There is no docket entry on June
25, 2009, relating to the Supplemental Certificate. 	On the
contrary, there is a third affidavit submitted by Debtor on that
date in support of entry of default. 15 	This affidavit provides a
meticulously detailed list of elements for the bankruptcy court to
consider in ordering a default. 	In one such item, Debtor again
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asserts that service was accomplished on the defendants via their
attorneys on May 11, 2009. 	There is no reference in this
affidavit to the alleged May 13, 2009 Supplemental Certificate.
On the other hand, the affidavit contains a detailed justification
for service on the attorneys rather than their clients:
Defendants GMAC and Homecomings Financial did request
special notice as per Docket Item No. 12 of Bankruptcy
Case No. 09-10970 dated 4/23/09 which clearly listed
GMAC’s attorney’s address and preemptive requested [sic]
for jury trial. 	This was filed before the adversary
proceeding was even filed or served. 	This was the
address used by plaintiff to contact GMAC and its
subsidiary Homecomings Financial [] through its attorney
[of] record Steven W. Pite, Jose A. Garcia, Pite Duncan
attorneys for GMAC Mortgage, LLC 4375 Jutland Drive,
Suite 200, San Diego, CA 92117. 	These attorneys should
have kept track of this bankruptcy but apparently did
not. 	Why should they when they can always move to
strike a default especially from a pro se[?] It is the
Defendant’s attorneys’ fault for not following this
bankruptcy case and adversary proceeding. NOT THE FAULT
OF PLAINTIFFS even if they are in pro per.
Dkt. no. 10 at 1-2.
The next relevant docket entry is for July 21, 2009, when
Debtor brings to the attention of the bankruptcy court his
allegations that “critical proofs of service” were destroyed by
the clerk’s staff. 	Attached to his July 21 Motion to Compel Entry
of Default at Exhibit 2 was the alleged Supplemental Certificate.
The certificate submitted on July 21 alleged process had been
mailed to seven addresses, including that of GMAC’s chief
executive and a designated agent for service. 	Homecomings was
allegedly served at three addresses, including a designated agent
for service of process. 	But unlike his statements relating to the
May 11 service, Debtor did not support the validity or relevance
of the alleged Supplemental Certificate with an affidavit or other
admissible evidence.
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The next relevant docket entry, no. 21, on August 6, 2009,
was Appellants’ Objection to Having to Reply to a Defaulted
Party’s Motion to Dismiss. 	Appellants stated that service was
accomplished on May 11, and make no reference to a service on
May 13.
In summary, based on the entries in the bankruptcy court’s
docket and the affidavits and pleadings filed in the record, the
following appeared to the bankruptcy court regarding Appellants’
efforts to effect service of process:
- The May 11 certificate of service was filed on May 18,
indicating that service by mail was effected on the attorneys for
GMAC and Homecomings, not on the corporations’ qualified officers
or agents. 	There was no return of the alleged May 13 Supplemental
Certificate in the docket. 	The first reference in the docket to
the May 13 Supplemental Certificate occurred over two months after
the alleged service, on July 21, 2009.
- Three affidavits from Debtor were filed, all of which
represent that service of process occurred on May 11, and none of
which refer to a May 13 service. 	The third affidavit was filed on
June 25, 2009, the same day Debtor alleges that the clerk’s staff
destroyed the May 13 Supplemental Certificate. 	However, this
third affidavit also asserts that service was accomplished on May
11, makes no reference to any service on May 13, and contains a
strong statement in support of service of process on attorneys in
lieu of their corporate clients.
- There was no affidavit or any other evidence than Debtor’s
late allegations in his pleadings supporting the existence of the
alleged May 13 Supplemental Certificate.
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16 	The excerpts in this appeal include only one, three-page
transcript from the adversary proceeding. 	Again, in our view, the
bankruptcy court showed patience and firmness with Debtor, in
spite of Debtor's comments to the court:
DEBTOR: Pro se objects to hearing defendant's
motion to dismiss, because de facto defendant is in
default per FRCP Rule 55(a). . . .
THE COURT: No default has been entered.
DEBTOR: Thanks to the Court's sidestepping it.
Thank you very much. 	I believe this —
THE COURT: All right.
DEBTOR: 	— belongs to —
THE COURT: I will have a written decision for you
in a couple of days.
(continued...)
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Given this record, the bankruptcy court did not err in
deciding that Appellants failed to demonstrate that they properly
served the defendant-corporations as required by Rule 7004(b)(3),
and therefore, that they were entitled to entry of a default.
B.
Appellants argue at length in their briefs that the
bankruptcy court was biased against Debtor. 	An individual
asserting judicial bias has an exceptionally heavy burden and must
"overcome a presumption of honesty and integrity in those serving
as adjudicators." 	Withrow v. Larkin, 412 U.S. 35, 47 (1975).
In the separate memorandum disposing of the appeal of the
conversion of Debtor's bankruptcy case, Labankoff v. U.S. Trustee,
(BAP no. NC–09-1300), we have noted several examples of the
bankruptcy court’s firm, but courteous, admonitions to Debtor
concerning his failure to comply with Rules and procedure during
the bankruptcy case. 16 	Although the bankruptcy court used firm
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16 (...continued)
Hr'g Tr. 3:11-17 (September 4, 2009).
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language in criticizing Debtor for failure to comply with
bankruptcy procedure and rules, in general, comments made by a
court in the course of judicial proceedings are rarely sufficient
to establish bias requiring recusal. 	Pau v. Yosemite Park &
Curry Co., 928 F.2d 880, 885 (9th Cir. 1991) (district court’s
“gruff” demeanor was not sufficient to establish bias); United
States v. Conforte, 624 F.2d 869, 881 (9th Cir. 1980) (court’s
comments on insufficiency of evidence before completion of
evidentiary hearing insufficient to find bias and require
recusal). 	Instead, a finding of judicial bias must stem from some
personal interest in the case or an extrajudicial source. 	Liteky
v. United States, 510 U.S. 540, 552-53 (1994).
The “extrajudicial source” rule is implicated when bias
originates outside the courtroom. 	United States v. Grinnell
Corp., 384 U.S. 563, 583 (1966) (explaining that the “alleged bias
and prejudice to be disqualifying must stem from an extrajudicial
source and result in an opinion on the merits on some basis other
than what the judge learned from his participation in the case.”);
United States v. Bray, 546 F.2d 851, 857 (10th Cir. 1976)
(“unjudicious” remarks such as referring to counsel’s comments as
ridiculous, or describing a witness as pathetic are not
extrajudicial, but “reflected the judge’s attitude and reactions
to specific incidents occurring at trial”).
There is no evidence in the record before us that the
bankruptcy judge had any personal interest, financial or
otherwise, in this case. 	Similarly, there is no indication in the
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record that the bankruptcy judge’s opinions, expressed during
hearings or in written memoranda in the case, were based on any
information or events originating outside the bankruptcy court
proceedings.
Appellants’ claim of judicial bias, if it is valid at all,
must fall within a narrow exception to the rule that bias must
arise either personally or extrajudicially: 	the so-called
“pervasive bias” exception. 	The United States Supreme Court
instructs that "opinions formed by the judge on the basis of facts
introduced or events occurring in the course of the current
proceedings, or of prior proceedings, do not constitute a basis
for a bias or partiality motion unless they display a deep-seated
favoritism or antagonism that would make fair judgment
impossible." 	Liteky, 510 U.S. at 555 (emphasis added). 	As one
treatise explains:
This pervasive bias exception to the extrajudicial
source factor arises when a judge’s favorable or
unfavorable disposition toward a party, although
stemming solely from the facts adduced or the events
occurring at trial, nonetheless becomes so extreme as to
indicate the judge’s clear inability to render fair
judgment. 	However, the exception is construed narrowly;
bias stemming solely from facts gleaned during judicial
proceedings must be particularly strong in order to
merit recusal.
12 M OORE ’S FED . PRAC .- C IV . § 63.21[5] (Matthew Bender, 3d ed. 2007)
(emphasis added); accord In re Huntington Commons Assocs., 21 F.3d
157, 158 (7th Cir. 1994) (judge is not required to be impervious
to impressions about litigants; impatience, admonishments to
defendant, adverse rulings, and vague references to possible
predisposition not remotely sufficient to meet requirement of
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deep-seated and unequivocal antagonism that would render fair
judgment impossible).
We have carefully examined the record in this appeal and can
find no evidence of any “deep-seated antagonism” shown by the
bankruptcy court against Debtor. 	On the contrary, based upon our
review of the complaint, the bankruptcy court likely could have
dismissed this adversary proceeding for failure to allege a valid
claim for relief under Civil Rule 12(b)(6). 	Instead, the
bankruptcy court concluded that, with some help, Debtor and
Appellants might be able to offer up a cogent case. 	Therefore,
the court abstained and dismissed the action without prejudice so
that Debtor could perhaps proceed in another forum. 	This act of
discretion by the bankruptcy court does not demonstrate any
pattern of “deep-seated antagonism” against Debtor.
In short, Appellants have not shown that the bankruptcy court
was biased against Debtor.
CONCLUSION
We AFFIRM the order of the bankruptcy court abstaining and
dismissing the adversary proceeding without prejudice.
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