Opposition Brief — Harrison v. Bankers First Federal Savings & Loan Ass'n, 114 S. Ct. 83 (1993) (No. 92-1969)

No. 92-1969

In The

Supreme Court of the United States

October Term, 1992

,

v

IN RE: THE COLONY PLACE COMPANY,

Debtor,

DORIS B. HARRISON,

Petitioner,

V.

BANKERS FIRST FEDERAL SAVINGS

AND LOAN ASSOCIATION, AND

JAMES D. WALKER, JR., TRUSTEE,

Respondents.

*

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

S

RESPONDENTS’ BRIEF IN OPPOSITION

¢

Davip E. Hupson

Counsel of Record

Hutt, Towmt, Norman & Barrett, P.C.

P.O. Box 1564

Augusta, Geo 30903-1564

(706) 722-4481

(Additional counsel listed on inside front cover.)

COCKLE LAW BRIEF PRINTING 225-6964

OR CALL COLLECT (402)

Davip E. Hupson

LAWTON JORDAN, Jr.

Hutt, Towitt, NorMAN & BarRETT

P.O. Box 1564

Augusta, Georgia 30903

(706) 722-4481

Attorneys for Respondent

Bankers First Federal Savings and

Loan Association

James D. WALKER, JR.

SuRRETT, WALKER, CRESON,

Way AND COLEMAN

801 Broad Street

Augusta, Georgia 30901

(706) 722-3301

Attorneys for Respondent

James D. Walker, Jr.,

Trustee in Bankruptcy

for the Colony Place Company

QUESTIONS PRESENTED

The Bankruptcy Court asked the opposing parties to

submit proposed findings and conclusions on whether

the Trustee’s settlement of claims should be approved.

Counsel for Respondent Bankers First provided the Bank-

ruptcy Court, but not the opposing party, with courtesy

copies of the authorities and pages from the transcripts

cited in its proposed order. The proposed order, which

cited all of these materials, was served on the opposing

party.

The questions presented are whether the factual

determinations made by the Bankruptcy Court (that there

was no prohibited ex parte communication, and that

there was-no fundamental unfairness to the Petitioner),

and affirmed by the District Court and by the Eleventh

Circuit Court of Appeals without opinion were clearly

erroneous and whether the Bankruptcy Court abused its

discretion in denying the motion to set aside the judg-

ment.

The other question presented is whether the issue

stated above involves a departure by the lower Federal

Courts so far from the accepted and usual course of

judicial proceedings so as to warrant review by this Court

on writ of certiorari pursuant to Rule 10 of the Supreme

Court Rules.

ii

PARTIES TO PROCEEDING

The caption of the case contains the names of all

parties. Bankers First Corporation (publicly held) is the

parent company of Respondent Bankers First Federal

Savings and Loan Association. Respondent Bankers First

Federal Savings and Loan Association has no partially

owned subsidiaries.

ili

TABLE OF CONTENTS

Page

oN ae er errr ere rr ey Pr i

Pe III 6 kk 6s oa oo ee oad ee eee iv

eo PP PEPTTET EPO TT IT eT T ete eet eh 1

IE SCCM iia caasasaeyces eee eeaow eines 1

se ere ee er Trey 2

Summary of the Argument ..................eeeeee 7

pi Pee Te TeCeT TTT ETeE cere eee eee 9

RIN ok whe ak ses asa een Dae ee ee eee 18

| eer raet TT rer Pree srr eer Tee Tee re App. 1

iv

TABLE OF AUTHORITIES

Page

Cases

Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 10¢ S.Ct.

BOs DE Rae GES CFPC ccc cs incicsteesssesncs 14

Anderson v. Bessemer City, 470 U.S. 564, 105 S.Ct.

EE, DE LS SIG CIGGS) co ccc csc caseencancrses 16

Appalachian Power Co. v. AICPA, 80 S.Ct. 16, 4

L.Ed.2d 30, cert. den’d, 361 U.S. 887, 80 S.Ct. 158,

ee GB errr rT eer Pee 17

EEOC v. Mike Smith Pontiac GMC, Inc., 896 F.2d

ee ee Re TH hn oin es cu cnsecrcone¥ecebes cxeneas 16

Hale v. Ralston Purina Company, 432 F.2d 156 (8th

eR. PPPPPenT TTT re Teeter ee ee ee ee Tee 13

In re Colony Place Company, Debtor, James D. Walker,

Jr., Trustee v. Landor Condominium Consultants,

Inc., Case No. 91-8470 (11th Cir. Oct. 2, 1992)...... 3

In re Colony Square Co., 60 B.R. 1003 (N.D. Ga.

1986), aff'd, 819 F.2d 272 (11th Cir. 1987), cert.

den‘d., 485 U.S. 977, 108 S.Ct. 1271, 99 L.Ed.2d

482 (1988) POITIER TTT Tee ee 10, 12, 13, 14

In re Design Classics, Inc., 788 F.2d 1384 (8th Cir.

ee er ene Tr rere re sre ee ere rere 9

In re Securities Group, 926 F.2d 1051 (11th Cir. 1991) .... 16

In re Wisconsin Steel Co., 48 B.R. 753 (N.D.IIl. 1985) .13, 14

Landor Condominium Consultants, Inc. v. Bankers

First Federal Savings and Loan Association, 198

Ga. App. 274, 401 S.E. 2d 305 (1991)............... 3

Landor Condominium Consultants, Inc. v. Bankers

First Federal Savings and Loan Association, 204

Ga. App. 212, 416 S.E.2d 772 (1992). ............0: 3

Margoles v. Johns, 660 F.2d 291 (7th Cir. 1981), cert.

den‘d., 455 U.S. 909, 102 S.Ct. 1256, 71 L.Ed.2d

Pe ERED cio 4s Lace kau vealaaeeee eee ees 12, 14

Vv

TABLE OF AUTHORITIES - Continued

Page

Marks v. Shell Oil Co., 895 F.2d 1128 (6th Cir. 1990) .... 16

Mullane v. Central Hanover Bank & Trust Co., 339

U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950) ........ 10

National Hockey League v. Metropolitan Hockey Club,

Inc., 427 U.S. 639, 96 S.Ct. 2778, 49 L.Ed.2d 747

(1976) PETC ee eT TOPE Pee Terre Tee Te TTC Tree 12

Pelican Prod. Corp. v. Marino, 893 F.2d 1143 (10th

ER EE cache evanceasansdiacccesseskhehubacedss 16

Pullman Standard v. Swint, 456 U.S. 273, 102 S.Ct.

se Me EO Re 2 er reer Teer ere 16

Rozier v. Ford Motor Co., 573 F.2d 1332 (5th Cir.

(I Pores ToT eTe Te ree TT Tee TT Te TT eee 11

Rushen v. Spain, 464 U.S. 114, 104 S.Ct. 453, 78

LE ET ERED nba scc new eeia dd cokers tae eneees 14

Simer v. Rios, 661 F.2d 655 (7th Cir. 1981), cert.

denied, 456 U.S. 917, 102 S.Ct. 1773, 72 L.Ed.2d

PE PET Sb SEGBCLS Gh vce wscneedowdebpescediessane 14

Toledo Scales Co. v. Computing Scale Co., 261 U.S.

399, 43 S.Ct. 458, 62 L.Ed. 719 (1923)..... eet eaks 12

Tucker v. Commonwealth Land Title Ins. Co., 800 F.2d

et NE io hls sxc dew snacesevernecnsss 4

United States v. Adams, 785 F.2d 917 (11th Cir.),

cert. denied; 479 U.S. 1009, 107 S.Ct. 650, 93

No une Khe ae aNeanwer cere nne 14

West v. Love, 776 F.2d 170 (7th Cir. 1985)............ 11

vi

TABLE OF AUTHORITIES - Continued

Page

RULES

oo Et See T TREC err eEere er re ee 1, 16

os Oe ee errr 12, 13

Darkrupicy Rade POS6. wo cnc ce cnicneses 1, 3, 9, 14, 32

Federal Rule of Civil Procedure 60(b)...1, 9, 10, 12, 13

supreme Court Rule 10.....066. 06.0645 i, 2, 8, 9, 16, 18

OPINIONS BELOW 7

The opinions below consist of:

1. A Bankruptcy Court order approving a compromise

recommended by the Trustee! (H-1);

2. A decision by another Bankruptcy Court Judge deny-

ing Petitioner’s motion pursuant to Bankruptcy Rule 9024

(which incorporates Fed. R. Civ. P. 60) to collaterally

attack and set aside the order approving the compromise

(C-1);

3. A decision by the United States District Court review-

ing and affirming the decision of the Bankruptcy Court

(B-1); and

4. A decision by the Eleventh Circuit Court of Appeals

affirming the decision of the District Court without opin-

ion (A-1).

RULES INVOLVED

In addition to the rules cited in the Petition, the

following rules apply:

Federal Rules of Bankruptcy Procedure Rule 8013.

DISPOSITION OF APPEALS; WEIGHT ACCORDED

BANKRUPTCY JUDGE’S FINDINGS OF FACT

' All of the opinions below are contained in the Appendix

to the Petition for Writ of Certiorari and the citations in this brief

are to that Appendix.

On an appeal the district court or bankruptcy appel-

late panel may affirm, modify, or reverse a bankrupcy

judge’s judgment, order, or decree or remand with

instructions for further proceedings. Findings of fact,

whether based on oral or documentary evidence, shall

not be set aside unless clearly erroneous, and due regard

shall be given to the opportunity of the bankruptcy court

to judge the credibility of the witnesses.

Supreme Court Rule 10 is set forth in the Appendix

to this brief.

+

STATEMENT OF THE CASE

A. fNACCURACIES IN PETITIONER’S STATEMENT

OF THe CASE.

Respondents wish to point out an incorrect statement in

Petitioner’s brief. In her statement of the question presented

and also on page 20, Petitioner suggests that cousel for

Respondent Bankers First intentionally engaged in prohib-

ited ex parte communication by providing the Bankruptcy

Court, but not the opposing party, with copies of the authori-

ties and pages from the transcript cited in its proposed order.

This allegation is not correct and is not supported by the

record. There was no finding by the Bankruptcy Court of any

intentional misconduct by counsel for Respondent Bankers

First. On the contrary, the Bankruptcy Court found that

while it would have been the better practice to give copies to

opposing parties, under the facts in this case, there was no

improper ex parte communication (C-35). That finding is

fully supported by the evidence and is inconsistent with the

statements in Petitioner’s brief.

B. NATURE OF THE CASE

This case is one of a series of lawsuits? between Respon-

dents and the Petitioner Doris B. Harrison (plaintiff

{

\

2 Related litigation includes:

FRAUDULENT TRANSFERS:

Adversary proceeding No. 188-0083 in Chapter 7 Case No.

188-00819 was brought by the Trustee to set aside real property

conveyances made by Petitioner and her husband as officers of

the Colony Place Company to a company they owned

(“Landor”) on the grounds that the transfers were fraudulent. A

default judgment setting aside these conveyances was affirmed

by the District Court, and the 11th Circuit. In re Colony Place

Company, Debtor, James D. Walker, Jr., Trustee, v. Landor Condomin-

ium Consultants, Inc., Case No. 91-8470 (11th Cir. Oct. 2, 1992).

DISPOSSESSORY CASE:

After obtaining stay relief and foreclosing on its collateral,

Respondent Bankers First brought a dispossessory action

against the Harrisons and Landor (a company owned by the

Harrisons) in the Superior Court of Richmond County, Georgia.

A writ of possession was granted. The Harrisons appealed, but

the Georgia Court of Appeals dismissed the appeal because it

was premature. Landor Condominium Consultants, Inc. v. Bankers

First Federal Savings and Loan Association, 198 Ga. App. 274, 401

S.E.2d 305 (1991).

1989 STATE COURT LAWSUIT:

In 1989, Landor and Ms. Harrison filed an eleven count

lender liability lawsuit against Bankers First in the Superior

Court of Richmond County, Georgia. Many of these same allega-

tions were specifically rejected by the Bankruptcy Court in

approving the compromise (H-1).

Bankers First’s motion for summary judgment was granted

and this decision was affirmed by the Georgia Court of Appeals.

Landor Condominium Consultants, Inc. v. Bankers First Federal Sav-

ings and Loan Association, 204 Ga. App. 212, 418 SE.2d 772 (1992).

in Bankruptcy Court), her husband D. Landrum Harrison,

and a company (“Landor”) owned by the Harrisons. The

litigation arose from the Harrisons’ failed attempt to

develop a condominium project in Augusta, Georgia

called Colony Place (H-2).

The Colony Place project was owned by the Colony

Place Company (controlled by the Harrisons). Landor

was the development manager for the project and

Bankers First was the lender (H-2). The project failed

because construction schedules were not met, large cost

overruns were experienced and sales did not meet projec-

tions (H-3 to H-4). Eventually, Bankers First agreed to

loan over $600,000 more than the Colony Place Company

originally projected was needed to build and sell 120

condominium units (H-24). However, a total of only 48

units were built and only 25 of these units were sold

(H-25).

The Harrisons claimed Bankers First was responsible

for the failed development of the Colony Place project

(H-5). The Trustee investigated and recommended com-

promise of the Harrisons’ claims for an option on part of

the Colony Place property. but no less than $25,000 (H-5

to H-6, H-37 to H-38). (Bankers First was willing to settle

on this basis to minimize further litigation.)

After the Bankruptcy Court (Judge John Dalis)*

approved the proposed settlement, Petitioner attempted

3 There are decisions by two United States Bankruptcy

Judges in this case. The first decision was a ruling by Judge John

Dalis approving the compromise. The second ruling was made

by Judge Lamar Davis denying a motion to set aside the order

approving the compromise.

to challenge the approval but did not file her motion to

amend within the required time (C-19).

Next, Petitioner collaterally attacked the compromise

by filing a motion to set aside the compromise in which

she asserted virtually the same thirty-one grounds raised

in her untimely motion to\amend (C-20). This extraordin-

ary relief was sought pursuant to Bankruptcy Rule 9024.

Specifically, Petitioner claimed that Respondents

improperly communicated with the Bankruptcy Court

(Judge John Dalis) by furnishing courtesy copies of the

cases and portions of the transcript cited in a proposed

order which Judge Dalis requested from both parties.

Therefore (according to Petitioner), the process by which

the decision to approve the compromise was reached

deprived her of the opportunity to fully and fairly pre-

sent her case, and was fundamentally unfair to her. Peti-

tioner made these claims even though the proposed order

of Respondents was served on her, so she knew exactly

what authorities and portions of the transcripts were

relied upon by Respondents (B-9, C-36 to C-37).

At the hearing to consider the compromise Petitioner

was heard and called her husband, D. Landrum Harrison

who testified at length on her behalf (C-14 to C-15). Also,

Petitioner was asked by Judge Dalis to present a pro-

posed order. She submitted an order and received a copy

of the order proposed by Respondents (C-15 to C-18). The

order proposed by Respondents contained the same cita-

tions to cases and portions of the transcript which were

supplied to Judge Dalis (B-9, C-36 to C-37).

sieineneinenaeeniaiiasiiiaiiae ele

Bankruptcy Judge Lamar Davis denied Ms. Har-

rison’s motion to set aside the judgment for two reasons,

holding that:

First, there were no facts to support an allegation of

prohibited ex parte communication since everything com-

municated to the Bankruptcy Court (Judge John Dalis)

was cited in the proposed order furnished to Petitioner

(C-35 to C-37).

Second, even if a prohibited ex parte communication

had occurred, Petitioner failed to meet the burden of

establishing that she was entitled to the extraordinary

relief sought because she “utterly failed to demonstrate

any lack of due process or fundamental unfairness in the

process” (C-37 to C-39).

In support of these holdings, Judge Davis found

there was “absolutely no evidence presented at the hear-

ing or otherwise in the record” showing that furnishing

the Bankruptcy Court (Judge John Dalis) with copies of

the cases and transcript pages cited in the proposed order

caused the Bankruptcy Court (Judge John Dalis) to rule in

a manner that was procedurally unfair (C-39). This find-

ing was based on the undisputed evidence that Petitioner

received a copy of the order proposed by Respondents,

knew exactly what authorities and portions of the tran-

script Respondents were relying upon, and that all mate-

rial cited in the proposed order of Respondents was fully

available to Petitioner (C-23, C-25 to C-26).

Judge Davis further found that Petitioner was given

the opportunity to present her case in a lengthy hearing

(C-14 to C-15). She was permitted to call witnesses, and

did call her husband D. Landrum Harrison, who testified

at length on her behalf (C-15). This testimony was

allowed “out of an abundance of caution. . . in order to

insure that all parties with a colorable right to be heard

were afforded that opportunity” (C-21 to C-22). He also

found that Petitioner submitted a proposed order to the

court (C-18). On the basis of this factual record, Judge

Davis held that there was no showing that a prohibited ex

parte communication occurred (C-35) and no showing of

fundamental unfairness (C-38).

After review on appeal, both the United States Dis-

trict Court for the Southern District of Georgia (Augusta

Division) and the Eleventh Circuit Court of Appeals

(without opinion) affirmed the decision of the Bank-

ruptcy Court.

In addition, the District Court reviewed the order of

the Bankruptcy Court (Judge John Dalis) approving the

settlement and ruled that the findings of facts and conclu-

sions of law were supported by the evidence in the record

(B-14).

SUMMARY OF THE ARGUMENT

The Petition for certiorari seeks further review of

factual determinations and the decision by the Bank-

ruptcy Court (Judge Lamar Davis) denying a motion to

set aside a.judgment (C-1) which has been reviewed and

upheld by both the District Court and the Eleventh Cir-

cuit Court of Appeals (A-1, B-1).

Both grounds upon which the Bankruptcy Court

(Judge Lamar Davis) denied the motion to set aside the

judgment were correctly decided and fully supported by

the evidence.

On the first ground the Bankruptcy Court correctly

concluded, based on the facts in this case, that there was

no prohibited ex parte communication (C-35).

On the second ground, the Bankruptcy Ccurt also

correctly concluded, based on the facts in this case, that

there was no showing of fundamental unfairness to Peti-

tioner since she knew exactly the authorities upon which

Respondents were relying (B-9, C-36 to C-37) and was

given the opportunity to fully and fairly present her case

(C-14 to C-15).

On appeal, the applicable standard of review on

questions of fact is whether the findings of the Bank-

ruptcy Court are clearly erroneous. The record shows that

the findings of the Bankruptcy Court are not clearly

erroneous. On the contrary, they are fully supported by

the evidence.

A motion to set aside a judgment is an extraordinary

remedy. The applicable standard of review on appeal of

such a motion is whether the trial court abused its discre-

tion. The record shows there was no abuse of that discre-

tion in the case at bar by refusing to grant the relief

sought. 7

Therefore, the District Court and the Eleventh Circuit

Court of Appeals did not err in affirming the decision of

the Bankruptcy Court on both of the grounds stated

above.

Furthermore, the case is not one which meets the

standard for certiorari under Rule 10 of the Supreme

Court Rules since it involves a review of factual findings

made by a Bankruptcy Court following the standards

which this Court and the lower Federal courts have

applied in a number of cases.

Therefore, this is not a case where a United States

Court of Appeals “has so far departed from the accepted

and usual course of judicial proceedings, or sanctioned

such a departure by a lower court, as to call for an

exercise of this Court’s power of supervision”. Supreme

Court Rule 10.

ARGUMENT

Petitioner seeks to collaterally attack the compromise

by her motion to set aside the unappealed judgment

pursuant to Bankruptcy Rule 9024 (which incorporates

Rule 60(b) of the Federal Rules of Civil Procedure). Rule

60 provides in part:

On motion and upon such terms as are just, the

court may relieve a party . . . from a final judg-

ment .. ., for the following reasons: .. . (3) fraud

(whether heretofore denominated intrinsic or

extrinsic), misrepresentation, or other miscon-

duct of an adverse party; . . . (emphasis supplied)

Rule 60(b), which provides relief from judgments, is

an extraordinary remedy. Tucker v. Commonwealth Land

Title Ins. Co., 800 F.2d 1054, 1056 (11th Cir. 1987). In the

case of In re Design Classics Inc., 788 F.2d 1384, 1386 (8th

Cir. 1986) the court said:

Relief under Rule 60(b) is an extraordinary rem-

edy. It lies with the discretion of the trial court,

and its grant or denial may be reviewed only for

abuse of discretion. Rule 60(b) relief is not

10

appropriate as a substitute for direct appeal of a

judgment.

Respondents respectfully submit that the decision of

the Bankruptcy Court to deny the extraordinary relief

sought by Ms. Harrison under Rule 60(b), and the affir-

mation of this decision by the District Court and Court of

Appeals, is correct for each of the reasons set forth below.

A. NO PROHIBITED EX PARTE COMMUNICATION

OCCURRED

The Bankruptcy Court (Judge Lamar Davis) was cor-

rect in holding that not all ex parte communication is

prohibited and that an ex parte communication does not

per se require a reversal (C-30 to C-35).

In the case of In re Colony Square Co., 60 B.R. 1003,

1018 (N.D. Ga. 1986), aff'd, 819 F.2d 272 (11th Cir. 1987),

cert. den’d., 485 U.S. 977, 108 S.Ct. 1271, 99 L.Ed.2d 482

(1988) the District Court held that:

Due process requires that a litigant be given

notice and the opportunity to be heard. Mullane

v. Central Hanover Bank & Trust Co., 339 U.S. 306,

314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). Ex

parte contacts between a judge and a litigant

will not always deprive the adversary of these

due process attributes. When a party has been

given the opportunity to participate actively ina

proceeding and is not prejudiced by the ex parte

contact, the requirements of due process have

been met... . “[W]e reject any notion of due

process which would place an absolute prohibi-

tion on all ex parte contacts or proceedings.”

(Cits. omitted)

11

Judge Davis properly found that, under the facts of

this case, providing the Bankruptcy Court (Judge John

Dalis) with courtesy copies of cases and excerpts from the

record cited in the proposed order was not a prohibited

ex parte communication since the proposed order citing

these cases and pages from the transcript was furnished

to Petitioner (C-23). She knew exactly what cases and

pages from the record Respondents were relying upon

(C-35 to C-37), and had unfettered access to them (B-10 to

B-11, C-25 to C-26).

B. NO SHOWING OF FUNDAMENTAL UNFAIRNESS

The Bankruptcy Court (Judge Lamar Davis) also cor-

rectly denied Petitioner’s motion on the ground that

Bankruptcy Rule 9024 requires a moving party to show

that the process was fundamentally unfair (C-38). (The

Bankruptcy Court found that even if there was a prohib-

ited ex parte communication, Petitioner “utterly failed to

demonstrate any lack of due process or fundamental

unfairness in the process” (C-38 to C-39).)

In West v. Love, 776 F.2d 170, 176 (7th Cir. 1985), the

court held:

. . . West was required to show by clear and

convincing evidence that the verdict was obtained

through misconduct and that the misconduct

was of such a nature that it prevented plaintiff

from fully and fairly presenting his case. Rozier v.

Ford Motor Co., 573 F.2d 1332, 1339 (5th Cir.

1978). (emphasis supplied)

In Rozier v. Ford Motor Co., 573 F.2d 1332, 1339 (5th

Cir. 1978), the court held:

12

One who asserts that an adverse party has

obtained a verdict through fraud, misrepresen-

tation or other misconduct has the burden of

proving the assertion by clear and convincing evi-

dence . . . The conduct complained of must be

such as prevented the losing party from fully and

fairly presenting his case or defense. Toledo Scales

Co. v. Computing Scale Co., 261 U.S. 399, 421, 43

S.Ct. 458, 464 67 L.Ed. 719 (1923) .. . . (emphasis

supplied)

Thus, an order will not be set aside unless the pro-

cess was fundamentally unfair. In Colony Square, the Elev-

enth Circuit held:

Such orders will be vacated only if a party can

demonstrate that the process by which the judge

arrived at them was fundamentally unfair. See

also Margoles v. Johns, 660 F.2d 291, 296 (7th Cir.

1981), cert. den’d., 455 U.S. 909, 102 S.Ct. 1256, 71

L.Ed.2d 447 (1982)4

In re Colony Square Co., 819 F.2d 272, 276 (11th Cir. 1987),

cert. denied, 485 U.S. 977, 108 S.Ct. 1271, 99 L.Ed.2d 482

(1988).

In her argument, Petitioner suggests a different stan-

dard for setting aside a judgment on the basis of alleged

misconduct. She argues, in effect, that a “per se” rule

should apply and that it is not necessary to determine

whether the alleged misconduct affected the outcome of

the case or deprived Petitioner of the opportunity to be

4 Petitioner’s reliance on National Hockey League v. Metro-

politan Hockey Club, Inc., 427 U.S. 639, 96 S.Ct. 2778, 49 L.Ed.2d

747 (1976) is misplaced, because that case involves a discovery

dispute and not Bankruptcy Rules 9003 or 9024 or Rule 60(b).

13

fully and fairly heard. Petitioner cites In re Wisconsin Steel

Co., 48 B.R. 753 (N.D.IIl. 1985) for the proposition that

there is a blanket prohibition against all ex parte commu-

nication. That decision is not on point, however, because

in that case counsel wrote an opinion for the Bankruptcy

Judge without the knowledge of the opposing parties. In

the case at bar the Bankruptcy Judge requested proposed

orders from both sides, and the opposing party was given

the draft of the proposed order prepared by Respondents.

(C-15 to C-16).

Furthermore, Petitioner suggests an application of In

re Wisconsin Steel and Rule 9003 that is inconsistent with

the language of Rule 60 which provides that a “court may

relieve a party from a final judgment for . . . mis-

conduct...” (emphasis supplied). Rule 60 uses the word

“may”. It does not provide that such relief is automatic or

mandatory. See, e.g. Hale v. Ralston Purina Company, 432

F.2d 156, 159 (8th Cir. 1970) where the court said:

Rule 60(b) motions address themselves to the

sound discretion of the trial court and will not be

overturned absent an abuse of that discretion.

Petitioner’s argument is also inconsistent with other

decisions of this Court (discussed in quote below) and the

‘ower Federal courts which have repeatedly reviewed

matters of this nature on a case-by-case basis instead of

applying a “per se” rule as advocated by Petitioner. A

quote from the Eleventh Circuit Court of Appeals opinion

in Colony Square, 819 F.2d 272, 276 (11th Cir. 1987), cert.

den’d., 485 U.S. 977, 108 S.Ct. 1271, 99 L.Ed.2d 482 (1388)

discusses the standard which has been applied by this

Court and the lower Federal Courts in a number of differ-

ent factual situations involving ex parte communications:

14

The fact that a judge allowed a litigant to draft

the court’s orders without notice to the oppo-

sing party does not automatically invalidate

these orders, however. See, e.g. Rushen v. Spain,

464 U.S. 114, 104 S.Ct. 453, 78 L.Ed.2d 267 (1983)

(ex parte communication between trial judge

and juror held to be harmless error); United

States v. Adams, 785 F.2d 917, 920-921 (11th Cir.),

cert. denied, 479 U.S. 1009, 107 S.Ct. 650, 93

L.Ed.2d 706 (1986) (ex parte conference between

judge, witness and government held constitu-

tional) . . . ; Simer v. Rios, 661 F.2d 655, 679-681

(7th Cir. 1981), cert. denied, 456 U.S. 917, 102

S.Ct. 1773, 72 L.Ed.2d 177 (1982) (ex parte con-

tacts between judge and litigant held not to

violate due process). Such orders will be vacated

only if a party can demonstrate that the process

by which the judge arrived at them was funda-

mentally unfair. Margoles v. Johns, 660 F.2d 291,

296 (7th Cir.1981), cert. denied, 455 U.S. 909, 102

S.Ct. 1256, 71 L.Ed.2d 447 (1982); see generally

Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 106

S.Ct. 1580, 1584-1585, 89 L.Ed.2d 823 (1986).

See also Simer v. Rios, 661 F.2d 655, 679 (7th Cir. 1981)

where the Seventh Circuit Court of Appeals held:

(W)e reject any notion of due process which

would place an absolute prohibition on all ex

parte contacts or proceedings.

It should also be pointed out that to the extent In re

Wisconsin Steel implies that a “per se” rule exists, that

part of the case was rejected in Colony Square at both the

District Court and Circuit Court levels. 60 B. R. 1003,

1013-1018 (N.D. Ga. 1986); 819 F.2d 272, 273 (11th Cir.

1987).

15

The cases cited above show that the applicable stan-

dard followed by this Court and the lower Federal courts

is a case-by-case review based on the facts in each case as

was done by the Bankruptcy Court (Judge Lamar Davis)

in the case at bar.

The facts in this case do not show fundamental

unfairness. Petitioner participated in the lengthy hearing

on September 18, 1989 at which her husband, D. Landrum

Harrison, testified in opposition to the proposed settle-

ment (C-14 to C-15). She submitted a proposed order for

consideration by the Bankruptcy Court (Judge John

Dalis), and received a copy of the order proposed by

Respondents (C-16, C-23). Petitioner knew exactly the

authorities and evidence upon which Respondents were

relying (C-25 to C-26, C-36). Petitioner had unfettered

access to the materials cited in the proposed order sub-

mitted by Bankers First (C-25 to C-26).

Furthermore, Petitioner did not appeal from the

order approving the compromise and failed to file a

timely motion to amend the judgment (although she did

file an untimely motion to amend based on virtually the

same alleged errors she sought to raise by her motion to

set aside the judgment) (C-20).

Therefore, under the facts of this case, Respondents

respectfully submit that the Bankruptcy Court (Judge

Lamar Davis) correctly concluded that Petitioner did not

meet her burden of showing by clear and convincing evi-

dence that furnishing the Bankruptcy Court (Judge John

Dalis) with courtesy copies of cases and pages from the

record referred to in the proposed order deprived Peti-

tioner of the opportunity to fully and fairly present her

16

case, or resulted in a process that was fundamentally

unfair to her.

C. STANDARD OF REVIEW

On appeal the applicable standard of review of find-

ings of fact is whether the findings of the Bankruptcy

Court were clearly erroneous. Bankruptcy Rule 8013;

Anderson v. Bessemer City, 470 U.S. 564, 105 S.Ct. 1504, 84

L.Ed.2d 518, 528 (1985); Pullman Standard v. Swint, 456

U.S. 273, 102 S.Ct. 1781, 72 L.Ed.2d 66, 78-79 (1982);

see also In Re Securities Group, 926 F.2d 1051, 1055 (11th Cir.

1991). Respondents respectfully submit that the findings of

fact by the Bankruptcy Court were fully supported by the

evidence and were certainly not clearly erroneous.

Furthermore, on appeal from an order denying a

motion to set aside a judgment, the applicable standard of

review is whether the trial court abused its discretion.

EEOC v. Mike Smith Pontiac GMC, Inc., 896 F.2d 524, 528

(11th Cir. 1990); Marks v. Shell Oil Co., 895 F.2d 1128, 1129

(6th Cir. 1990); Pelican Prod. Corp. v. Marino, 893 F.2d 1143,

1145 (10th Cir. 1990). The record in this case supports the

finding that Petitioner was not entitled to the extraordin-

ary relief sought and the Bankruptcy Court did not abuse

its discretion in denying the motion to set aside the

judgment.

Lastly, the Petition does not meet the standards for

writs of certiorari set forth in Rule 10 of the Supreme

Court Rules. The case does not involve a departure by the

lower Federal courts from the accepted and usual course

of judicial proceedings as required by Rule 10 of the

heneeaeeeneenemennmeemenenmasaal

17

Supreme Court Rules. The case involves a review of

findings of fact by a Bankruptcy Court and a review of a

Bankruptcy Court’s decision declining to grant a motion

to set aside a judgment. In Appalachian Power Co. v.

AICPA, 80 S.Ct. 16, 4 L.Ed.2d 30, 32, cert. den’d, 361 U.S.

887, 80 S.Ct. 158, 4 L.Ed.2d 121 (1959) (per Brennan, J., as

Circuit Justice) the class of cases which will be reviewed

by this Court on writ of certiorari are discussed:

But ordinarily an application by a District Court

of the Rules of Civil Procedure when affirmed

by the Court of Appeals will not be reviewed by

this Court. This is particularly true where, as

here, the question is one that concerns the judg-

ment of the District Judge in relation to a partic-

ular set of facts.

18

CONCLUSION

Respondents respectfully suggest that the Bank-

ruptcy Court correctly denied Petitioner’s motion to set

aside the judgment for all of the reasons set forth above.

Furthermore, the findings of the Bankruptcy Court (Judge

Lamar Davis) were fully supported by the evidence and

were not clearly erroneous and there was no abuse of

discretion in denying the motion to set aside the judg-

ment. Thus, the District Court and the Eleventh Circuit

Court of Appeals did not err in affirming the decision of

the Bankruptcy Court denying the extraordinary relief

sought by Petitioner.

Respondents also respectfully suggest that the case is

not one which meets the standards for certiorari set forth

in Rule 10 of the Supreme Court Rules since it does not

involve a departure so far “from the accepted and usual

course of judicial proceedings .. . ” as to call for this

Court to exercise its supervisory powers.

On the contrary, it involves the review on appeal of a

factual determination and exercise of discretion by the

Bankruptcy Court, using a procedure and a standard

which this Court and the lower Federal courts have fol-

lowed and applied in a number of cases and which the

Bankruptcy Court, the District Court and the Eleventh

19

Circuit Court of Appeals correctly applied in the case at

bar.

For the reasons set forth above, Respondents respect-

fully suggest that Petitioner’s request for a writ of cer-

tiorari should be denied.

Respectfully submitted,

Davip E. Hupson

Counsel of Record

Hutt, Towitt, NorMAN & BARRETT

P.O. Box 1564

Augusta, Georgia 30903

(706) 722-4481

LAWTON JORDAN, JR.

Hutt, Towitt, NorMAN & BarRETT

P.O. Box 1564

Augusta, Georgia 30903

(706) 722-4481

Attorneys for Respondent

Bankers First Federal Savings

and Loan Association

James D. WaLKER, JR.

SuRRETT, WALKER, CRESON,

Way AND COLEMAN

801 Broad Street

Augusta, Georgia 30901

(706) 722-3301

Attorneys for Respondent

James D. Walker, Jr.,

Trustee in Bankruptcy

for the Colony Place Company

App. 1

APPENDIX

RULE 10 OF THE UNITED STATES SUPREME COURT

Considerations Governing Review on Writ of Cer-

tiorari

-l. A review on writ of certiorari is not a matter of

right, but of judicial discretion. A petition for a writ of

certiorari will be granted only when there are special and

important reasons therefore. The following, while neither

controlling nor fully measuring the Court’s discretion,

indicate the character of reasons that will be considered:

(a) When a United States court of appeals has

rendered a decision in conflict with the decision

of another United States court of appeals on the

same matter; or has decided a federal question

in a way in conflict with a state court of last

resort; or has so far departed from the accepted

and usual course of judicial proceedings, or

sanctioned such a departure by a lower court, as

to call for an exercise of this Court's power of

Supervision.

(b) When a state court of last resort has

decided a federal question in a way that con-

flicts with the decision of another state court of

last resort or of a United States court of appeals.

(c) When a state court or a United States court

of appeals has decided an important question of

federal law which has not been, but should be,

settled by this Court, or has decided a federal

question in a way that conflicts with applicable

decisions of this court.

-2. The same general considerations outlined above

will control in respect to a petition for a writ of certiorari

App. 2

to review a judgment of the United States Court of Mili-

tary Appeals.