United States District Court, D. Connecticut
RULING DENYING PETITION FOR WRIT OF MANDAMUS
R. UNDERHILL United States District Judge.
Chen petitioned for a writ of mandamus, asking that I order
United States Bankruptcy Judge James J. Tancredi to recuse
himself from presiding over a bankruptcy court adversary
proceeding to which Chen is a party. See Doc. No. 1.
She also sought a stay of the bankruptcy proceedings. See
Id. At a hearing held on April 17, 2017, I orally denied
Chen's petition. See Doc. No. 12. In this
ruling, I set forth in detail the reasons for my decision.
Standard of Review
courts are empowered to order a bankruptcy judge's
recusal via a writ of mandamus, but “such a remedy is
rarely granted.” In re Ad Hoc Comm. of Tort
Victims, 327 B.R. 138, 141 (S.D.N.Y. 2005). When the
bankruptcy judge already has ruled on a motion to recuse,
district courts apply “the standard of review applied
by the Second Circuit to mandamus actions seeking recusal of
a district judge.” Id. (citing, e.g., In
re Savage & Associates, P.C., 2005 WL 578919, at *1
(S.D.N.Y. Mar. 9, 2005); Tese-Milner v. Holland,
1997 WL 1048898, at *3 (E.D.N.Y. Nov. 26, 1997)). Under that
“exacting standard, ” In re IBM, 45 F.3d
641, 643 (2d Cir. 1995) (Newman, J.), “the exceptional
remedy of mandamus only will be invoked where the petitioner
has demonstrated that its right to such relief is
‘clear and indisputable.'” In re
Basciano, 542 F.3d 950, 955-56 (2d Cir. 2008) (quoting
In re Drexel Burnham Lambert, 861 F.2d 1307, 1312
(2d Cir. 1988)).
reviewing a bankruptcy judge's denial of a recusal motion
for purposes of evaluating a mandamus petition, I first
consider “the manner in which the [bankruptcy] judge
decided not to recuse himself, employing an ‘abuse of
discretion' standard of review.” See Id.
at 957. Second, I determine whether there have been
“actions by the judge which might be viewed by
‘an objective, disinterested observer' as
evidencing bias.” Id. The fundamental question
is, “[w]ould a reasonable person, knowing all the
facts, conclude that the  judge's impartiality could
reasonably be questioned?” Diamondstone v.
Macaluso, 148 F.3d 113, 120-21 (2d Cir. 1998).
Xiao-Chen's former husband-and his company, LXEng, LLC
(“LXEng”), both filed for Chapter 7 bankruptcy
relief in this district in July 2013. In re LXEng,
No. 13-bk-51144 (Bankr. D. Conn. July 23, 2013); In re
Xiao, No. 13-bk-51186 (Bankr. D. Conn. July 30, 2013).
At the time of the filings, Xiao and LXEng were defendants in
a suit brought by Dow Corning in the United States District
Court for the Eastern District of Michigan. See Dow
Corning Corp. v. Xiao, No. 11-cv-10008 (E.D. Mich.). In
early July 2013, a few weeks before filing for bankruptcy,
Xiao transferred approximately $1.6 million to Chen as part
of a divorce settlement. See Pet. Writ Mandamus,
Doc. No. 1, In re Chen, No. 17-cv-00615 (D. Conn.
Apr. 13, 2017).
Chapter 7 Trustee of the LXEng estate, Richard Coan, and the
Chapter 7 Trustee of the Xiao estate, Ronald Chorches
(collectively, “the Trustees”), separately sued
Chen, alleging that the divorce settlement was a fraudulent
transfer in violation of 11 U.S.C. § 548. See Coan
v. Chen, No. 15-ap-05027 (Bankr. D. Conn.); Chorches
v. Chen, No. 14-ap-05019 (Bankr. D. Conn.). Both cases
are currently pending in this district before Judge Tancredi.
Trial in Coan v. Chen is scheduled to begin April
18, 2017, see Doc. No. 87, Coan v. Chen,
No. 15-ap-05027 (Bankr. D. Conn.), and trial in Chorches
v. Chen-which has been consolidated for trial with
another adversary proceeding, Dow Corning Corp. v.
Xiao, No. 14-ap-05054 (Bankr. D. Conn.)-is expected to
occur sometime in May 2017.
time that Chorches filed suit against Chen, he also filed an
Application for Prejudgment Remedy (“PJR
Application”) and a Motion for Prejudgment Disclosure
of Assets (“Disclosure Motion”). United States
Bankruptcy Judge Alan H. W. Shiff-from whom the case
subsequently was transferred to Judge Tancredi-issued an
Order for Hearing and Notice on the PJR Application and
Disclosure Motion on April 10, 2014. Docs. Nos. 4 & 5,
Chorches v. Chen, No. 14-ap-05019 (Bankr. D. Conn.).
Judge Shiff certified notice of the hearing on the PJR
Application to Chen by first class mail on April 12, 2014.
Doc. No. 10, id. On April 21, 2014, Chen transferred
$50, 000 to a Bank of China account in her mother's name,
and on May 5, 2014, she transferred an additional $250, 000
to a Bank of China account in her mother's name.
See Ex. A to Obj. Pet. Writ Mandamus, Doc. No. 9,
In re Chen, No. 17-cv-00615 (D. Conn.).
5, 2014, Judge Shiff granted the PJR Application and the
Disclosure Motion, Docs. Nos. 13 & 14, Chorches v.
Chen, No. 14-ap-05019 (Bankr. D. Conn.), and the court
mailed notice of the orders to Chen on May 7, 2014.
See Docs. Nos. 15 & 16, id. On May 6,
2014, Chen transferred $50, 000 to a Bank of China account in
her father's name, and on May 12, 2014, she transferred
$1, 000, 000 to accounts in her parents' names at the
Bank of China. See Ex. A to Obj. Pet. Writ Mandamus,
Doc. No. 9, In re Chen, No. 17-cv-00615 (D. Conn.).
Chen subsequently testified under oath at a deposition that
she placed the $1.6 million received as part of the divorce
settlement into four financial institutions in the United
States. See id.
10, 2014-after counsel had appeared for Chen-Judge Shiff
entered a Stipulated Order on the PJR Application. Doc. No.
30, Chorches v. Chen, No. 14-ap-05019 (Bankr. D.
Conn.). Two years later, Chorches filed a Motion to Modify
Stipulated Order and to Compel Defendant to Produce Proof of
Compliance, in which he asked the bankruptcy court to require
Chen to produce evidence of her compliance with the
Stipulated Order, and to allow Chorches to attach $1, 180,
970 from Chen's assets (the sum he had previously sought
in the PJR Application). Doc. No. 91, id. Judge
Tancredi (now presiding over the case) held a hearing on the
motion on October 20, 2016, Doc. No. 95, id., after
which he entered an Order Modifying Stipulated Order that
authorized Chorches to “attach sufficient property
and/or assets of [Chen] to secure the sum of $1, 180,
970.” Doc. No. 97, id.
February 21, 2017, Chorches first learned of Chen's
transfer of $1.35 million to her parents in China. Obj. Pet.
Writ Mandamus, Doc. No. 9, In re Chen, No.
17-cv-00615 (D. Conn.). On May 2, 2017, Chorches filed a
Motion for Injunctive Relief in which he sought an injunction
to compel Chen to bring the $1.35 million within the
territorial jurisdiction of the bankruptcy court. Doc. No.
119, Chorches v. Chen, No. 14-ap-05019 (Bankr. D.
Conn.). Chen filed an objection on March 15, 2017, in which
she claimed to have transferred the funds to avoid a
different creditor-Xiao's original bankruptcy attorney,
Carlos Cuevas-without any awareness of the adversary
proceeding against her. Doc. No. 129, id. The
bankruptcy court held an evidentiary hearing on the Motion
for Injunctive Relief on March 20, 2017, which was then
continued until March 28, 2017.
the hearing on March 20, 2017, Judge Tancredi entered a
Preliminary Order Restraining International Travel.
See Doc. No. 142, id. (“Travel
Order”). In the order, Judge Tancredi noted that
Chorches had “previously established probable cause for
a prejudgment remedy upon his Complaint, ” and that he
had “also shown that there is good and compelling cause
to restraining the Defendant's travel.”
Id. at 1. Judge Tancredi reasoned that
“substantial funds that are the subject matter of this
action, and [that] may be recoverable by the Trustee, have
already been dispatched by [Chen] during the pendency of this
action to China, where [Chen] has roots, family and where her
former husband . . . conducts business and frequents.”
Id. Thus, pursuant to 11 U.S.C. § 105(a),
Judge Tancredi directed Chen to “immediately surrender
and deliver any and all passports or travel papers to her
legal counsel . . . to be held in escrow by his firm.”
Id. at 2. Judge Tancredi scheduled a “further
hearing” on the Travel Order for March 28, 2017,
“to seek its vacation, modification or other
March 24, 2017, Chen filed a motion to recuse Judge Trancredi
from presiding over Chorches v. Chen, Doc. No. 148,
id.; a motion to recuse was not filed in the other
adversary proceeding to which she was a party, Coan v.
Chen, No. 15-ap-05027 (Bankr. D. Conn.). In her motion,
Chen stated that recusal was required due to Judge
Tancredi's “bias and/or prejudice concerning [her],
” as evidenced by his decision to “enjoin [her]
from international travel . . . without due process . . . and
without hearing any testimony from her during the
hearing.” Mot. Recusal, Doc. No. 148, at 1,
Chorches v. Chen, No. 14-ap-05019 (Bankr. D. Conn.
Mar. 24, 2017). She argued that “there has never been
any evidence that [she] is a flight risk” (citing for
support that “[s]he owns a home in New Jersey”
and that “[h]er children go to school in New
Jersey”), and that “[t]here was not a shred of
evidence presented during the hearing that would warrant
restraining [her] from international travel, especially given
the fact that her mother is sick with cancer in China.”