
USCA1 Opinion

	




        April 20, 1995          [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 94-1957                            RICHARD SIMONE AND LINDA SIMONE,                               Plaintiffs, Appellants,                                          v.                      WORCESTER COUNTY INSTITUTION FOR SAVINGS,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Nathaniel M. Gorton, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                                Torruella, Chief Judge,                                           ___________                          Selya and Boudin, Circuit Judges.                                            ______________                                 ____________________            Richard Simone and Linda Simone on brief pro se.            ______________     ____________            Lucille B. Brennan and Fletcher, Tilton  & Whipple, P.C. on  brief            __________________     _________________________________        for appellee.                                 ____________________                                 ____________________                      Per Curiam.  Plaintiff-Appellants Richard and Linda                      __________            Simone  ("the  Simones")  appeal  from  the district  court's            affirmance  of  the  bankruptcy  court's  dismissal  of their            complaint and allowance of the counterclaim by the defendant,            Worcester County Institution for Savings ("WCIS").  They also            appeal  from the district court's denials  of their motion to            reconsider pursuant to Fed.  R. Civ. P. 59(e) and  motion for            relief from judgment pursuant  to Fed. R. Civ. P. 60(b).  "In            an appeal  from district court  review of a  bankruptcy court            order,  we  independently   review  the  bankruptcy   court's            decision,  applying  the  'clearly  erroneous'   standard  to            findings  of fact and de  novo review to  conclusions of law.                                  __  ____            No  special  deference  is   owed  to  the  district  court's            determinations." Grella  v. Salem Five Cent  Savings Bank, 42                             ______     _____________________________            F.3d 26, 30 (1st Cir. 1994).                      The Simones  argue  on appeal  that the  bankruptcy            court erred in concluding that defendant bank did not violate            either its  common  law duty  or  Mass. Gen.  L.  ch. 93A  in            failing  to  characterize  their  property  as  a  two-family            dwelling  when  advertising  the   foreclosure  sale  of  the            property.    The Simones  also  contend  that the  bankruptcy            court's  error  in granting  plaintiffs' counsel's  motion to            sequester all  witnesses, including Linda Simone  (a party to            the case), entitles them to a new trial.  Finally, they argue            that the district  court erred in denying their Rule 60(b)(2)                                         -2-            motion  seeking  relief from  the judgment  on the  ground of            "newly   discovered  evidence"  showing   partiality  of  the            bankruptcy  court  judge  who  presided  at  the  June,  1992            trial.1                      I.  Breach of Common Law Duty of Mortgagee to                                _________________________________________                          Mortgagor                          _________                      Massachusetts    law   regarding    a   mortgagee's            responsibility to a mortgagor in the context of a foreclosure            sale is as follows:                           The  law   governing  a  mortgagee's                      responsibility  to  the mortgagor  in the                      exercise of a power of sale is relatively                      straightforward.  The mortgagee "must act                      in  good  faith and  must  use reasonable                      diligence to protect the interests of the                      mortgagor."  The motgagee's duty  is more                      exacting when it becomes the buyer of the                      property.  "When a party who is intrusted                      with  a power  to sell  attempts also  to                      become  the purchaser, he will be held to                      the strictest  good faith and  the utmost                      diligence  for  the  protection   of  the                      rights  of  his  principal."   Consistent                      with  these  requirements, the  mortgagee                      has a duty "to obtain for the property as                      large a price as possible."            Williams v. Resolution GGF Oy.,  417 Mass. 377, 382-83 (1994)            ________    __________________            (citations   omitted).  However,   "[t]he  rule   that  'mere            inadequacy  of [the  foreclosure sale]  price alone  does not            necessarily show bad faith or lack of due diligence' has been                                            ____________________            1.  The Simones' brief contains myriad vague  and unsupported            claims of  tampering with  evidence and improper  behavior by            counsel  for  both  parties.    We  reject  those  claims  as            completely unsupported by the record.                                         -3-            repeated or applied by  this court in many cases."  Seppala &                                                                _________            Aho Construction Co. v. Peterson, 373 Mass. 316, 328 (1977).            ____________________    ________                      The  bankruptcy court  made  the following  factual            findings at the June 4, 1992, proceeding:                      I find that the  fair market value of the                      property at  the  time of  the  sale  was                      $135,000.  . . . I find  that it was more                      likely  than not  --  whether or  not the                      sale  was advertised as a two-family sale                      or as a sale  with an in-law apartment or                      words of that affect .  . . that in  June                      of '91, it was  more likely than not that                      no  qualified  bidders  would appear  who                      would  be  prepared  to  bid   more  than                      seventy percent of fair market value.   I                      find  that the  bank acted  in accordance                      with  custom that has  developed over the                      last few  years in bidding in  at what it                      believed  to be  seventy  percent of  the                      fair market value. . .  . I do find  that                      there  were code  violations, and  . .  .                      this property as a two-family, would have                      been in violation of the zoning bylaw . .                      .   ,  even   though  a   certificate  of                      occupancy had been issued.            In  light  of  those  findings,  the  court  ruled  that  the            advertisements  placed by  WCIS were  not unreasonable.   The            appraiser,  on   whom  the  bank  relied,   "was  not  acting            unreasonably in determining that this was essentially a . . .            single-family home."                       The  burden  is on  appellants  to  prove that  the            bankruptcy  court's factual  findings are  clearly erroneous.            See In re Payeur, 22 B.R. 516, 519 (U.S. Bankruptcy Panel for            ___ ____________            the  First Circuit, 1982).  Under  the "clear error" standard            of review, reversal  is warranted only if after reviewing the                                         -4-            entire record, the reviewing court is  left with a "'definite            and  firm conviction  that  a mistake  has been  committed.'"            I.C.C. v. Holmes Transp., Inc., 983 F.2d 1122 (1st Cir. 1993)            ______    ____________________            (citation omitted).                      WCIS hired  ATR  Appraisal Consultants  ("ATR")  to            prepare  two  appraisals  of  the subject  property,  one  in            November,  1990 (prior  to the  first scheduled  sale  of the            property,  which was  postponed  when the  Simones filed  for            bankruptcy)  and one  in  May,  1991  (prior  to  the  second            scheduled  sale of  the  property).   The November  appraisal            noted in an addendum that the property consisted of a "multi-            level  style dwelling with finished basement set up as an in-            law apartment."   ATR  explained  its decision  to treat  the            dwelling as a single-family as follows:                      As   the  basement   apartment  contained                      windows which did not  appear to be  code                      and   as   its  present   layout  created                      functional  problems,   the  subject  was                      treated as a single family residence with                      finished  basement.   It  should  also be                      noted  that  current zoning  requirements                      require an  8,000 sq.  ft. lot for  a two                      family dwelling.   It  is not known  if a                      permit was  filed  in order  to obtain  a                      variance  to  allow   for  a   two-family                      building.            The  November  report  estimated  the  market  value  of  the            property to be $144,000.                      ATR's May 1991 report, noting that "market appears to            be declining,"  estimated the  property's market value  to be            $135,000.  The second appraisal  also treated the dwelling as                                         -5-            a single-family given the  condition of the unit  revealed by            the November, 1990  inspection.  (ATR was unable  to re-enter            the apartment  for inspection  in May,  1991.)   Both reports            relied  primarily  upon the  "Sales  Comparison Approach"  as            yielding the most accurate  estimate of the property's market            value.    ATR  noted  that  "[t]ypically  the  price paid  at            foreclosure is  substantially less than the  indicated Market                            _____________            Value of  the  foreclosed property."    The May  1991  report            estimated a  foreclosure sale  value of between  $108,000 and            $115,000.                      The  Simones  contend  that  ATR's  appraisals were            unreasonable in failing to treat the dwelling as a two-family            and in  failing to apply the "income  approach" to estimating            its market value.   That contention is  undercut, however, by            their  own appraiser's  report.   Thomas  Head, an  appraiser            hired  by the Simones, testified  at trial that his November,            1991 appraisal,  which treated the dwelling  as a two-family,            estimated the market value of the property at that time to be            $135,000.   Therefore,  whether  treating the  dwelling as  a            single-family with  a finished  basement or as  a two-family,            the appraisals  arrived at  the same estimated  market value.            In  addition, ATR researched the  value of the  property as a            two-family dwelling and  concluded in a June  18, 1991 letter            to WCIS that the estimated value would remain in the $135,000            to $145,000 range.       At  trial,  Kimberly Comeau  (one of                                         -6-            the two  ATR appraisers  who prepared the  reports) testified            that her visit  to the  Building Department for  the City  of            Worcester had revealed that current zoning required a minimum            lot  size of 8,000 square  feet for a  two-family dwelling at            the relevant location.  Given  that the subject lot contained            only 7,960 square feet and that there  was no evidence that a            special permit  had been  granted, Ms. Comeau  concluded that            the  use  of  the  property as  a  two-family  dwelling would            violate the applicable zoning  laws.  The Simones argue  that            the Certificate of Occupancy  issued to them by  the Building            Department  in 1987, when  they converted the  basement to an            apartment, demonstrates  that the  unit does not  violate the            zoning laws.                      Even assuming, without deciding,  that ATR erred in            concluding  that the  use  of the  property  as a  two-family            dwelling  violated  the zoning  laws,  that  error would  not            invalidate its estimate of market  value or its treatment  of            the dwelling as  a single-family.   As Ms.  Comeau stated  at            trial, ATR's decision to  appraise the dwelling as  a single-            family dwelling was based upon a conclusion that "the highest            and best use of  the subject property was as  a single-family            residence."    She  explained  that  she  believed  that  the            property  would not  be  purchased as  a  two-family for  the            following reasons:                           Well, based on our findings upon the                      inspection  in which  the  layout of  the                                         -7-                      basement    unit    was    awkward    and                      unconventional.      We  also   had  some                      questions as to possible code violations.                      In  addition,  we did  consider  the two-                      family market;  and due to  risk involved                      in the two-family  market, we  determined                      that  the  highest and  best  use of  the                      property was that of a single-family.            A  May  17,  1991,   Code  Inspection  Report  noted  several            violations in  the basement apartment.   Although that report            was  not received  by  WCIS  until  after  the  sale  of  the            property, it confirms ATR's impression (noted in its reports)            that code violations were present in the basement unit.2                      WCIS admits that it  considered the income from the            second  unit in  granting a  second mortgage  on  the subject            property  and that it  insured the property  as a two-family.            Those decisions,  however, may merely reflect  the actual use            of  the  property as  a two-family  dwelling at  the relevant            times.   It does not necessarily follow, and the Simones have            failed to  demonstrate, that WCIS was  obligated to advertise            the property as  a two-family  because it was  being used  as            such at  the time of the  sale.  ATR  determined that single-            family  occupancy  was  the  "highest  and  best  use of  the            property",  i.e., "the  most  profitable and  feasible"  use.                                            ____________________            2.  The code inspection was  performed in response to reports            of violations  by the upstairs tenant,  who allegedly offered            to purchase the property for $154,900 in February, 1991.  The            Simones  cite the  offer  as evidence  that  WCIS could  have            obtained  a  higher price  for the  property  if it  had been            advertised  as a  two-family.   Mr.  Simone  admitted at  his            deposition, however,  that the sale fell  through for unknown            reasons.                                          -8-            WCIS reasonably relied upon that determination in advertising            the property.                      The  Simones argue  that if  the property  had been            advertised as  a two-family  dwelling, there would  have been            more bidders and, consequently, a higher purchase price would            have resulted.   Plaintiff's professional auctioneer witness,            however, only testified that  if the property were advertised            as  a  two-family,  it  would  have  attracted  a  "different            audience."    Given  ATR's  reasonable  conclusion  that  the            "highest  and  best use"  of the  property  was as  a single-            family,  WCIS'  decision to  advertise  it  as  such did  not            violate its duty to the Simones.                      Based upon the above evidence, we conclude that the            bankruptcy  court did  not err  in dismissing  the complaint.            After reviewing the entire  record, we are not left  with the            "definite and  firm  conviction," I.C.C.  v. Holmes  Transp.,                                              ______     ________________            Inc.,  983   F.2d  at  1129,  that   the  bankruptcy  court's            ____            conclusion that WCIS acted  in good faith was mistaken.   Nor            are we persuaded  that the court  was mistaken in  concluding            that WCIS reasonably relied upon ATR's determination that the            property  was  essentially  a   single  family  home.3    The            bankruptcy court properly  concluded that the Simones  failed                                            ____________________            3.    We note that the  record indicates that the Simones did            not  object to the advertisement of the dwelling as a single-            family  until after  the  sale occurred,  although the  first            advertisement was published approximately six months earlier,            in November, 1990.                                         -9-            to prove that  the advertisement and  sale of the  foreclosed            property amounted to a breach of WCIS' common law duty to the            Simones.                      II.  Mass. Gen. L. ch. 93A Violation                           _______________________________                      The complaint also alleged that WCIS' advertisement            and sale of the foreclosed property violated  c. 93A    2 and            9.  Section  2(a) of  chapter 93A makes  unlawful "unfair  or            deceptive  acts or practices in  the conduct of  any trade or            commerce." Section 9 authorizes  suit by "[a]ny person, other            than a person entitled  to bring action under  section eleven            of this chapter, who has been injured by another person's use            or employment of any  method, act or practice declared  to be            unlawful by section two . . . ."  Section  11 authorizes suit            by  persons  who "engage[]  in the  conduct  of any  trade or            commerce."                      It is unclear, and neither the bankruptcy court nor            the district  court addressed the issue,  whether the Simones            were  "engaged in  the  conduct of  trade  or commerce"  and,            therefore, required to  bring suit  under   11.  The test  is            "whether  the  defendant's conduct  giving  rise  to the  93A            violation  occurred in  connection  with .  .  . a  plaintiff            individual  acting  in  a  business  context."    Michael  C.            Gilleran,  The Law of Chapter 93A    8.5 (1989 & Supp. 1994).                       ______________________            At the time  of the  foreclosure and sale,  the Simones  were            renting the  subject dwelling  to two  families, and were  no                                         -10-            longer living there  themselves. Section  1(b) defines  trade            and  commerce to  include  "the rent  .  .  . of  .  . .  any            property."                      It is unnecessary  to resolve this  issue, however,            since the Simones have failed  to meet the requisite standard            under either   11 or   9.  "The defendant in a   9  case will            or  will not  have  violated    9  depending on  whether  the            defendant acted in an  equitable manner toward the plaintiff.            The  equity  standard  in      9  cases  requires  that   the            defendant's   conduct  not  have  violated  some  established            concept of  unfairness or  otherwise  be immoral,  unethical,            oppressive  or  unscrupulous."  M.  Gilleran,  supra,     4.7                                                           _____            (citing cases); see also Gerli  v. G.K. Hall & Co.,  851 F.2d                            ___ ____ _____     _______________            452, 454  (1st Cir.  1988). "A plaintiff  claiming unfairness            under     11 must  show rascality,  that  is, a  violation of            conventional  business ethical norms."  M. Gilleran, supra,                                                                   _____            4.8 (citing cases); see also Midwest Precision Services, Inc.                                ___ ____ ________________________________            v. PTM Inds. Corp., 887 F.2d 1128, 1139 (1st Cir. 1989).               _______________                      The bankruptcy court  specifically found that  WCIS            acted in good  faith and  that it behaved  in a  commercially            reasonable  manner.   Given  those findings,  which were  not            clearly  erroneous, we  conclude that  the Simones  failed to            establish that WCIS' conduct violated  Mass. Gen. L. ch. 93A.            Therefore,  the bankruptcy  court did  not err  in dismissing            that claim.                                         -11-                      III.  Sequestering of Witnesses                            _________________________                      The Simones argue  on appeal, as they did  in their            motion for  reconsideration, that the  sequestering of  Linda            Simone during the trial violated their rights.  Fed. R. Evid.            615 provides, in relevant part, as follows:                           At the request of  a party the court                      shall  order  witnesses excluded  so that                      they cannot hear  the testimony of  other                      witnesses, and it  may make the  order of                      its  own  motion.    This rule  does  not                      authorize exclusion of (1) a party who is                      a natural person . . . .            The  district  court  ruled as  follows  in  response to  the            Simones' motion for reconsideration:                           Having reviewed the trial transcript                      in connection with appellants' contention                      that   Linda    Simone   was   improperly                      sequestered   at    trial,   and   having                      concluded   that   she  was   sequestered                      pursuant to the motion of counsel for the                      Simones,  it  is   hereby  Ordered   that                      appellants'   motion  to   reconsider  is                      DENIED.            We  agree  with the  district court  that  by moving  for the            sequestration  of  witnesses,  specifically  including  Linda            Simone,  and  by  failing  to object  during  the  bankruptcy            proceeding to  the sequestering of Linda  Simone, the Simones            waived the issue.   Cf. United States v. Abbott,  30 F.3d 71,                                ___ _____________    ______            73  (7th Cir. 1994) (failure to move for exclusion of witness            at trial constitutes waiver of  argument on appeal that court            erred  in failing to exclude  witness); Hull v.  Merck & Co.,                                                    ____     ___________            758 F.2d 1474, 1478 (11th Cir. 1985) (denying request for new                                         -12-            trial  where plaintiff  had been  excluded from  courtroom in            violation of  Fed. R.  Evid. 615(1), but  plaintiff --  after            returning to the courtroom --  agreed to proceed with trial).            Moreover,  the  Simones   have  failed  to   demonstrate  any            prejudice as  a result of  Linda Simone's exclusion  from the            courtroom.  See United States v. Bobo, 586 F.2d 355, 366 (5th                        ___ _____________    ____            Cir.  1978) (party seeking reversal  on basis of violation of            Fed.  R.  Evid. 615  must  demonstrate  prejudice therefrom),            cert. denied, 440 U.S. 976 (1979).            _____ ______                      IV.  Partiality Claim                           ________________                      The Simones argue that  the Bankruptcy Judge  ought            to have disqualified himself from presiding over the June  4,            1992,  trial.  They argue  that his previous employment as an            attorney at a law firm where defense counsel was then working            as  a paralegal, required his  recusal.  They further suggest            an  additional conflict:   that the  judge's former  law firm            represented WCIS.   A motion for recusal was  not made to the            bankruptcy court.  Instead, the Simones raised the partiality            issue  for the first time  in their Rule  60(b)(2) motion for            relief  from  judgment  on  the ground  of  newly  discovered            evidence.  The motion was filed and denied while the Simones'            motion for reconsideration pursuant to  Fed. R. Civ. P. 59(e)            was pending.  The Simones  did not appeal from the  denial of            their Rule 60(b) motion and WCIS argues that, therefore, they                                         -13-            have waived  the issue.   We need not decide  the question of            waiver  since  we  conclude  that  the  partiality  claim  is            entirely without merit.                        WCIS  admits that  its counsel "from  October, 1978            through June  1985, . . . was a paralegal employed at the law            firm  of Bowditch & Dewey  and during that  time often worked            with  Judge Queenan,  who, during  that same  period, was   a            lawyer and member  of the  firm."  Contrary  to the  Simones'            contention on  appeal,  however, those  circumstances do  not            require recusal.  The relevant statute provides as follows:                      Any  justice, judge or  magistrate of the                      United States shall disqualify himself in                      any proceeding in which  his impartiality                      might reasonably be questioned.            28  U.S.C.   455.  This court  has interpreted the statute to            require disqualification "`only if  the facts provide what an            objective, knowledgeable  member of the public  would find to            be   a   reasonable   basis    for   doubting   the   judge's                     __________   _____            impartiality.'"  In re Allied Signal, Inc., 891 F.2d 967, 970                             _________________________            (1st Cir.  1989) (citations omitted), cert.  denied, 495 U.S.                                                  _____  ______            957 (1990).  WCIS' counsel's employment, seven years earlier,            as  a paralegal at the  firm where the  Bankruptcy Judge then            worked  as an  attorney,  and her  work  with the  Judge,  on            matters unrelated to the  present controversy, do not provide            a "reasonable basis for doubting the judge's impartiality" in            this case.   See Singer  v. Wadman, 745  F.2d 606, 608  (10th                         ___ ______     ______            Cir. 1984)  (holding that  judge's former partnership  with a                                         -14-            lawyer   for  one   of   the  defendants   did  not   require            disqualification), cert. denied, 470 U.S. 1028 (1985).                               _____ ______                      Nor   does  the   Simones'   allegation  that   the            Bankruptcy Judge's former  law firm represented  WCIS require            recusal.   "[A] charge of  partiality must be  supported by a            factual  basis." Allied Signal, 891  F.2d at 970.   Here, the            _______  _____   _____________            Simones have provided only  the following vague suggestion of            partiality:                      [The  Bankruptcy  Judge]  at   one  point                      either   worked  at   the  Law   Firm  of                      Bowdwitch  &  Dewey of  Worcester  Ma. or                      Fletcher Tilton &  Whipple of  Worcester,                      Ma. and .  . . either of these  two Firms                      handled the accounts for W.C.I.S. Bank.            Even  if  the  factual   basis  were  adequate,  the  alleged            relationships  would not  necessarily  require recusal.   See                                                                      ___            National Auto Brokers v.  General Motors Corp., 572  F.2d 953            _____________________     ____________________            n.9  (2d  Cir. 1978)  (citing     455(b)(2)  and noting  that            "[e]ven under the more  stringent requirements of the current            statute,  . .  . the prior  representation of  [defendant] by            [judge's prior  law firm and  judge] as to  unrelated matters            would not require him to recuse himself"), cert.  denied, 439                                                       _____  ______            U.S. 1072 (1979).                      For  all  the  foregoing  reasons,  we  affirm  the                                                              ______            district  court's   affirmance  of  the   bankruptcy  court's            dismissal of this case.                                         -15-
