In re Fundamental Long Term Care, Inc., 602 B.R. 363

Involuntary Chapter 7 petition filed against Fundamental Long Term Care, Inc.; Trustee appointed January 2012; lengthy litigation and multiple settlements produced estate recoveries and interim distributions.
Probate Estates (creditors) hold large prepetition judgments and are represented by Wilkes; they will receive no additional cash from future recoveries because deferred attorney fees exceed anticipated distributions.
Shumaker was employed as special litigation counsel for the Trustee (approved 2012) and withdrew in December 2015; Probate Estates later filed a Motion to Disqualify Shumaker (seeking disgorgement and nunc pro tunc disqualification) in June 2018.
The Probate Estates alleged conflicts based on Shumaker’s prior representations (including Health Care REIT/Welltower and related entities) and asserted undisclosed ties that could disqualify Shumaker.
The Probate Estates moved to withdraw the reference partly because the Court’s law clerk, Edward Comey, was a former Shumaker associate and his spouse is an equity partner at Shumaker; District Court denied withdrawal. The Probate Estates then filed a Motion for Recusal under 28 U.S.C. § 455.
The Bankruptcy Court screened Comey from the case as of June 4, 2018; the court concluded Comey has not worked on the matter since then and will have no future involvement.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the judge must be recused due to law clerk's spouse having a financial interest in a party/firm (§ 455(b)(4))	Comey’s spouse is an equity partner at Shumaker; spouse’s financial interest could be affected by disgorgement, so clerk’s conflict should be imputed to judge requiring recusal	Clerk was screened; judge is presumed impartial; imputation not automatic where clerk had no substantive participation and no actual judicial bias shown	Court denied recusal of the judge; granted isolation/screening of the clerk only
Whether clerk possessed disqualifying personal knowledge or bias requiring recusal (§ 455(b)(1))	Comey formerly worked at Shumaker (2005–2010) and "likely" has personal knowledge of disputed facts, conflicts checks, and relationships relevant to the Disqualification Motion; he should have been screened earlier and prior participation taints the record	Allegations are speculative ("likely"); no specific facts shown that Comey gained relevant personal knowledge; HCN never named an adverse party; Comey has not worked on the case since June 4, 2018	Court found no evidence Comey had personal knowledge of disputed facts; screening sufficed; judge’s recusal not warranted

Hunt v. American Bank & Trust Co. of Baton Rouge, La., 783 F.2d 1011 (11th Cir. 1986) (recusal not required where conflicted court staff did not work on the case and no judicial bias was alleged)
Parker v. Connors Steel Co., 855 F.2d 1510 (11th Cir. 1988) (law clerk conflicts are not necessarily imputed to judges; judges can set aside clerks' potential biases)
Onishea v. Hopper, 126 F.3d 1323 (11th Cir. 1997) (discussing standards for when impartiality might reasonably be questioned)
In re Fundamental Long Term Care, Inc., 507 B.R. 359 (Bankr. M.D. Fla. 2014) (background on extensive litigation and claims in this bankruptcy)