Perkumpulan Investor Crisis Center Dressel WBG v. Sherer, 2:12-cv-00952

Background

Defendants Jared and Michelle Sherer removed an in rem Alaska state action to the U.S. District Court for the District of Utah; removal was improper (wrong district, lack of subject-matter jurisdiction, and failure of all defendants to join).
The court remanded the case to Alaska and awarded plaintiff Perkumpulan attorneys’ fees and costs for the improper removal ($31,156 after lodestar calculation).
The Sherers moved under 28 U.S.C. § 455 to disqualify Judge Nuffer for alleged appearance of partiality based on the fee-order reasoning, and moved under Fed. R. Civ. P. 60(b)(3) to vacate the fee order alleging fraud on the court by plaintiff’s counsel.
Perkumpulan opposed and sought additional fees for defending those motions; it also moved for Rule 11 sanctions against the Sherers as frivolous.
The court denied the disqualification and Rule 60 motions, granted Perkumpulan additional fee awards for expenses caused by removal, and declined to impose Rule 11 sanctions (finding deterrence achieved via fee awards).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Judge must be disqualified under 28 U.S.C. § 455 for appearance of partiality	Perkumpulan: Judge need not recuse; court should assess motion itself	Sherers: Order awarding fees shows bias (ignored veteran/pro se/poverty claims; substantive facts)	Denied — judicial rulings and reasoned fee analysis do not show extrajudicial bias; Sherers failed to show extreme or deep-seated antagonism under Liteky
Whether fee award should be vacated under Rule 60(b)(3) for fraud on the court	Perkumpulan: Fee award compensates for procedural harm of improper removal; alleged fraud in Alaska case irrelevant here	Sherers: Counsel committed fraud in related proceedings; that fraud taints fee order	Denied — Sherers failed to show fraud on the court affecting the remand/fee proceedings; Rule 60(b)(3) relief is extraordinary and not met
Whether attorneys’ fees for opposing removal and subsequent motions were proper	Perkumpulan: Fees recoverable under 28 U.S.C. § 1447(c) for unreasonable removal and for defending motions caused by removal	Sherers: Object to amount and claim poverty/special circumstances	Granted — lodestar applied; hours and rates reasonable; no special circumstances shown to reduce award
Whether Rule 11 sanctions should be imposed for frivolous filings	Perkumpulan: Sherers’ motions were frivolous and increased costs; seek sanctions	Sherers: (implicitly) filings were justified	Denied (no separate Rule 11 sanctions) — court found deterrence met by fee awards and declined separate Rule 11 sanctions at this time

Key Cases Cited

Liteky v. United States, 510 U.S. 540 (1994) (judicial rulings rarely constitute bias; disqualification requires extreme, extrajudicial bias)
Anchondo v. Anderson, Crenshaw & Assoc., L.L.C., 616 F.3d 1098 (10th Cir.) (lodestar framework for fee calculation)
Martin v. Franklin Capital Corp., 546 U.S. 132 (2005) (awarding fees for improper removal can deter meritless removals)
Zurich North America v. Matrix Serv., Inc., 426 F.3d 1281 (10th Cir. 2005) (fraud on the court standard and Rule 60(b)(3) requires clear and convincing proof)
Yapp v. Excel Corp., 186 F.3d 1222 (10th Cir. 1999) (Rule 60(b) relief is extraordinary)
Hinman v. Rogers, 831 F.2d 937 (10th Cir. 1987) (recusal standards; judge need not recuse without a legally sufficient affidavit)
United States v. Grinnell Corp., 384 U.S. 563 (1966) (extrajudicial-source limitation for disqualification analysis)