Helmer et al v. Pogue
MEMORANDUM OPINION. Signed by Judge Virginia Emerson Hopkins on 10/22/12. (ASL)
2012 Oct-22 PM 04:14
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
JAMES B. HELMER, JR.,;
HELMER MARTINS RICE &
POPHAM CO., L.P.A.,
) Case No.: 2:12-CV-1635-VEH
Plaintiffs James B. Helmer, Jr. (“Mr. Helmer”) and Helmer Martins Rice &
Popham Co., L.P.A. (“HMRP”) (collectively, the “Helmer Parties”) initiated this
abuse of process and malicious prosecution lawsuit against Defendant Scott Pogue
(“Mr. Pogue”) on April 20, 2012. (Doc. 1 at 1; id. ¶¶ 76-80 (setting forth the Helmer
Parties’ two counts against Mr. Pogue)). The claims asserted by the Helmer Parties
in this court relate to two preexisting proceedings: (1) the Helmer Parties’ prior
representation of Mr. Pogue in a qui tam action (the “Qui Tam Action”) in 1994; and
(2) Mr. Pogue’s subsequent legal malpractice suit relating to the Helmer Parties’
representation of him in the Qui Tam Action filed as an adversary proceeding in Mr.
Pogue’s bankruptcy case in 2008.
Pending before the court is Mr. Pogue’s Motion for Judgment on the Pleadings
Or, in the Alternative, for Summary Judgment and Supporting Brief (Doc. 15) (the
“Motion”) filed on August 20, 2012. Mr. Pogue provided his supporting evidence on
this same date. (Doc. 14).
The Helmer Parties filed their opposing materials on September 10, 2012
(Docs. 15-21), and on September 18, 2012. (Doc. 22). Mr. Pogue followed with his
reply on September 24, 2012. (Doc. 23). Accordingly, the Motion is now under
submission, and for the reasons explained below is due to be granted in part on
jurisdictional grounds only and otherwise termed as moot.
Rule 12(c) of the Federal Rules of Civil Procedure provides:
After the pleadings are closed--but early enough not to delay trial--a
party may move for judgment on the pleadings.
Fed. R. Civ. P. 12(c).
Relatedly, “[i]f on a motion under . . . 12(c), matters outside the pleadings are
presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56.” Fed. R. Civ. P. 12(d) (emphasis added). Here,
both sides have presented to the court information arising outside of the parties’
pleadings. Accordingly, the court considers the Motion under the summary judgment
standard set forth below.
Summary judgment is proper only when there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. Fed. R . Civ. P.
56(c). All reasonable doubts about the facts and all justifiable inferences are resolved
in favor of the nonmovant. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th
A dispute is genuine “if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). “Once the moving party has
properly supported its motion for summary judgment, the burden shifts to the
nonmoving party to ‘come forward with specific facts showing that there is a genuine
issue for trial.’” International Stamp Art, Inc. v. U.S. Postal Service, 456 F.3d 1270,
1274 (11th Cir. 2006) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586-87, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986)).
STATEMENT OF FACTS1
Mr. Pogue (i.e., the named defendant in this federal lawsuit) was the sole
relator in the Qui Tam Action that was filed in 1994 and was identified above in the
introductory section. AF No. 1.2 The Helmer Parties (i.e., the named plaintiffs in this
case) became involved as co-counsel for Mr. Pogue in the Qui Tam Action. AF No.
On February 27, 2007, Mr. Pogue (as an individual)3 filed a petition for relief
under Chapter 11 (the “Chapter 11 Petition”) of the United States Bankruptcy Code
in the Bankruptcy Court of the Northern District of Alabama, Southern Division (the
Keeping in mind that when deciding a motion for summary judgment the
court must view the evidence and all factual inferences in the light most favorable to
the party opposing the motion, the court provides the following statement of facts.
See Optimum Techs., Inc. v. Henkel Consumer Adhesives, Inc., 496 F.3d 1231, 1241
(11th Cir. 2007) (observing that, in connection with summary judgment, a court must
review all facts and inferences in a light most favorable to the non-moving party).
This statement does not represent actual findings of fact. See In re Celotex Corp.,
487 F.3d 1320, 1328 (11th Cir. 2007). Instead, the court has provided this statement
simply to place the court’s legal analysis in the context of this particular case or
“AF” stands for admitted fact. These admitted facts are taken from Mr.
Pogue’s narrative summary of undisputed facts contained in its brief (Doc. 15 ¶¶ 1-2,
30, 34, 37-38, 41-43, 52-56, 58-59) and the Helmer Parties’ response. (Doc. 16 at
3-5). While the parties reference many other facts in their briefs, those have not been
included in this background section, as they are immaterial to the court’s
jurisdictional ruling on summary judgment.
(See Doc. 14 at Ex. 1 at 1 (indicating individual as type of debtor)).
“Bankruptcy Court”). AF No. 30. On January 22, 2008, Mr. Pogue, as the debtor-inpossession, commenced an adversary proceeding in the Bankruptcy Court against the
Helmer Parties (the “Helmer Parties AP”) (Case No. 08-0023), relating to their
representation of him in the Qui Tam Action and asserting numerous claims for relief,
including legal malpractice. AF No. 34.
The Helmer Parties sought to dismiss the Helmer Parties AP, which motion the
Bankruptcy Court denied. AF Nos. 37, 38. Subsequently, the Helmer Parties filed
a counterclaim on April 30, 2008, in which they alleged abuse of process and made
other claims. AF No. 38.
On January 23, 2009, Mr. Pogue filed his First Amended Plan of
Reorganization (the “Plan”). AF No. 41. The Helmer Parties accepted and consented
to the Plan. AF No. 42. On March 5, 2009, the Bankruptcy Court entered an Order
on Confirmation of the Debtor’s First Amended Plan of Reorganization (the
“Confirmation Order”). AF No. 43.
The Helmer Parties AP proceeded through discovery and extensive pretrial
proceedings, including motions for summary judgment, which the Bankruptcy Court
denied. AF No. 52. A trial of the Helmer Parties AP took place over three days in
December of 2009. AF No. 53. At the close of Mr. Pogue’s case, the Helmer Parties
filed a motion for a judgment as a matter of law, but the Bankruptcy Court deferred
ruling on it. AF No. 54.
On March 21, 2012, the Bankruptcy Court entered an order disallowing a claim
for attorney’s fees (the “Claim #9”) made by HMRP, finding that the Helmer Parties
had already been paid the reasonable value of their legal services via an earlier
settlement with the defendants in the Qui Tam Action. AF No. 55. On this same
date, the Bankruptcy Court also abstained from all issues raised in the Helmer Parties
AP, other than the disposition of Claim #9. AF No. 56.
The Helmer Parties appealed the disallowance of HMRP’s Claim #9, but did
not appeal the abstention ruling as to the other claims. AF No. 58. The Helmer
Parties filed this federal lawsuit against Mr. Pogue without obtaining prior permission
from the Bankruptcy Court. AF No. 59.
Subject Matter Jurisdiction
Mr. Pogue initially asserts that this court lacks subject matter jurisdiction to
hear the Helmer Parties’ claims pursuant to the so-called Barton doctrine. See Barton
v. Barbour, 104 U.S. 126, 128, 26 L. Ed. 672 (1881) (“It is a general rule that before
suit is brought against a receiver[,] leave of the court by which he was appointed must
be obtained.”). As Mr. Pogue more specifically maintains, because the Helmer
Parties did not obtain permission from the bankruptcy court to sue him for abuse of
process and malicious prosecution, the court must dismiss their lawsuit for lack of
subject matter jurisdiction.
Barton Within The Eleventh Circuit
The Eleventh Circuit has apparently only written about the Barton doctrine
three times, and has only published two of those opinions.4 The Eleventh Circuit first
addressed the issue in Carter v. Rodgers, 220 F.3d 1249 (11th Cir. 2000):
This case presents an issue of first impression in this circuit
regarding whether a debtor first must obtain leave from the bankruptcy
court before it can initiate an action in the district court when that action
is against the trustee or other bankruptcy-court-appointed officer, for
acts done in the actor’s official capacity. Joining the other circuits that
have considered this issue, we hold that a debtor must obtain leave of
the bankruptcy court before initiating an action in district court when
that action is against the trustee or other bankruptcy-court-appointed
officer, for acts done in the actor’s official capacity.
“An unbroken line of cases ... has imposed [this] requirement as
a matter of federal common law.” Linton, 136 F.3d at 545. In so
holding, these circuit courts have applied the rule referred to as the
“Barton doctrine.” See id. The Supreme Court in Barton v. Barbour,
104 U.S. 126, 127, 26 L. Ed. 672 (1881), stated that “[i]t is a general
rule that before suit is brought against a receiver[,] leave of the court by
which he was appointed must be obtained.” Barton involved a receiver
The unpublished decision by the Eleventh Circuit that deals with Barton is
Patco Energy Express, LLC v. Lambros, 353 Fed. App’x 379 (11th Cir. 2009). Patco
involves Barton in the context of a § 1983 action against a state court-appointed
receiver. 353 Fed. App’x at 380. Due to Patco’s non-binding and factually distinct
nature, the court limits its analysis to the Eleventh Circuit’s published authorities
in state court, but the circuit courts have extended the Barton doctrine
to lawsuits against a bankruptcy trustee. In Linton, the Seventh Circuit
explained the reasons behind its application of the Barton doctrine to a
bankruptcy trustee, as follows: “The trustee in bankruptcy is a statutory
successor to the equity receiver, and ... [j]ust like an equity receiver, a
trustee in bankruptcy is working in effect for the court that appointed or
approved him, administering property that has come under the court's
control by virtue of the Bankruptcy Code.” 136 F.3d at 545.
Carter, 220 F.3d at 1252 (footnote and citations omitted) (emphasis added).
After embracing the Barton doctrine, including its subsequent extension to
bankruptcy trustees as a matter of federal common law, the Eleventh Circuit then
determined that the rule properly applied to the plaintiff-debtor’s case before it and
further found that it saw no basis for drawing a distinction between those suits
originating in state versus federal court:
Plaintiff's suit is a run-of-the-mill Barton case. Carter sued
Defendants in district court for breaches of fiduciary duties stemming
from their official bankruptcy duties. He needed leave of the bankruptcy
court, and absent that leave, the district court correctly found that it did
not have subject matter jurisdiction over his cause of action.
B. Federal vs. State Causes of Action
Carter argues that the Barton doctrine requires parties to obtain
leave of the bankruptcy court only when they wish to pursue a state
court remedy. We disagree, and hold that when leave is required, it is
required before pursuing remedies in either state or other federal courts.
We find no reason to distinguish between instances where the trustee is
sued in state court and those in which the trustee is sued in federal court.
See Kashani v. Fulton (In re Kashani), 190 B.R. 875, 885 (9th Cir. BAP
1995) (“[L]eave to sue the trustee is required to sue in those federal
courts other than the bankruptcy court which actually approves the
trustee’s appointment.”); In re Krikava, 217 B.R. 275, 279 (Bankr. D.
Neb. 1998) (“Consent of the appointing bankruptcy court is required
even when the plaintiff seeks to sue in another federal court.”).
Carter, 220 F.3d at 1253 (emphasis added).
The Eleventh Circuit also found to be without merit the plaintiff-debtor’s
suggestion that, because his claims failed to meet the “related to” bankruptcy
requirement, he was not obligated “to obtain leave of the bankruptcy court before
bringing his suit in district court.” Carter, 220 F.3d at 1253. As the court clarified:
While Carter’s action against Defendants arose after the date of
the bankruptcy petition, his suit turns solely on allegations of
wrongdoing in the sale of property belonging to the bankruptcy estate.
Any recovery would reduce the administrative expenses of the sale of
the estate property and would perforce increase the amount of estate
property available to satisfy creditors’ claims. See 11 U.S.C. §
541(a)(7); see, e.g., McGuirl v. White, 86 F.3d 1232 (D.C. Cir.1996).
Thus, the outcome of this case will impact Carter’s bankruptcy estate.
Carter, 220 F.3d at 1253-54 (footnote omitted).
Finally, the Eleventh Circuit articulated why the statutory exception to the
Barton doctrine was inapplicable in Carter.
Section 959 provides for a limited exception to the Barton doctrine,
permitting suits against “[t]rustees, receivers or managers of any
property ... without leave of the court appointing them, with respect to
any of their acts or transactions in carrying on the business connected
with such property.” 28 U.S.C. § 959(a). However, we note that the
“carrying on business” exception in section 959 is limited and not
The “carrying on business” exception in section 959(a) is
intended to “permit actions redressing torts committed in furtherance of
the debtor’s business, such as the common situation of a negligence
claim in a slip and fall case where a bankruptcy trustee, for example,
conducted a retail store.” Lehal Realty Assocs., 101 F.3d at 276. Section
959(a) does not apply to suits against trustees for administering or
liquidating the bankruptcy estate. See id. (“[Section] 959 does not
apply where, as here, a trustee ... perform [s] administrative tasks
necessarily incident to the consolidation, preservation, and liquidation
of assets in the debtor’s estate.”); DeLorean Motor Co., 991 F.2d at
1241 (“Merely collecting, taking steps to preserve, and/or holding
assets, as well as other aspects of administering and liquidating the
estate, do not constitute ‘carrying on business’ as that term has been
judicially interpreted.”) (citations omitted).
Carter’s action against the Defendants was for breach of fiduciary
duty and involves the Defendants’ duties as they relate to the
administration and liquidation of his estate. Because the alleged
breaches attributed to Defendants are not premised on an act or
transaction of a fiduciary in carrying out Carter’s business operations,
section 959(a) is not applicable.
Carter, 220 F.3d at 1254 (emphasis added).
In a debtor’s lawsuit challenging various actions of a trustee and a group of
creditors as an attempt “to gain a litigation advantage[,]” Lawrence v. Goldberg, 573
F.3d 1265, 1268 (11th Cir. 2009), the Eleventh Circuit further explained the contours
of the Barton doctrine:
The district court dismissed Lawrence’s complaint on the basis of
the Barton doctrine. In Barton, a court in equity had appointed a
receiver “of all the property, rights, and franchises” of a railroad
company. Barton, 104 U.S. at 126-27. While the receiver was operating
the railroad, one of the company’s train cars derailed, and a passenger
sustained personal injuries. Id. at 127. The injured passenger attempted
to sue the receiver without obtaining the leave of the court that had
appointed the receiver. Id. The Supreme Court reasoned that allowing
the plaintiff’s action to proceed without leave of the appointing court
would have been “an usurpation of the powers and duties which
belonged exclusively to [the appointing] court.” Id. at 136. Therefore,
the Supreme Court held that a court does not have “jurisdiction, without
leave of the court by which the receiver was appointed, to entertain a
suit against him for a cause of action ... based on his negligence or that
of his servants in the performance of their duty in respect of [the
property administered by the receiver].” Id. at 137.
In 2000, we held-in our only published case interpreting the
Barton doctrine-that, as a matter of federal common law, “a debtor must
obtain leave of the bankruptcy court before initiating an action in district
court when that action is against the trustee or other
bankruptcy-court-appointed officer, for acts done in the actor’s official
capacity.” Carter, 220 F.3d at 1252. We also held that the Barton
doctrine applies to actions against officers approved by the bankruptcy
court when those officers function “as the equivalent of court appointed
officers.” Id. at 1252 n.4; cf. Lowenbraun v. Canary (In re Lowenbraun),
453 F.3d 314, 321 (6th Cir. 2006) (holding that the Barton Doctrine
“applies to trustees’ counsel as well as to trustees themselves”). In
Carter, we explained that the Barton doctrine helps to ensure the proper
functioning of the bankruptcy process:
If [the trustee] is burdened with having to defend against
suits by litigants disappointed by his actions on the court’s
behalf, his work for the court will be impeded.... Without
the requirement [of leave], trusteeship will become a more
irksome duty, and so it will be harder for courts to find
competent people to appoint as trustees. Trustees will have
to pay higher malpractice premiums, and this will make the
administration of the bankruptcy laws more expensive....
Furthermore, requiring that leave to sue be sought enables
bankruptcy judges to monitor the work of the trustees more
Carter, 220 F.3d at 1252-53 (alteration in original) (quoting In re
Linton, 136 F.3d 544, 545 (7th Cir. 1998)).
Lawrence, 573 F.3d at 1269 (emphasis added).
In affirming the district court’s decision that it lacked subject matter
jurisdiction due to the Barton doctrine in Lawrence, the Eleventh Circuit first rejected
the plaintiff’s contention that it should not have applied to all of the defendants.
Instead, the Eleventh Circuit found that because the lawsuit “concerned actions taken
[by the trustee and other defendants] in their official [bankruptcy] capacities” and,
with respect to the creditor defendants sued, involved allegations that “they breached
their official fiduciary duties to the Trustee and the bankruptcy court[,]” Barton did
appropriately extend to all the defendants. 573 F.3d at 1270.
Secondarily, the Eleventh Circuit was not persuaded that the plaintiff’s lawsuit
was “unrelated to his bankruptcy proceeding.” Id. As the Eleventh Circuit reasoned:
Bankruptcy courts have jurisdiction to hear “any or all cases under title
11 and any or all proceedings arising under title 11 or arising in or
related to a case under title 11,” upon referral by a district court. 28
U.S.C. § 157(a) (2006). “‘Arising under’ proceedings are matters
invoking a substantive right created by the Bankruptcy Code. The
‘arising in a case under’ category is generally thought to involve
administrative-type matters....” Cont’l Nat'l Bank of Miami v. Sanchez
(In re Toledo), 170 F.3d 1340, 1345 (11th Cir. 1999) (citations omitted).
We have adopted the following guidelines for determining whether a
civil proceeding is “related to” a bankruptcy proceeding:
The ... test for determining whether a civil proceeding is
related to bankruptcy is whether the outcome of the
proceeding could conceivably have an effect on the estate
being administered in bankruptcy. The proceeding need
not necessarily be against the debtor or against the debtor’s
property. An action is related to bankruptcy if the outcome
could alter the debtor’s rights, liabilities, options, or
freedom of action (either positively or negatively) and
which in any way impacts upon the handling and
administration of the bankrupt estate.
Miller v. Kemira, Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784, 788
(11th Cir. 1990) (quoting Pacor Inc. v. Higgins, 743 F.2d 984, 994 (3d
Although Lawrence raises claims under a variety of state and
federal laws, the essence of Lawrence’s complaint is that the Trustee and
the other defendants colluded to enforce the Turn Over Order, an order
of the bankruptcy court, and otherwise unlawfully attempted to bring
assets into the bankruptcy estate. The outcome of Lawrence’s civil suit
clearly could have an effect on the handling and administration of his
bankruptcy estate. All of Lawrence’s civil claims fall within the scope
of the Barton doctrine because they are “related to” his bankruptcy
Lawrence, 573 F.3d at 1271-72 (emphasis added).
Does Barton Apply Here?
In responding to Mr. Pogue’s Barton challenge, the Helmer Parties maintain:
Pogue’s attempt to extend the Barton doctrine to shield the debtor
from liability for his own torts is contrary to the plain meaning of the
doctrine and the 11th Circuit cases adopting it. From Barton v.
Barbour, 104 U.S. 126 (1881), “the general rule has arisen that ‘before
suit is brought against a receiver[,] leave of the court by which he was
appointed must be obtained.’” Applying this rule, the 11th Circuit held
that “a debtor must obtain leave of the bankruptcy court before initiating
an action in district court when that action is against the trustee or other
bankruptcy-court-appointed officer, for acts done in the actor’s official
Pogue is not a court-appointed officer or a Trustee. In fact, the
Bankruptcy Court appointed a Liquidation Trustee to administer
Pogue’s estate. The Barton doctrine does not prevent a debtor from
facing liability for his own tortious conduct, and it has no application in
this suit against Pogue.
(Doc. 16 at 14-15).5
The Eleventh Circuit has never expressly addressed whether the Barton
doctrine is applicable when a defendant, who is being sued for allegedly tortious
misconduct like Mr. Pogue, is also a debtor-in-possession. Therefore, this court now
endeavors to answer this open question.
The court has studied the numerous decisions relied upon Mr. Pogue in his
efforts to invoke the Barton doctrine here. In one such case, In re McKenzie, No.
08–16378, 2012 WL 1115981 (Bankr. E.D. Tenn. Mar. 30, 2012), the bankruptcy
court addressed whether the filing of a malicious prosecution and abuse of process
action by a law firm against a bankruptcy trustee, debtor, and/or their counsel
(stemming from an earlier malpractice lawsuit that they had brought against that law
firm) without the prior approval of the bankruptcy court was in contravention of the
The page references to Doc. 16 correspond to the CM/ECF numbering
Barton doctrine. McKenzie, 2012 WL 1115981, at *1, *6.
Relying upon In re DeLorean Motor Co., 991 F.2d 1236 (6th Cir. 1993), the
bankruptcy court stated that “[a]ny party wishing to file a cause of action against a
trustee must file a motion in the appointing court for leave to sue the trustee in a court
other than the court which appointed the trustee.” McKenzie, 2012 WL 1115981, at
*5. The court further observed the “well settled” nature of this rule. Id. (internal
quotation marks omitted).
The law firm argued unsuccessfully “that leave is not required where a party
is suing a trustee for damages caused by an intentional tort or for seizing the property
of a party other than the debtor or the estate as noted in Barton.” McKenzie, 2012
WL 1115981, at *6. While the bankruptcy court determined that the law firm’s
malicious prosecution lawsuit against the trustee “was a violation of the Barton
Doctrine[,]” id., later in the opinion, the court stated that the law firm “was not
required to obtain leave of this court to sue the Debtor.” Id. at *11. However, in
McKenzie, the debtor, in contrast to Mr. Pogue, was not a debtor-in-possession.
Mr. Pogue also cites to In re Crown Vantage, Inc., 421 F.3d 963 (9th Cir.
2005) as supporting authority. (Doc. 15 at 15). As the Ninth Circuit framed the
initial issue in Crown:
The first question presented by this case is whether, and to what
extent, a bankruptcy court-appointed trustee of a liquidating trust may
be sued in a foreign jurisdiction without permission of the court
appointing the trustee.
Crown, 421 F.3d at 970. In answering this question, the Ninth Circuit, referencing
the Barton doctrine, “join[ed]. . . sister circuits in holding that a party must first
obtain leave of the bankruptcy court before it initiates an action in another forum
against a bankruptcy trustee or other officer appointed by the bankruptcy court for
acts done in the officer’s official capacity.” Id.
While Crown did not involve a debtor-in-possession, it did address the issue
of whether a liquidating trustee should be afforded the same protections as a
bankruptcy trustee. As the Ninth Circuit explained why the Barton doctrine should
extend to the liquidating trustee:
[T]he fact that the officer involved is not a bankruptcy trustee, but rather
a liquidating trustee, is of no moment. As the Sixth Circuit has
observed, under the Barton doctrine, “court appointed officers who
represent the estate are the functional equivalent of a trustee....”
DeLorean, 991 F.2d at 1241. Here, as part of a liquidating Chapter 11
reorganization proceeding, the bankruptcy court chose the mechanism
of a liquidating trust to liquidate and distribute the assets of the estate.
The bankruptcy court retained jurisdiction over the case. In this context,
the Liquidating Trustee is the “functional equivalent” of the bankruptcy
trustee and is entitled to Barton protection. Id.
Thus, the fact that the bankruptcy assets are now being liquidated
through the vehicle of a liquidating trust with an appointed liquidating
trustee does not prevent the application of the Barton doctrine.
Crown, 421 F.3d at 973 (emphasis added).
Another illustrative case referenced by Mr. Pogue in his initial brief and cited
again in his reply brief is In re Silver Oak Homes, Ltd., 167 B.R. 389 (Bankr. D. Md.
1994). In deciding that the failure of the plaintiffs to obtain permission to sue the
president and counsel of a debtor-in-possession created a jurisdictional defect, the
bankruptcy court in Silver Oak explained:
1. The failure of the plaintiffs to apply to this Court for leave to
file the instant lawsuit against the debtor’s president and counsel
deprived the Circuit Court for Baltimore City of jurisdiction to entertain
it, Barton v. Barbour, 104 U.S. 126, 26 L. Ed. 672 (1881), for which the
plaintiffs may be held in contempt of the stay. Baptist Medical Center
of New York v. Singh (In re Baptist Medical Center ), 80 B.R. 637, 643
(Bankr. E.D.N.Y. 1987), citing In re Kish, 41 B.R. 620 (Bankr. E.D.
2. “It is well settled that leave of the appointing forum must be
obtained by any party wishing to institute an action in a non-appointing
forum against a trustee, for acts done in the trustee's official capacity and
within the trustee's authority as an officer of the court.” Allard v.
Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1240 (6th Cir.
3. Under the Bankruptcy Code, a Chapter 11 debtor in possession
enjoys the same status as a Chapter 11 bankruptcy trustee, is invested
with most of the same powers and is subject to the same fiduciary duties.
11 U.S.C. § 1107(a) (1993). Indeed, as used in the bankruptcy rules, the
word “trustee” includes a Chapter 11 debtor in possession. Fed. R.
Bankr. P. 9001(10).
4. “We hold as a matter of law, counsel for trustee,
court-appointed officers who represent the estate, are the functional
equivalent of a trustee, where as here, they act at the direction of the
trustee and for the purpose of administering the estate or protecting its
assets.” DeLorean, 991 F.2d at 1241.
5. “It is well settled that [a debtor’s attorney] cannot be sued in
state court without leave of the bankruptcy court for acts done in his
official capacity and within his authority as an officer of the Court.”
Mangun v. Bartlett (In re Balboa Improvements, Ltd. ), 99 B.R. 966, 970
(9th Cir. BAP 1989), citing U. and I. Inc. v. Fitzgerald (In re Campbell),
13 B.R. 974, 976 (Bankr. D. Idaho 1981).
Silver Oak, 167 B.R. at 394-95 (emphasis added).
The Silver Oak court also ruled that § 959(a) did not apply because “counsel
to the debtor in possession, and . . . president of the debtor in possession, [we]re being
sued for their alleged acts and omissions in the liquidation of the assets of the
bankruptcy estate as opposed to the operation of the debtor’s business.” Silver Oak,
167 B.R. at 395.
Similar to Silver Oak, in an unpublished decision issued by the United States
Court of Appeals for the Fourth Circuit referenced on reply by Mr. Pogue, the court
addressed whether the Barton doctrine applied to the plaintiffs’ negligent
misrepresentation and constructive fraud lawsuit filed against the general partner of
the company debtor-in-possession. Gordon v. Nick, 162 F.3d 1155 (Table of
Decisions Without Reported Opinions), No. 96-1858, 1998 WL 559734, at *1 (4th
Cir. Sept. 2, 1998).6 The plaintiffs’ claims in Gordon stemmed from “operating
reports and financial statements [filed] in the bankruptcy court [by the debtor-inpossession]” that plaintiffs maintained proved to be misleading. Gordon, 1998 WL
559734, at *1.
In agreeing with the district court that the plaintiffs needed to obtain preapproval from the bankruptcy court before bringing suit, an unpublished panel of the
Fourth Circuit reasoned:
In Barton v. Barbour, 104 U.S. 126, 26 L. Ed. 672 (1881), the
Supreme Court held that a trustee cannot be sued without leave of the
bankruptcy court. This holding, generally referred to as the “Barton
doctrine,” prohibits a party from suing a trustee in a non-appointing
court for acts done in the official capacity of the trustee and within the
trustee’s authority as an officer of the court. The Barton doctrine
protects not only the trustee, but also other court-appointed officers who
represent the bankruptcy estate, including the attorney of the trustee.
See Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236,
1240-41 (6th Cir. 1993) (“It is well settled that leave of the appointing
forum must be obtained by any party wishing to institute an action in a
nonappointing forum against a trustee, for acts done in the trustee’s
official capacity and within the trustee’s authority as an officer of the
court .... counsel for trustee, court appointed officers who represent the
estate, are the functional equivalent of a trustee.”); see also Mangun v.
Bartlett (In re Balboa Improvements, Ltd.), 99 B.R. 966, 970 (B.A.P. 9th
Cir. 1989) (holding that permission to sue debtor’s attorney for alleged
misconduct in the administration of an estate must be obtained from the
bankruptcy court). We agree with the district court’s conclusion that the
The plaintiffs’ action originally included other defendants, but on appeal they
were all jointly dismissed, leaving the managing partner as the sole defendant.
Gordon, 1988 WL 559734, at *1 n.*.
doctrine is applicable to suits against the debtor’s managing partner.
Gordon, 1998 WL 559734, at *2 (emphasis added).
The Gordon court also concluded that the § 959(a) exception to the Barton
doctrine did not apply because the defendant’s “conduct did not arise out of acts or
transactions in carrying on the business of [the debtor-in-possession].” Gordon, 1998
WL 559734, at *2. Thus, Gordon stands for the proposition that a plaintiff must
obtain prior permission from the bankruptcy court when suing an agent of a debtorin-possession for his actions done in furtherance of the debtor’s bankruptcy.
Mr. Pogue also points to In re General Growth Properties, Inc., 426 B.R. 71
(Bankr. S.D.N.Y. 2010) in his reply. General Growth involved a debtors’ motion “to
enforce the automatic stay . . . and for contempt sanctions against . . . a shareholder
. . . . in response to the filing of a class and derivative complaint for breach of
fiduciary duty” against the debtors by the shareholder in state court. 426 B.R. at 73.
As part of its decision to grant the debtors’ motion, the bankruptcy court
Under the circumstances of this case, an action against the Board,
whose members act as officers of the court, implicates the Barton
doctrine. Under the doctrine of Barton v. Barbour, 104 U.S. 126, 26 L.
Ed. 672 (1881), “a party must first obtain leave of the bankruptcy court
before it initiates an action in another forum against a bankruptcy trustee
or other officer appointed by the bankruptcy court for acts done in the
officer's official capacity.” Beck v. Fort James Corp. (In re Crown
Vantage, Inc.), 421 F.3d 963, 970 (9th Cir. 2005); see also Lebovits v.
Scheffel (In re Lehal Realty Assocs.), 101 F.3d 272, 276 (2d Cir. 1996);
Muratore v. Darr, 375 F.3d 140, 147 (1st Cir.2004); Carter v. Rodgers,
220 F.3d 1249, 1252 (11th Cir. 2000); In re Linton, 136 F.3d 544, 546
(7th Cir. 1998); Allard v. Weitzman (In re DeLorean Motor Co.), 991
F.2d 1236, 1240 (6th Cir.1993). The doctrine protects any fiduciary of
the estate, including a debtor-in-possession, as “[i]t is well settled that
such fiduciary cannot be sued in state court without leave of the
bankruptcy court for acts done in his official capacity and within his
authority as an officer of the court.” In re Balboa Improvements, Ltd.,
99 B.R. 966, 970 (9th Cir. BAP 1989) (debtor-in-possession case); see
also In re Noakes, 104 B.R. 323, 326 n.5 (Bankr. D. Mont. 1989); In re
Campbell, 13 B.R. 974, 976 (Bankr. D. Idaho 1981). Under the Barton
doctrine, since Plaintiff had not obtained leave of this Court before
filing the Complaint, “[t]he only appropriate remedy, therefore, is to
order cessation of the improper action.” Beck, 421 F.3d at 970; see also
Jasmine Networks, Inc. v. Marvell Semiconductor, Inc., 2006 WL
3392062, 2006 Bankr. LEXIS 3269 (Bankr. N.D. Cal. Nov. 20, 2006).
General Growth, 426 B.R. at 74-75 (footnote omitted) (emphasis added).
The General Growth court further noted:
By statute, with exceptions not relevant here, “a debtor in
possession shall have all the rights ... and powers, and shall perform all
the functions and duties ... of a trustee serving in a case under this
chapter....” 11 U.S.C. § 1107(a); see also United Shipyards, Inc. v. Hoey,
131 F.2d 525, 527 (2d Cir.1942); In re Wil–Low Cafeterias, 111 F.2d
83, 84 (2d Cir.1940) (“A debtor continued in possession by court order
is a court officer analogous to a receiver or trustee.”).
General Growth, 426 B.R. at 75 n.1; see also In re Fordu, 201 F.3d 693, 707 n.18
(6th Cir. 1999) (“The duties and responsibilities of either a Chapter 11 trustee or
debtor-in-possession as a fiduciary for the bankruptcy estate are virtually the same as
those imposed on a Chapter 7 trustee.” (citing 11 U.S.C. § 704 in comparison with
11 U.S.C. §§ 1106(a) and 1107(a))); cf. 28 U.S.C. § 959(a) (statutory exception to
Barton rule expressly covers “[t]rustees, receivers or managers of any property,
including debtors in possession”) (emphasis added). The statute’s inclusion of
debtors-in-possession makes no sense if the Barton doctrine does not extend to
someone like Mr. Pogue.
Similar to General Growth, in In re J.S. II, L.L.C., 389 B.R. 570 (Bankr. N.D.
Ill. 2008), the bankruptcy court there explained:
The Barton doctrine, first announced by the Supreme Court in
Barton v. Barbour, provides that a trustee of a bankruptcy estate is a
statutory successor to the equity receiver and that a receiver cannot be
sued without leave of the court appointing him. Barton v. Barbour, 104
U.S. 126, 128–29, 26 L. Ed. 672 (1881). Since the bankruptcy court
appoints the trustee that administers property of the estate that is under
the control of the bankruptcy court pursuant to the bankruptcy code, the
trustee is essentially an agent of the court. Matter of Linton, 136 F.3d
544, 545 (7th Cir.1998). Therefore, under the Barton doctrine, leave
from the appointing court is required before filing suit against a trustee
for acts done within the trustee’s administrative capacity. Id. Further,
the Barton doctrine bars suits against the trustee in the appointing court
as well as a foreign forum, such as a state court. In re marchFIRST,
Inc., 378 B.R. 563, 566–67 (Bankr. N.D. Ill. 2007) (Schwartz, J.). A
debtor-in-possession enjoys the same rights and protections as a
bankruptcy trustee. 11 U.S.C. § 1107(a); Precision Industries v.
Qualitech Steel SBQ, LLC, 327 F.3d 537, 545 (7th Cir. 2003). Without
prior court approval for suits against a trustee (or a debtor-in-possession,
as in this case), a trustee would face the burden of defending the suit and
the threat of distraction, raising the concern that it would be more
difficult to appoint a trustee because the appointment would be less
appealing or more costly. See marchFIRST, 378 B.R. at 567 (addressing
these same concerns that were raised in Linton).
J.S. II, 389 B.R. at 583 (emphasis added); see also In re Allnutt, 220 B.R. 871, 888
(Bankr. D. Md. 1998) (“No suit may be brought in a state court against a trustee or
counsel to a debtor in possession for alleged misconduct in liquidating assets of a
bankruptcy estate without leave of the bankruptcy court.”); In re Jasmine Networks,
Inc., No. 02–54815–MM, 2006 WL 3392062, at *2 (Bankr. N.D. Cal. Nov. 20, 2006)
(recognizing that Barton rule “extends beyond trustees to other persons appointed by
the bankruptcy court, like debtors-in-possession and their court-approved counsel”)
The bankruptcy court ultimately decided in J.S. II, that events “occurr[ing] prepetition and not during the administration of the bankruptcy estate” would not be
barred by the Barton doctrine but that claims tied to acts taking place after the
bankruptcy filing date of March 5, 2007, would be.7 J.S. II, 389 B.R. at 584.
Having studied the collection of cases relied upon by Mr. Pogue, and in the
absence of any authority cited by the Helmer Parties to the contrary, this court is
persuaded to hold that, by virtue of an extension of the Barton doctrine to Mr. Pogue,
as a debtor-in-possession (i.e., “the functional equivalent of a trustee,” DeLorean, 991
In their lawsuit, the Helmer Parties do not claim that they are challenging
actions taken by Mr. Pogue pre-petition or before he became the debtor-inpossession.
F.2d at 1241), this court lacks subject matter jurisdiction to hear the Helmer Parties’
claims. In sum, and consistent with the Eleventh Circuit’s reasoning in Carter, the
statutory exception to the Barton doctrine, i.e., § 959(a), does not apply because the
Helmer Parties’ claims directly relate to Mr. Pogue’s handling of his bankruptcy
estate, as a debtor-in-possession. As a result, akin to the comparable case of
McKenzie, and as bolstered by the decisions of Carter, Lawerence, Silver Oak,
Gordon, General Growth, and others, the court lacks subject matter jurisdiction
because the Helmer Parties have not obtained the appropriate permission from the
Bankruptcy Court to proceed against Mr. Pogue in this venue for his actions taken as
a debtor-in-possession in conjunction with the Helmer Parties AP.
The Remainder of Mr. Pogue’s Motion
Because the court concludes that the Helmer Parties’ lawsuit is due to be
dismissed without prejudice for lack of subject matter jurisdiction, it does not reach
the other grounds raised by Mr. Pogue in support of dismissal. Accordingly, the
remainder of Mr. Pogue’s Motion is due to be termed as moot.
Therefore, based upon the foregoing, the Motion is due to be granted for lack
of subject matter jurisdiction, and is otherwise due to be termed as moot. Further, this
lawsuit is due to be dismissed without prejudice. The court will enter a separate order
consistent with this memorandum opinion.
DONE and ORDERED this the 22nd day of October, 2012.
VIRGINIA EMERSON HOPKINS
United States District Judge
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