Financial Industry Association et al v. Securities & Exchange Commission et al

Filing 70

ORDER adopting 67 Report and Recommendation of the Magistrate Judge. Goble's Motion for Leave to File Fourth Amended Complaint 57 is DENIED without prejudice. Within FOURTEEN (14) DAYS of the date of this Order, Goble may file a renewed motion for leave to file an amended complaint, accompanied by a proposed amended complaint which corrects the deficiencies identified in this Order and the Report and Recommendation and which complies with the parameters set forth below. Based on th e facts asserted in the proposed Fourth Amended Complaint, Goble is hereby PROHIBITED from naming any of the following defendants in the proposed amended complaint: (1) the SEC and its employees, as to FTCA claims; (2) Receiver Anderson, his law firm , and his attorneys and other agents; and (3) Trustee Gilbert, his law firm, and his attorneys and other agents. Based on the facts asserted in the proposed Fourth Amended Complaint, Goble is hereby PROHIBITED from asserting causes of action for: (1 ) bankruptcy fraud; (2) aiding and abetting bankruptcy fraud; (3) violation of 11 U.S.C. Section 523; and (4) legal malpractice against any Defendant with whom there is no privity of contract. Goble may assert tort claims against the United States o nly to the extent it has waived sovereign immunity. The proposed amended complaint must identify what each defendant did that could plausibly make it liable for the corresponding claim, and each count must clearly identify a cause of action recogniz ed under governing law. Failure to file a renewed motion for leave to file an amended complaint, accompanied by a proposed amended complaint, within the time provided in this Order will result in the dismissal of this action without further notice. Signed by Judge Charlene Edwards Honeywell on 10/4/2013. (BGS)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
FINANCIAL INDUSTRY ASSOCIATION,
G&G HOLDINGS, INC., RICHARD GOBLE
and THE GOBLE FIRST REVOCABLE
FAMILY TRUST MAY 13, 1999,
Plaintiffs,
v.

Case No: 6:10-cv-408-Orl-36KRS

SECURITIES AND EXCHANGE
COMMISSION, FINANCIAL INDUSTRY
REGULATORY AUTHORITY, INC., THE
DEPOSITORY TRUST AND CLEARING
CORPORATION, et al.,
Defendants.

ORDER
This cause comes before the Court on the Report and Recommendation of Magistrate
Judge Karla R. Spaulding (Doc. 67). In the Report and Recommendation, Magistrate Judge
Spaulding recommends that pro se Plaintiff Richard Goble’s (“Goble”) Motion for Leave to File
Fourth Amended Complaint (“Motion to Amend”) (Doc. 57) be denied as futile and that the
Court permit Goble to file a renewed motion for leave to file an amended complaint, which
asserts only viable claims. See Doc. 67. Goble filed an Amended Objection (“Objection”) to the
Report and Recommendation (Doc. 69). No party has filed a response to Goble’s Objection and
the time to do so has expired. As such, this matter is ripe for review.

I.

BACKGROUND
The procedural history of this case and its related cases1 has been detailed thoroughly in

Part I of the Report and Recommendation, which the Court incorporates fully herein in the
interest of brevity. See Doc. 67, pp. 1–6. In his Motion to Amend, Goble seeks leave to file a
Fourth Amended Complaint, a proposed copy of which he attached to the motion. See Docs. 57,
57-1. The proposed Fourth Amended Complaint would add or remove several parties and claims
in this case. See Doc. 57-1.
In the Report and Recommendation, Magistrate Judge Spaulding recommends denying
Goble’s Motion to Amend because the claims asserted therein are futile, in that they: seek relief
against parties which cannot be held liable; do not provide a private right of action; or are not
based on a plausible theory of relief. Doc. 67, p. 6. The Magistrate Judge further recommends
that the Court give Goble one more opportunity to seek leave to file an amended complaint
against only individuals and entities subject to liability under governing law, and only based on
causes of action for which relief can be granted. Id. The instant Objection followed. See Doc.
69.
II.

STANDARD OF REVIEW
When a party makes a timely and specific objection to a Magistrate Judge’s Report and

Recommendation, the district judge “shall make a de novo determination of those portions of the
report or specified proposed findings or recommendations to which objection is made.” 28
U.S.C. § 636(b)(1)(C); Jeffrey S. v. State Bd. of Educ. of State of Georgia, 896 F.2d 507, 512
(11th Cir. 1990). The district judge may accept, reject, or modify in whole or in part, the Report
1

This case was consolidated with another case before the Court, No. 6:11-cv-825, with the
instant case being designated as the lead case. See Doc. 66. In addition, the facts and claims in
these consolidated cases are intertwined with those in another case pending in the Middle District
of Florida, No. 6:08-cv-829 (the “SEC Case”), in which the U.S. Securities and Exchange
Commission (“SEC”) brought a civil action against Goble and others.

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and Recommendation of the Magistrate Judge. Fed. R. Civ. P. 72(b)(3). The district judge may
also receive further evidence or recommit the matter to the Magistrate Judge with further
instructions. Id.
Under Rule 15, a party may amend its pleading once as a matter of course within 21 days
after serving it, or within 21 days after service of a responsive pleading. Fed. R. Civ. P. 15(a)(1).
Otherwise, “a party may amend its pleading only with the opposing party’s written consent or the
court’s leave. The court should freely give leave when justice so requires.” Fed. R. Civ. P.
15(a)(2). If the underlying facts or circumstances relied on by the plaintiff may give rise to a
proper subject of relief, leave to amend should be freely given. Hall v. United Ins. Co. of Am.,
367 F.3d 1255, 1262 (11th Cir. 2004). However, a court may properly deny leave to amend the
complaint under Rule 15 if such amendment would be “futile.” Id. at 1262–63. “[D]enial of
leave to amend is justified by futility when the complaint as amended is still subject to
dismissal.” Id. at 1263.
III.

DISCUSSION
Goble’s Objection, while not directly addressing every determination made by the

Magistrate Judge, maintains that Goble has been granted permission to pursue claims against the
various Defendants in this case. See Doc. 69, pp. 2–3. Goble avers that this permission has been
granted either through court order or, with respect to the claims against the SEC, by the
defendant itself. See id. The Court addresses these arguments in the same manner as the
Magistrate Judge, by dividing the claims in the proposed Fourth Amended Complaint into the
following categories: claims against defendants who cannot be liable; claims for which there is
no private right of action; claims that are barred by sovereign immunity; and claims that are not
based on a plausible theory of relief.

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A.

Claims Against Defendants Who Cannot Be Liable
1.

Receiver Anderson, Trustee Gilbert, and Their Attorneys and Other
Agents

Goble’s proposed Fourth Amended Complaint would assert claims against, inter alia:
Peter Anderson (“Receiver Anderson”), the court-appointed receiver of North American
Clearing, Inc. (“NACI”), of which Goble was the sole stockholder; Robert N. Gilbert (“Trustee
Gilbert”), the court-appointed trustee of NACI; Receiver Anderson and Trustee Gilbert’s
respective law firms, Sutherland Asbill & Brennan LLP and Carlton Fields, P.A.; and attorneys
and other agents who assisted Receiver Anderson and Trustee Gilbert in discharging their duties
in the SEC Case. See Doc. 57-1. The Magistrate Judge determined that these claims were barred
by the Barton doctrine. Doc. 67, pp. 7–9. For the following reasons, the Court agrees.
The Barton doctrine provides that before bringing suit against a court-appointed receiver
or trustee for acts done in the receiver or trustee’s official capacity, a party must first obtain leave
of the court which appointed the receiver or trustee. See Barton v. Barbour, 104 U.S. 126, 127
(1881); Carter v. Rodgers, 220 F.3d 1249, 1252 (11th Cir. 2000). Failure to obtain leave of
court results in dismissal of the suit for lack of subject matter jurisdiction. See Barton, 104 U.S.
at 136–37; Carter, 220 F.3d at 1253. The Barton doctrine extends to actions against the
attorneys and other agents for the receiver or trustee who function as the equivalent of courtappointed officers by helping the receiver or trustee execute official duties.

Lawrence v.

Goldberg, 573 F.3d 1265, 1270 (11th Cir. 2009); Carter, 220 F.3d at 1252 n.4.
As Receiver Anderson and Trustee Gilbert were appointed by the court in the SEC Case,
the Barton doctrine requires that Goble obtain leave of that court before bringing claims against
them and their attorneys and agents for acts done in the execution of their official duties. See
Lawrence, 573 F.3d at 1270; Carter, 220 F.3d at 1253. In his Objection, Goble contends that he

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did, in fact, obtain leave to sue Receiver Anderson, Trustee Gilbert, and their respective
attorneys and agents, as required under the Barton doctrine. Doc. 69, p. 2. However, a review of
the procedural history in the SEC Case reveals this not to be the case. In the SEC Case, Goble
and others filed a motion to intervene for the sole purpose of petitioning for leave to file suit
against Receiver Anderson, his law firm, and attorneys at the firm working on his behalf. See
Doc. 203. Goble and the others filed a similar motion to intervene for the sole purpose of
petitioning for leave to file suit against Trustee Gilbert and his law firm and attorneys working
on his behalf. See Doc. 207. While the court granted the motions to intervene as to “Goble as
Trustee of The Goble First Revocable Family Trust May 13, 1999,”2 this merely granted Goble
the right to intervene in the SEC Case so he could file Barton motions seeking leave to file suit.
See Doc. 209 (granting in part Docs. 203 and 207); Doc. 222, pp. 38–39. The court denied
Goble’s actual Barton motions, which were filed separately from his motions to intervene. See
Doc. 209 (denying Docs. 204 and 208); Doc. 222, pp. 38–39. Accordingly, Goble did not obtain
leave of court to file suit against Receiver Anderson, Trustee Gilbert, and their respective
attorneys and agents for acts done in the execution of their official duties, as required under the
Barton doctrine.
Goble next argues that leave of court was not required because his claims against
Receiver Anderson, Trustee Gilbert, and their respective attorneys and agents are for actions
taken outside the scope of their court appointments, and therefore the claims fall under an
exception to the Barton doctrine. Doc. 69, pp. 2–3. In the bankruptcy context, this exception is
codified in Section 959 of the Bankruptcy Code. The Eleventh Circuit has recognized that
“Section 959 provides for a limited exception to the Barton doctrine, permitting suits against
2

The court denied the motions to intervene as to Financial Industry Association, Inc. and G&G
Holdings, Inc. See Doc. 209 (denying in part Docs. 203 and 207).

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‘[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.’” Carter, 220 F.3d at 1254 (quoting 28 U.S.C. § 959(a)) (emphasis added). However,
“[t]he ‘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.

Section 959(a) does not apply to suits against trustees for administering or

liquidating the bankruptcy estate.” Id. (internal citations and quotations omitted) (emphasis
added).
The basis of Goble’s purported claims against Receiver Anderson, Trustee Gilbert, and
their respective attorneys and agents is that these parties mismanaged NACI after the company
went into receivership and liquidation. See Doc. 57-1. As the Magistrate Judge correctly noted,
these claims arise directly from their work administering the receivership and liquidation of
NACI, rather than as a result of carrying out NACI’s business operations. As such, they fall
squarely within the Barton doctrine, and do not fall within the “carrying on business” exception
of Section 959(a). See Carter, 220 F.3d at 1254 (holding that the “carrying on business”
exception of Section 959(a) is inapplicable to breach of fiduciary claims which relate to a
trustee’s administration and liquidation of an estate).
Because Goble’s claims against Receiver Anderson, Trustee Gilbert, and their
representatives are premised on acts done by them in the execution of their official duties, and
Goble did not obtain leave of the appointing court to bring suit against them, this Court does not
have subject matter jurisdiction over the claims. See Carter, 220 F.3d at 1253. As these claims
would be futile, leave to amend the complaint to bring the claims will be denied.

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2.

SEC and Its Employees

Goble’s proposed Fourth Amended Complaint would assert claims against the SEC and
certain of its employees. See Doc. 57-1. The Magistrate Judge correctly recognized that the
SEC and its employees are not proper defendants in this case. Doc. 67, p. 9. “Absent a waiver,
sovereign immunity shields the Federal Government and its agencies from suit.” FDIC v.
Meyer, 510 U.S. 471, 474 (1994). The Federal Tort Claims Act (“FTCA”), 28 U.S.C. § 2671 et
seq., provides a limited waiver of sovereign immunity for certain tort claims seeking money
damages from the United States for the wrongful acts of its employees. 28 U.S.C. § 1346(b)(1).
However, the remedies provided under the FTCA are available exclusively against the United
States, and not its agencies or employees. 28 U.S.C. §§ 2674, 2679(b)(1).
In his Objection, Goble nevertheless maintains that the SEC “expressly consented” to
suit, pointing to a letter sent to his counsel by the SEC’s Executive Director. Doc. 69, p. 2.
However, even if the letter could amount to a waiver of sovereign immunity, the letter does no
such thing. Rather, the letter merely states that the SEC has denied the claims that Goble
submitted administratively pursuant to the FTCA, and that Goble may file suit challenging the
decision in federal court within the time period allowed in the statute of limitations. Doc. 69, p.
10. Nothing in the letter purports to waive the SEC’s sovereign immunity.
As the SEC and its employees are immune from liability for the claims asserted in
Goble’s proposed Fourth Amended Complaint, leave to amend the complaint to bring these futile
claims will be denied.
B.

Claims For Which There Is No Private Right Of Action

Goble’s proposed Fourth Amended Complaint would assert claims for bankruptcy fraud
(Count III) and aiding and abetting bankruptcy fraud (Count IV) pursuant to Title 18, Chapter 9
of the United States Code. See Doc. 57-1, pp. 40–41. The Magistrate Judge correctly noted that

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these are criminal statutes which do not provide a private cause of action. See Doc. 67, pp. 9–10.
Goble also wishes to bring a claim pursuant to 11 U.S.C. § 523 (Count V). See Doc. 57-1, pp.
42–43. As the Magistrate Judge observed, Section 523 only applies to debts owed by an
individual debtor, and the sole debtor in the bankruptcy proceedings resulting from the SEC Case
was NACI, a corporation rather than an individual debtor. See Doc. 67, pp. 10–11. In any event,
Section 523 is properly invoked only in bankruptcy proceedings and does not provide for a
private right of action. As such, leave to amend the complaint to bring the foregoing futile
claims will be denied.
C.

Claims Barred By Sovereign Immunity

Goble’s proposed Fourth Amended Complaint would assert claims against the United
States and the SEC and its employees arising from abuse of process (Count VI), libel and slander
(Count XI), misrepresentation and deceit (Counts I, II, III, IV), and interference with contract
rights (Counts VIII, XIII, XVI). See Doc. 57-1. As discussed previously, the SEC and its
employees are not proper defendants. See supra, Part III.A.2. However, even if the claims
against them are construed as claims against the United States, the Magistrate Judge correctly
noted that these claims are barred by sovereign immunity, as they are explicitly excluded from
the FTCA’s waiver of sovereign immunity, and that other claims may be barred by the
discretionary function exception to the FTCA’s waiver of sovereign immunity. See Doc. 67, p.
10; 28 U.S.C. § 2680(a) & (h). Accordingly, the Court will deny leave to amend the complaint
to bring claims against the United States, the SEC, and its employees which are barred by
sovereign immunity.
D.

Claims That Are Not Based On A Plausible Theory Of Relief

Count XVII of Goble’s proposed Fourth Amended Complaint would assert a claim for
legal malpractice against the Securities Investor Protection Corporation (“SIPC”), Receiver

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Anderson, Trustee Gilbert, and their respective attorneys who worked on the SEC Case, arising
from an alleged breach of duty owed to NACI. See Doc. 57-1, pp. 60–61. However, as the
Magistrate Judge noted, “Florida courts have uniformly limited attorney’s liability for negligence
in the performance of their professional duties to clients with whom they share privity of
contract.” Doc. 67, p. 11 (quoting Brennan v. Ruffner, 640 So. 2d 143, 145 (Fla. 4th Dist. Ct.
App. 1994)). As Goble was not in privity of contract with the attorneys he seeks to hold liable,
he cannot assert a legal malpractice claim against them. Therefore, the Court will deny Goble
leave to amend the complaint to bring his legal malpractice claim.
The Magistrate Judge also noted that the counts in the proposed Fourth Amended
Complaint are alleged against all or multiple defendants, without identifying what each
defendant did that could plausibly make it liable for the corresponding claim, while other counts
do not sufficiently identify a cause of action. See Doc. 67, p. 12. Thus, leave to amend the
complaint will be denied because the counts do not provide plausible claims for relief.
IV.

CONCLUSION
Because the claims in Goble’s proposed Fourth Amended Complaint are futile, he will

not be granted leave to amend the complaint to add those claims. However, given that he is
proceeding pro se, the Court will allow him one final opportunity to file a renewed motion for
leave to file an amended complaint, accompanied by a proposed amended complaint which
corrects the deficiencies identified in this Order and the Report and Recommendation and which
complies with the adjudication below.
Accordingly, it is hereby ORDERED and ADJUDGED:
1.

The Report and Recommendation of the Magistrate Judge (Doc. 67) is adopted,
confirmed, and approved in all respects and is made a part of this Order for all
purposes, including appellate review.

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2.

Goble’s Motion for Leave to File Fourth Amended Complaint (Doc. 57) is
DENIED without prejudice. Within FOURTEEN (14) days of the date of this
Order, Goble may file a renewed motion for leave to file an amended complaint,
accompanied by a proposed amended complaint which corrects the deficiencies
identified in this Order and the Report and Recommendation and which complies
with the parameters set forth below.

3.

Based on the facts asserted in the proposed Fourth Amended Complaint, Goble is
hereby PROHIBITED from naming any of the following as defendants in the
proposed amended complaint: (1) the SEC and its employees, as to FTCA claims;
(2) Receiver Anderson, his law firm, and his attorneys and other agents; and (3)
Trustee Gilbert, his law firm, and his attorneys and other agents.

4.

Based on the facts asserted in the proposed Fourth Amended Complaint, Goble is
hereby PROHIBITED from asserting causes of action for: (1) bankruptcy fraud;
(2) aiding and abetting bankruptcy fraud; (3) violation of 11 U.S.C. § 523; and (4)
legal malpractice against any Defendant with whom there is no privity of
contract..

5.

Goble may assert tort claims against the United States only to the extent it has
waived sovereign immunity.

6.

The proposed amended complaint must identify what each defendant did that
could plausibly make it liable for the corresponding claim, and each count must
clearly identify a cause of action recognized under governing law.

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7.

Failure to file a renewed motion for leave to file an amended complaint,
accompanied by a proposed amended complaint, within the time provided in this
Order will result in the dismissal of this action without further notice.

DONE and ORDERED in Orlando, Florida on October 4, 2013.

Copies furnished to:
Counsel of Record
Unrepresented Parties
Magistrate Judge Karla R. Spaulding

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