Randazzo v. Babin

Filing 27

ORDER and REASONS re 11 Motion to Dismiss for Lack of Jurisdiction. IT IS ORDERED that the defendant's motion to dismiss for lack of subject matter jurisdiction is GRANTED and that the Complaint is DISMISSED WITHOUT PREJUDICE. This ruling considered, the Court declines to address grounds for dismissal presented under Rule 12(b)(6) of the Federal Rules of Civil Procedure, as stated within document. Signed by Chief Judge Kurt D. Engelhardt on 8/18/2016. (cbs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

NICHOLAS W. RANDAZZO

CIVIL ACTION

VERSUS

NO. 15-4943

WILBUR J. BABIN

SECTION “N” (4)

ORDER AND REASONS
Before the Court is a motion to dismiss (Rec. Doc. 11) pursuant to Rules 12(b)(1) and
12(b)(6) of the Federal Rules of Civil Procedure, filed by the defendant, Wilber J. Babin, Jr., who
appears in his capacity as Chapter 7 Trustee of the Bankruptcy Estate of Nicholas W. Randazzo.
Proceeding pro se, the plaintiff, Nicholas W. Randazzo, opposes the motion (Rec. Doc. 21). The
defendant has filed a reply (Rec. Doc. 24). Now, having considered the submissions of the parties
and the applicable law, the Court GRANTS the Motion for the reasons stated herein.
I.

BACKGROUND

On December 3, 2013, the plaintiff, Nicholas W. Randazzo (“Plaintiff”), filed a voluntary
petition for bankruptcy under Chapter 7 in the United States Bankruptcy Court for the Eastern
District of Louisiana (docket No. 13-13313). Wilber J. Babin, Jr. (“Babin”) serves as Trustee of
the bankruptcy estate. The bankruptcy proceedings have since given rise to the present action, in
which Plaintiff brings a single bad faith claim against Babin, in his capacity as Trustee, for actions
related to the administration of assets in the bankruptcy estate.
At the heart of the Complaint, titled “Petition for Damages against the Trustee and for a
Preliminary Injunction to Stop the Auction of the 1415 Whitney Avenue and 1408 Romain Street

Properties,” 1 are three immovable properties located in Gretna, Louisiana: 1415 Whitney Avenue,
1408 Romain Street, and 28 Smithway Drive. Though Plaintiff makes a litany of allegations, they
can be sorted into the following general categories: (1) allegations that Babin caused the 1415
Whitney Avenue and 1408 Romain Street properties to be improperly included in the bankruptcy
estate; (2) allegations that Babin acted unethically in the manner in which said properties were set
for auction; and (3) allegations that Babin conspired with counsel for Plaintiff’s former spouse to
drive down the price of 28 Smithway Drive, which she then purchased from the bankruptcy estate.
Relying on the Barton doctrine, Babin now moves for dismissal of the action based on Plaintiff’s
failure to obtain leave from the Bankruptcy Court before pursuing claims against him, as Trustee,
in a different forum.
II.

LAW AND ANALYSIS

In Barton v. Barbour, the Supreme Court of the United States held that “before suit is
brought against a [court-appointed] receiver leave of the court by which he was appointed must be
obtained.” 104 U.S. 126, 127 (1881). While the Barton case involved a receiver in state court, the
United States Court of Appeals for the Fifth Circuit has extended this principle, now known as the
Barton doctrine, to lawsuits against bankruptcy trustees for acts committed in their official
capacities. See Villegas v. Schmidt, 788 F.3d 156, 158 (5th Cir. 2015). The doctrine serves multiple
purposes, including: preserving the limited assets of the bankruptcy estate; protecting the trustee,
who is an officer of the court that appoints him, in the performance of official duties; and enabling
bankruptcy courts to maintain control over the administration of estates. See McDaniel v. Blust,
668 F.3d 153, 157 (4th Cir. 2012); In re Lowenbraun, 453 F.3d 314, 321 (6th Cir. 2006); 9 Am.

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The Court denied the request for a preliminary injunction, without prejudice to Plaintiff’s
right to seek similar relief in the bankruptcy court proceedings. (See Rec. Doc. 3).
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Jur. 2d, Bankruptcy § 539 (2016). When required by the Barton doctrine, failure to obtain leave
from the court hosting the bankruptcy deprives the non-appointing court of subject matter
jurisdiction that it might otherwise have. See, e.g, Equip. Leasing, L.L.C. v. Three Deuces, Inc.,
2011 WL 6141443, at *3 (E.D. La. Dec. 9, 2011).
While the Fifth Circuit has recognized the viability of the Barton doctrine and its
application to bankruptcy trustees, see Villegas, 788 F.3d at 158 (discussed supra), it has not, to
this Court’s knowledge, elaborated on the scope of the doctrine. However, other Courts of Appeal,
including the Fourth Circuit, have. See McDaniel, 668 F.3d at 157. “To determine whether a
complained-of act falls under the Barton doctrine, courts consider the nature of the function the
trustee . . . was performing during the commission of the actions for which liability is sought.” Id.
at 157. For example, a plaintiff must obtain leave from the bankruptcy forum before suing a trustee
for acts done “within the context of [his] role of recovering assets for the estate.” Id. (quoting
Heavrin v. Schilling (In re Triple S Rests., Inc.), 519 F.3d 575, 578 (6th Cir. 2008). Similar to
recovery of assets, the liquidation of property in the bankruptcy estate is a basic function of the
trustee in a chapter 7 case. See 11 U.S.C. §704(a)(1).
Here, the Complaint expressly states that Babin is being sued in his capacity as Trustee of
the bankruptcy estate. (Rec. Doc. 1 at p. 1) Further, while Plaintiff argues that he “does not
challenge or question Trustee’s authority, responsibility, or duties” (Rec. Doc. 21 at p. 1), Babin’s
alleged mishandling of the liquidation process forms the very core of the bad faith claim at issue.
As a result, the Court finds the lawsuit to constitute an action against a bankruptcy trustee for acts
committed in his official capacity. Therefore, the Barton doctrine requires that Plaintiff obtain
leave from the United States Bankruptcy Court for the Eastern District of Louisiana before

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prosecuting the claim. Plaintiff’s failure to do so demands dismissal of the case for want of subject
matter jurisdiction.
III.

CONCLUSION

For the foregoing reasons,
IT IS ORDERED that the defendant’s motion to dismiss for lack of subject matter
jurisdiction is GRANTED and that the Complaint is DISMISSED WITHOUT PREJUDICE.
This ruling considered, the Court declines to address grounds for dismissal presented under Rule
12(b)(6) of the Federal Rules of Civil Procedure.
New Orleans, Louisiana, this 18th day of August 2016.

____________________________________
KURT D. ENGELHARDT
UNITED STATES DISTRICT JUDGE

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