Rozelle, Jr. et al v. Lowe et al
ORDER DISMISSING CASE. Lowes First Amended Motion to Dismiss is GRANTED. Signed by Judge Xavier Rodriguez. (aej)
UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
FRANCIS MCQUEEN ROZELLE, JR., ET
JOHN PATRICK LOWE, ET AL.,
Civil Action No. SA-16-CV-489-XR
On this date, the Court considered the status of the above captioned case, and its many
pending motions. After careful consideration, the Court finds that Plaintiffs voluntarily dismissed
their claims against all defendants except for John Patrick Lowe, and that Lowe’s First Amended
Motion to Dismiss should be granted for a lack of subject matter jurisdiction. The result is that
all claims against all defendants are hereby DISMISSED. The Court further denies Defendants’
requests for sanctions.
On May 31, 2016, Plaintiffs Francis McQueen Rozelle, Jr. and Clarita Sommers Johnson,
acting pro se at the time, filed their original complaint. Docket no. 1. They “complain . . . of
Anti-Trust, Illegal Restraint of Trade, Tortious Interference with Existing Contract, Tortious
Interference with Prospective Relations, Breaches of Fiduciary Duty, Fraud Under the Provision
of Rule 60, and Malpractice” against ten defendants—one is the trustee to a separate bankruptcy
proceeding, four are individuals, and five are business entities. Id. at 1–3. Plaintiffs’ allegations
relate to two bankruptcy proceedings in which they are the debtors. Id. at 4–5. Plaintiffs’
allegations surround an undeveloped 114-acre tract of land located in San Antonio, Texas
between UTSA Boulevard and Interstate Highway 10 that Plaintiffs owned before these actions
were commenced. Id.
a. Plaintiffs’ Bankruptcies
Plaintiffs filed their first bankruptcy petition under Chapter 11 on September 6, 2011. Id.
(referencing In re Clarita Sommers Johnson, et al., Case No. 11-53132-RBK (W.D. Tex. Bankr.
2011)). Plaintiffs allege that under a September 2012 plan of reorganization, they were given 18
months to sell the 114-acres and pay their creditors, one of whom was Defendant Broadway
National Bank. Id. at 4. They allege that shortly before this plan was ordered, Broadway, who
held a note securing a debt on the property, assigned that note to Defendant Stratford Land
Investments, Inc. Id.
Plaintiffs allege that for nearly two years thereafter, they attempted to sell the property,
but that Stratford, “in numerous, varied and intentional ways, interfered with each and every
potential sale of the property. As a result, all sales failed.” Id. at 5.
Plaintiffs allege that because they were unable to pay on the note that secured the debt on
the property, they were forced to file their second bankruptcy petition on June 2, 2014. Id.
(alluding to In re Francis McQueen Rozelle, et al., Case no. 14-51480-RBK (W.D. Tex.
Bankr.)). In this proceeding, Defendant John Patrick Lowe was appointed Chapter 11 Trustee. Id.
b. Lead-Up to the Sale
After Lowe’s appointment as the bankruptcy trustee, Plaintiffs allege that Lowe was
contacted by Defendant Steve Sanders, who was employed by Stratford. Id. at 5. Sanders
allegedly insisted that Lowe appoint Defendant Walter Busby, a principal of Defendant Central
Texas Realty and Development LLC, to broker the property, which Lowe did. Id. The
bankruptcy court thereafter approved Busby’s appointment as a broker. Id. Meanwhile, Lowe
allegedly ignored Plaintiffs’ proposals “regarding the appointment of a proper, honest and
disinterested broker and commenced to exclude and ignore all due diligence by [them] and all
information they possessed regarding the property.” Id. According to the complaint, Sanders and
Stratford, who lobbied Lowe to appoint Busby as broker, were Busby’s longtime business
partners. Id. at 5.
Plaintiffs allegedly brought what they viewed as “the enmeshed and interested nature
established by [Lowe,]” to the attention of the bankruptcy court, Lowe, and Defendant Patrick H.
Autry. 1 Id. at 6. They further informed these parties that Lowe’s actions were “doing significant
harm to the price of the property to be obtained at any sale.” Id. Plaintiffs allege that their
concerns were ignored by everyone, including the bankruptcy court. Id.
From September 2014 on, Busby, Autry, Sanders, and Lowe “orchestrated the alleged
‘sale.’” Id. Plaintiffs allege that Sanders “vetted potential buyers,” Busby and Central Texas
Realty “served as a smokescreen to make it appear the property was marketed,” and Lowe and
Autry “made sure the scheme was properly approved through the Court.” Id.
c. The Sale
In March 2015, the Property sold for approximately $20 million to Defendant Robert
Schumacher at an in-court auction. Id. at 6–7. Eventually, title to the property vested in
Defendant UTSA Blvd. IH-10, LP (“UTSA, LP”), a limited partnership in which Sanders is a
general partner. Id. Autry allegedly introduced “testimony [that was] obviously manipulated . . .
and patently false,” leading the bankruptcy court to confirm the sale. Id. at 7.
The complaint is not entirely clear regarding Autry’s role. It appears that Autry is an attorney who was
involved in the bankruptcy proceedings and sale in some capacity, though it is not clear who he represented. It also
appears that he is employed with the law firm of Branscomb PC, another named defendant in this case. Docket no. 1
Plaintiffs allege that the amount received for the property was far below its worth,
causing them approximately $30 million in actual damages. Id. at 8. They also seek “special and
exemplary [treble] damages payable by the named Defendants and possibly the Court itself.” Id.
a. Plaintiffs’ Filings
Plaintiffs filed their complaint on May 31, 2016, naming the ten defendants discussed
above. Docket no 1. At the time, they were unrepresented by counsel and signed the complaint
themselves. Id. at 31
On July 5 and 6, 2016, Plaintiffs filed what were characterized as responses to a motion
to dismiss. Docket nos. 10, 11. 2 In each of these “responses,” Plaintiffs sought to voluntarily
dismiss all claims against all defendants without prejudice. Id. They indicated that in drafting
their complaint, they “relied on the advice of an attorney . . . that said [they] could sue the
[bankruptcy] trustee,” but later consulted with other counsel who indicated that they had received
incorrect advice. Id. These filings are signed by the Plaintiffs themselves, and not by the attorney
that they allegedly consulted before realizing that the initial advice was incorrect. Id. Several
defendants oppose Plaintiffs’ voluntary dismissals. Docket no. 14 (Response from Schumacher,
Sanders, and UTSA, LP); Docket nos. 15, 16 (Responses from Lowe); 3 Docket no. 18 (Response
from Autry and Branscomb).
On October 20, 2016, an attorney made an appearance on behalf of Plaintiffs for the first
time. Docket no. 22. Thereafter, Plaintiffs responded to a pending motion for sanctions
(described below). Docket no. 25. In addition, Plaintiffs filed a motion to withdraw their prior
The latter of these two filings indicates that the earlier was filed “just as the clerk’s office was closing” the
day before, and due to these time constraints, lacked clarity. They are more or less the same substantively.
Lowe’s multiple responses likely resulted from the fact that the Plaintiffs’ notices of voluntarily dismissal
are styled as responses to one of Lowe’s motions to dismiss. The substance of Lowe’s two responses is the same.
requests to voluntarily dismiss their claims without prejudice. Docket no. 24. Defendants Autry
and Branscomb filed a response to this motion, suggesting that Plaintiffs’ voluntary dismissals
without prejudice should not be withdrawn due to their significance to the sanctions issue.
Docket no. 31.
b. Defendants’ Filings
Lowe, the bankruptcy trustee, filed a motion to dismiss on June 21. Docket no. 3. On
June 22, he filed his answer to Plaintiffs’ complaint. Docket no. 5. On June 28, he filed his First
Amended Motion to Dismiss. Docket no. 6. The Amended Motion presents the same arguments
as the original motion; for this reason, the original motion (Docket no. 3) is dismissed as moot.
Plaintiffs have not responded to either motion to dismiss.
ii. Autry and Branscomb
Autry and Branscomb, the attorney and his law firm, filed a motion to dismiss on June
21, accompanied by a brief in support filed on July 8. Docket nos. 4, 12. They filed their answer
to Plaintiffs’ complaint on July 8. Docket no. 13. They filed a motion to strike on July 11.
Docket no. 17. They filed a motion for sanctions on October 13. Docket no. 20. Plaintiffs did not
respond to the motions to dismiss or strike (Docket nos. 4, 12 and 17), but timely responded to
the motion for sanctions through their newly acquired counsel. Docket no. 25. Autry and
Branscomb replied regarding the motion for sanctions. Docket no. 30. Defendant Broadway
National Bank also filed a reply to Plaintiffs’ response on the motion for sanctions. Docket no.
iii. Sanders, Schumacher, and UTSA, LP
Sanders and Schumacher, and UTSA, LP, filed a motion to dismiss and for sanctions on
June 29, along with an appendix in support. Docket nos. 8, 9. Plaintiffs did not respond.
iv. Broadway National Bank
Broadway filed a motion to dismiss on June 29 (Docket no. 7), which was mooted via
text order by its July 20 motion to dismiss. Docket no. 19. Broadway filed a motion to
supplement its live motion to dismiss on November 21. Docket no. 29. Plaintiffs did not respond
to any of Broadway’s motions.
v. Busby, Central Texas Realty, and Stratford
Despite Plaintiffs filing their original complaint in May 2016, there is no indication that
Busby or Central Texas Realty have been served with process. In addition, Plaintiffs have not
filed a return of service indicating that Stratford has been served, yet Stratford recently filed a
motion to dismiss, arguing that service was not timely and that it should be dismissed under Rule
4(m). Docket no. 33. A copy of the summons indicating that Stratford was served with process
on November 17 was attached to this motion. Docket no. 33-1.
The Effect of Plaintiffs’ Voluntary Dismissals
Plaintiffs filed notices on July 5 and 6, seeking to dismiss all claims in this lawsuit
against all defendants without prejudice because they had received incorrect advice from
previous counsel (who did not sign the complaint). Docket nos. 10, 11. After these notices were
filed, three groups of defendants responded in opposition to this request, arguing that Plaintiffs’
claims should be dismissed with prejudice and seeking other relief. Lowe’s responses restate the
arguments in his motion to dismiss in hopes of obtaining dismissal with prejudice, identification
and discipline of the attorney who helped Plaintiffs draft their complaint without signing it, and
monetary sanctions against that attorney. Docket nos. 15, 16. Sanders, Schumacher, and UTSA,
LP seek a dismissal with prejudice and costs under Federal Rule of Civil Procedure 41(d), along
with an order preventing Plaintiffs from filing further pleadings without court approval. Docket
no. 14. Autry and Branscomb likewise seek dismissal with prejudice (or, in the alternative ask
that this Court retain jurisdiction to rule on its underlying motion to dismiss), and ask that the
Court take up their motion for sanctions. 4 Docket no. 18.
Meanwhile, Plaintiffs seek to withdraw their notices of dismissal. Docket no. 24; see also
Docket no. 25 (“Although Plaintiffs at one point filed documents indicating that they planned to
nonsuit claims or parties (Dkt. 10 and Dkt. 11), some of the defendants opposed those filings.
This litigation therefore has remained open, and the parties have continued to litigate this case as
though the claims remained live . . . Nonetheless, to clarify the record, Plaintiffs are filing a
Motion for Leave to Withdraw Pleadings concurrently with this Response.”). Autry and
Branscomb oppose withdrawal, arguing that a voluntary dismissal in these circumstances is selfexecuting, but that this dismissal should be with prejudice and that the Court retains jurisdiction
over the sanctions issue. Docket no. 31.
a. Plaintiffs’ voluntary dismissals resulted in dismissal of all claims against all
defendants except for Lowe, who had filed his answer before the dismissals
Federal Rule of Civil Procedure 41 governs voluntary dismissal of actions by the plaintiff
without a court order. This rule reads:
(a) Voluntary Dismissal.
(1) By the Plaintiff.
Autry and Branscombs’ motion for sanctions was not filed at the time of this response, but they were in
the process of forwarding the motion to Plaintiffs in anticipation of filing it. Docket no. 18 at 4–5.
(A) Without a Court Order. Subject to Rules 23(e), 23.1(c), 23.2,
and 66 and any applicable federal statute, the plaintiff may dismiss
an action without a court order by filing:
(i) a notice of dismissal before the opposing party serves
either an answer or a motion for summary judgment; or
(ii) a stipulation of dismissal signed by all parties who have
(B) Effect. Unless the notice or stipulation states otherwise, the
dismissal is without prejudice. But if the plaintiff previously
dismissed any federal- or state-court action based on or including
the same claim, a notice of dismissal operates as an adjudication on
(2) By Court Order; Effect. Except as provided in Rule 41(a)(1), an action
may be dismissed at the plaintiff's request only by court order, on terms
that the court considers proper. If a defendant has pleaded a counterclaim
before being served with the plaintiff's motion to dismiss, the action may
be dismissed over the defendant’s objection only if the counterclaim can
remain pending for independent adjudication. Unless the order states
otherwise, a dismissal under this paragraph (2) is without prejudice.
FED. R. CIV. P. 41(a).
Plaintiffs filed two documents that the Court construes as “notices of dismissal” under
Rule 41(a)(1)(A)(i) because they contain clear language indicating that Plaintiffs wish to dismiss
all claims against all defendants without prejudice. 5 As an initial matter, Lowe filed his answer
before Plaintiffs sought dismissal, so Lowe cannot be voluntarily dismissed without a court order
under Rule 41(a). Since there is no court order dismissing Lowe, Plaintiffs’ notices of dismissal
are ineffective as to Lowe, and the Court will consider his pending motions later in this order.
The Court now turns to the effect of Plaintiffs’ notices of dismissal as to the other
The first, filed July 5, does not have a title and was filed in response to a motion to dismiss. It states “we
would ask to be allowed to dismiss the defendants without prejudice.” Docket no. 10. The second, filed July 6, is
titled “Petitioners First Amended and Corrected Response to Defendant John Patrick Lowe’s Motion to Dismiss,”
and states “Plaintiffs request that the case be dismissed without prejudice with respect to all defendants.” Docket no.
11. Though not formally titled as notices of dismissal, “[i]t is its content, not its label that matters” in construing a
filing as a notice of dismissal under Rule 41. See, e.g., Wilson & Co v. Fremont Cake & Meal Co., 83 F. Supp. 900,
903 (D. Neb. 1949).
defendants. 6 Once a plaintiff has filed his notice of dismissal under Rule 41(a)(1), a case is
effectively terminated without further order of a court. Often cited language from the Fifth
Circuit describes this automatic effect as follows:
Rule 41(a)(1) is the shortest and surest route to abort a complaint when it is
applicable. So long as plaintiff has not been served with his adversary’s answer or
motion for summary judgment he need do no more than file a notice of dismissal
with the Clerk. That document itself closes the file. There is nothing the defendant
can do to fan the ashes of that action into life and the court has no role to play.
This is a matter of right running to the plaintiff and may not be extinguished or
circumscribed by adversary or court. There is not even a perfunctory order of
court closing the file. Its alpha and omega was the doing of the plaintiff alone. He
suffers no impairment beyond his fee for filing.
Am. Cyanamid Co. v. McGhee, 317 F.2d 295, 297 (5th Cir. 1963). “In short, in the normal
course, the district court is divested of jurisdiction over the case by the filing of the notice of
dismissal itself.” Qureshi v. United States, 600 F.3d 523, 525 (5th Cir. 2010) (summarizing Am.
Cyanamid, 317 F.2d at 297).
Based on the foregoing, Plaintiffs voluntarily dismissed all claims against all defendants
except for Lowe in early July with the filing of their notices. These dismissals were
automatically effective when filed, requiring neither further order from the Court nor action from
b. Plaintiffs’ attempt to withdraw their voluntary dismissals is denied.
Plaintiffs’ notices of dismissal are effective as to all claims against all defendants (except
for those against Lowe) despite Plaintiffs’ motion to withdraw the notices of dismissal, which is
hereby denied. “When a Rule 41(a)(1)(A)(i) notice of voluntary dismissal becomes effective, the
plaintiff may not withdraw the notice,” which is precisely what Plaintiffs seek to do here. Luv N’
Care, Ltd. v. Jackel Intern. Ltd., CIV.A. 13-1565, 2013 WL 5726052, at *1 (W.D. La. Oct. 21,
The inability to dismiss Lowe does not preclude voluntary dismissal of other defendants under Rule
41(a)(1)(A)(i). See Plains Growers, Inc. By & Through Florists’ Mut. Ins. Co. v. Ickes-Braun Glasshouses, Inc., 474
F.2d 250, 254 (5th Cir. 1973); Aggregates (Car.), Inc. v. Kruse, 134 F.R.D. 23, 25 (D.P.R. 1991).
2013); 8-41 MOORE’S FEDERAL PRACTICE § 41.33[f] (2016) (“Once a notice of dismissal is
filed [under Rule 41(a)(1)(A)(1)], the case is closed and the plaintiff may not unilaterally
withdraw or amend the notice.”). This legal premise is consistent with the general idea that a
voluntary dismissal under Rule 41(a)(1) divests the court of jurisdiction. See id.
Plaintiffs’ notices of dismissal became effective immediately and automatically upon
their filing, as previously stated. Further, Plaintiffs’ attempt to withdraw these notices, which is
not titled as a motion, simply states “Plaintiffs . . . hereby withdraw their pleadings [entered at
Docket nos. 10 and 11].” This is, by its terms, a unilateral attempt to withdraw notices of
dismissal that had already become effective. In some situations, courts have treated similar
requests as motions for relief from judgment under Federal Rule of Civil Procedure 60(b). E.g.,
Yesh Music v. Lakewood Church, 727 F.3d 356, 363 (5th Cir. 2013). Giving Plaintiffs the benefit
of the doubt and construing their “withdrawal” as a motion for relief from judgment under Rule
60(b), they present no substantive argument to justify the withdrawal; their attempt to withdraw
their dismissals is truly unilateral and without legal justification. 7 Plaintiffs’ Motion to Withdraw
(Docket no. 24) is therefore denied. As a result, all claims against all defendants except for Lowe
were voluntarily dismissed through Plaintiffs’ notices of dismissal.
c. Whether Plaintiffs’ voluntary dismissals are with prejudice under the two
dismissal rule of Rule 41(a)(1)(B) is not properly before this Court.
Having determined that Plaintiffs’ voluntary dismissals under Rule 41(a)(1)(A)(i) are
effective against most defendants, the Court now turns to whether these dismissals are with or
without prejudice. Rule 41 provides that “[u]nless the notice or stipulation states otherwise, the
Autry and Branscomb make a brief argument under Rule 60(b), seeking relief from the judgment
effectuated by Plaintiffs’ notices of dismissal; they ask that the Court consider their motion to dismiss under Rule
12(b)(6) despite the notices. Docket no. 18 at 4. This request is denied, as Autry and Branscomb do not identify a
specific ground for relief under Rule 60(b), nor do they make a showing of “extraordinary circumstances” sufficient
to invoke the catchall clause of Rule 60(b)(6). See Yesh Music, 727 F.3d at 363.
dismissal is without prejudice. But if the plaintiff previously dismissed any federal- or state-court
action based on or including the same claim, a notice of dismissal operates as an adjudication on
the merits.” FED. R. CIV. P. 41(a)(1)(B). Plaintiffs’ notices of dismissal stated that they are
without prejudice. Docket nos. 10, 11. This comports with the general application of Rule
Numerous defendants argue, however, that Plaintiffs have “previously dismissed [an
action] based on or including the same claim,” bringing Plaintiffs’ dismissals in this case within
the exception laid out in Rule 41(a)(1)(B) to make them with prejudice. 8 This exception is
referred to as the two dismissal rule. Theard v. Dep’t of Civil Serv., La., CIV.A. 10-4165, 2012
WL 6161944, at *9 (E.D. La. Dec. 11, 2012) (quoting Federal Rule of Civil Procedure
41(a)(1)(B)). In support of their argument for the application of the two dismissal rule, several
defendants identify numerous motions in the related bankruptcy proceeding that Plaintiffs
voluntarily dismissed, along with a stipulation of dismissal of related bankruptcy appeals under
Federal Rule of Appellate Procedure 42. Docket nos. 18 at 1–3; 14 at 6 (citing Docket nos. 8, 9).
Without conducting a detailed analysis of whether the motions and appeals dismissed by
Plaintiffs constitute an “action based on or including the same claim” within the meaning of Rule
41(a)(1)(B), application of the two dismissal rule is not a proper question for this Court. This
conclusion follows from the principle that a notice of dismissal is effective immediately without
further order or action from the court, and divests the court of jurisdiction to decide the merits of
Defendants Schumacher, Sanders, and UTSA Blvd IH-10, LP also argue that these dismissals should be
with prejudice based on Freeman v. United States, 98 Fed. Cl. 360 (2011). This case is inapposite. Freeman dealt
with a dismissal by stipulation under Rule 41(a)(2), which requires judicial approval and a court order. Freeman, 98
Fed. Cl. at 367–68. Here, however, Plaintiffs voluntarily dismissed under Rule 41(a)(1)(A)(i) by notice of dismissal
without the need for a court order.
The Ninth Circuit Court explained this logic in Commercial Space Mgmt. Co., Inc. v.
Boeing Co., Inc., 193 F.3d 1074, 1075 (9th Cir. 1999). There, the plaintiff filed two
“substantially identical actions.” Commercial Space, 193 F.3d at 1076. The plaintiff, at the
defendant’s request, then signed a stipulation of dismissal in the first case, which was
accompanied by a court order. Id. at 1076–77. The plaintiff then brought a third action, and later
filed a “Notice of Voluntary Dismissal Without Prejudice” in the second action. Id. at 1077. In
the second action, the defendant filed a motion to alter or amend the judgment under Rule 59(e),
asking the district court to convert the plaintiff’s notice of voluntary dismissal without prejudice
into a dismissal with prejudice because of Rule 41(a)(1)(B)’s view of the stipulation of dismissal
in the first action. Id. The district court denied the motion on the merits. Id. The Ninth Circuit
affirmed on different grounds and vacated the district court’s merits-based decision. Id.
The Ninth Circuit opinion was premised on the fundamental and familiar concept of Rule
41—“a Rule 41(a)(1) dismissal, once filed, automatically terminates the action, and thus federal
jurisdiction, without judicial involvement.” Id. at 1076. Recognizing the “absolute right” that
Rule 41 gives to plaintiffs to dismiss their own actions under certain circumstances, combined
with the automatic and self-effectuating impact of such a notice, the court found that
the district court has no role to play once a notice of dismissal under Rule 41(a)(1)
is filed. The action is terminated at that point, as if no action had ever been filed.
Therefore, the district court has no power to place a condition on a Rule 41(a)(1)
dismissal at the defendant’s request. This would conflate Rule 41(a)(1) dismissals
with Rule 41(a)(2) dismissals, contrary to their different language and purpose.
Id. at 1080. Therefore, the district court in the second action should not have decided whether the
notice of dismissal was with or without prejudice because the issue “becomes ripe (and can be
determined) only in a third action, if and when one is filed.” Id. at 1076.
While the Court recognizes that Commercial Space is from the Ninth Circuit, its logic is
instructive, particularly because it is based on law identical to that of the Fifth Circuit—a notice
of voluntary dismissal is self-effectuating without court involvement. 9 Applying that logic, it
would be inappropriate for this Court to determine the effect of a notice of dismissal that has
already terminated the case, just as it was in Commercial Space. 10
In sum, Plaintiffs’ notices of dismissal (Docket nos. 10, 11) became effective
immediately and automatically as to all defendants except for Lowe. Plaintiffs did not provide a
sufficient justification for relief from these dismissals under Rule 60(b), and so their Motion to
Withdraw (Docket no. 24) these notices is DENIED. Whether these dismissals are with or
without prejudice is not a question properly before this Court because the dismissals were
effective immediately, depriving this Court of jurisdiction to determine the merits of these
already dismissed claims or place conditions on these dismissals. Should Plaintiffs file another
related action, the effect of their notices of dismissal in this case will be a question properly
before that court. Because nearly all of Plaintiffs’ claims are dismissed through their own notices
of dismissal, many of the defendants’ motions—Docket nos. 4, 8, 11 17, 19, 29, and 33—are
DISMISSED as moot.
Lowe’s Motion to Dismiss
As discussed above, Plaintiffs’ voluntary dismissal under Rule 41(a)(1)(A)(i) was not
effective as to Lowe because Lowe filed his answer before Plaintiffs filed their notices of
The Ninth Circuit in Commercial Space quoted the same Fifth Circuit language from Am. Cyanamid, 317
F.2d at 297, that this order quotes above. Commercial Space, 193 F.3d at 1077.
For a similar reason, it would not be appropriate, as some defendants request, for the Court to enter an
order dismissing Plaintiffs’ claims with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2). Plaintiffs’
claims are already dismissed by the filing of their notices of dismissal; there are no claims left for the Court to
dismiss through a Rule 41(a)(2) order.
This dismissal for mootness is based on the motion’s request to dismiss Plaintiffs’ claims against
Sanders, Schumacher, and UTSA, LP. This motion’s request for sanctions is discussed below.
dismissal. Docket no. 5. The Court now turns to Lowe’s Amended Motion to Dismiss, to which
Plaintiffs have not responded. Docket no. 6.
Lowe presents several grounds for dismissal of Plaintiffs’ claims against him. First, he
argues that Plaintiffs have not satisfied a condition precedent by obtaining leave from the
bankruptcy court to sue him because he is the bankruptcy trustee. Id. at 2. Next, he argues that
judicial and collateral estoppel bar this suit based on prior orders of the bankruptcy court. Id. at
6. He adds that this Court lacks subject matter jurisdiction, that Plaintiffs’ fraud claims do not
satisfy the heightened pleading standard of Rule 9(b), and that res judicata and absolute privilege
bar this suit. Id. at 6–7.
Lowe is correct that Plaintiffs’ failure to obtain leave from the bankruptcy court to sue
the trustee warrants dismissal of the claims against him. As the Fifth Circuit recently explained,
[t]he Supreme Court has held that, “before suit is brought against a receiver leave
of the court by which he was appointed must be obtained.” Barton v. Barbour,
104 U.S. 126, 128, 26 L.Ed. 672 (1881). We have applied this principle to
bankruptcy trustees, as have other circuits addressing the issue. See Anderson v.
United States, 520 F.2d 1027, 1029 (5th Cir. 1975); McDaniel v. Blust, 668 F.3d
153, 156–57 (4th Cir. 2012) (collecting cases).
Villegas v. Schmidt, 788 F.3d 156, 158 (5th Cir. 2015), cert. denied, 136 S. Ct. 588, 193 L. Ed.
2d 469 (2015). This is squarely the case here—as in Villegas, Plaintiffs seek to sue their Chapter
11 bankruptcy trustee for various actions taken in his capacity as bankruptcy trustee. Their
complaint continually identifies Lowe as “trustee” and all of the allegations against him relate to
actions taken as bankruptcy trustee. See Docket no. 1. Plaintiffs did not obtain leave to sue Lowe
in this capacity from the bankruptcy court that appointed him as trustee, and his motion to
dismiss is therefore granted.
Lowe’s success on this argument, however, does not result in a dismissal with prejudice;
it results in a dismissal without prejudice based on a lack of subject matter jurisdiction. The
holding in Barton was not that a plaintiff’s failure to seek leave is a “condition precedent to suit,”
as Lowe argues. Docket no. 6 at 2. Instead, Barton held that the court that appoints the receiver
must grant leave in order for another court to have jurisdiction. Barton, 104 U.S. at 131; Carroll
v. Abide, 788 F.3d 502, 505 (5th Cir. 2015); see also McDaniel v. Blust, 668 F.3d 153, 156 (4th
Cir. 2012) (“The Supreme Court established in Barton that before another court may obtain
subject-matter jurisdiction over a suit filed against a receiver for acts committed in his official
capacity, the plaintiff must obtain leave of the court that appointed the receiver” (emphasis
added)). “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.” Randazzo v. Babin, CV 15-4943, 2016 WL 4418969, at *1 (E.D. La. Aug. 18,
2016). As a result, Barton presents an obstacle that is a “condition precedent” insofar as subject
matter jurisdiction is a condition precedent to any lawsuit. Because Lowe’s motion to dismiss is
granted for a lack of subject matter jurisdiction over the claims against him, the Court declines to
reach the other grounds in his motion, and dismisses Plaintiffs’ claims against him without
prejudice. See id. (dismissing claims against a bankruptcy trustee without prejudice under the
Barton doctrine and declining to consider a Rule 12(b)(6) motion to dismiss due to a lack of
subject matter jurisdiction).
Finally, the Court turns to the defendants’ requests for sanctions. Docket nos. 8, 20.
Certain defendants seek sanctions both based on the court’s inherent authority and Federal Rule
of Civil Procedure 11. These requests are based on Plaintiffs’ conduct in two main ways. First,
Defendants argue that Plaintiffs’ claims lack any chance of success, are not warranted by
existing law, and could only have been brought for an improper purpose, such as to harass or
delay; to support this argument, Defendants point out numerous instances of Plaintiffs’ conduct
from the related bankruptcy proceedings. Second, they argue that Plaintiffs’ reliance on the
advice of an attorney in drafting their complaint while representing that they were pro se
warrants sanctions, perhaps from the attorney who advised Plaintiffs in drafting the complaint.
Even though the Court no longer has jurisdiction over the merits of this case due to the
dismissals described above, it retains its inherent supervisory powers. Qureshi v. United States,
600 F.3d 523, 525 (5th Cir. 2010). These powers include the ability to impose sanctions under
Rule 11, costs, or attorney’s fees. Id.
Federal Rule of Civil Procedure 11(b), which forms the basis for the sanctions sought,
provides as follows:
(b) Representations to the Court. By presenting to the court a pleading, written
motion, or other paper—whether by signing, filing, submitting, or later
advocating it—an attorney or unrepresented party certifies that to the best of the
person's knowledge, information, and belief, formed after an inquiry reasonable
under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass,
cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by
existing law or by a nonfrivolous argument for extending, modifying, or
reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so
identified, will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if
specifically so identified, are reasonably based on belief or a lack of
FED. R. CIV. P. 11(b). Review of a district court’s imposition of sanctions is reviewed on an
abuse of discretion standard. Marceaux v. Lafayette City-Par. Consol. Gov’t, 614 Fed. Appx.
705, 708 (5th Cir. 2015).
Sanctions are inappropriate because Plaintiffs have not engaged in sanctionable conduct
in this litigation. As Plaintiffs’ response to the motion for sanctions points out, much of the
conduct specified in the motions for sanctions occurred in the bankruptcy proceedings, not
before this Court. In addition, the Court does not view Plaintiffs’ consultation of an attorney
while drafting their complaint to be sanctionable, particularly in light of the fact that they
admitted this in their own voluntary dismissals. As a result, defendants’ requests for sanctions
(Docket nos. 8, 20) are denied.
For the foregoing reasons, all claims against all Defendants in this lawsuit are
DISMISSED. Because of the effect of Plaintiffs’ notices of voluntary dismissal, the following
motions are DISMISSED as moot—Autry and Branscomb’s Motion to Dismiss (Docket no. 4);
Sanders, Schumacher, and UTSA, LP’s Motion to Dismiss (Docket no. 8); Autry and
Branscomb’s Motion to Strike (Docket no. 17); Broadway National Bank’s Motion to Dismiss
(Docket no. 19); Broadway’s Motion to Supplement (Docket no. 29); and Stratford Land
Investment’s Motion to Dismiss (Docket no. 33). Plaintiffs’ Motion to Withdraw their notices of
voluntary dismissal (Docket no. 24) is DENIED. Lowe’s Motion to Dismiss (Docket no. 3) is
DISMISSED as moot. Lowe’s First Amended Motion to Dismiss (Docket no. 6) is GRANTED,
and Plaintiffs’ claims against Lowe are DISMISSED without prejudice for a lack of subject
matter jurisdiction. Sanders, Schumacher, and UTSA, LP’s Motion for Sanctions (Docket no. 8)
is DENIED. Autry and Branscomb’s Motion for Sanctions (Docket no. 20) is also DENIED.
It is so ORDERED.
SIGNED this 13th day of December, 2016.
UNITED STATES DISTRICT JUDGE
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