Grant, Konvalinka & Harrison, PC v. Banks
716 F.3d 404
6th Cir.2013Background
- McKenzie bankruptcy case included a Chapter 11 then Chapter 7 conversion; C. Kenneth Still served as trustee.
- Grant, Konvalinka & Harrison (GKH) represented itself and challenged the Trustee and attorneys for alleged malicious prosecution and abuse of process arising from three post-petition actions.
- Trustee filed three adversary actions against GKH in 2010 (Turnover Action, Avoidance Action, and an additional action related to CAM/50-acre transfer).
- Bankruptcy court dismissed the Avoidance and Turnover actions as barred by quasi-judicial immunity; no appeal filed on those dismissals.
- GKH pursued state-court leave to sue the Trustee and attorneys for malicious prosecution/abuse of process; district court affirmed the bankruptcy court’s rulings, denying leave.
- GKH timely appealed, challenging immunity and the denial of leave under the Barton doctrine and Kashani factors; the Sixth Circuit affirmed the district court’s decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Trustee and counsel are protected by quasi-judicial immunity | GKH argues immunity does not apply to trustee actions. | Trustee/counsel acted within official duties; immunity applies. | Yes, immunity bars the claims. |
| Whether the Avoidance and Turnover Actions were within the Trustee's authority / ultra vires | Actions were outside authority or ultra vires to sue for asset recovery. | Actions were within the trustee’s duties to collect assets and investigate finances. | Within scope of authority; not ultra vires. |
| Whether the district court properly denied leave to sue in state court under Barton/Kashani | Leave should be granted; issues warrant forum in state court. | Leave properly denied; retain jurisdiction in bankruptcy court due to immunity and estate interests. | Denied leave; district court affirmed. |
Key Cases Cited
- Allard v. Weitzman, 991 F.2d 1236 (6th Cir. 1993) (counsel for trustee treated as officer of the court; derivative immunity)
- In re Heinsohn, 231 B.R. 60 (Bankr. E.D. Tenn. 1999) (trustee immunity; fiduciary duties; limits of immunity from third-party suits)
- In re Kashani, 190 B.R. 875 (BAP 9th Cir. 1995) (Kashani factors for keeping proceedings in bankruptcy court)
- Satterfield v. Malloy, 700 F.3d 1231 (10th Cir. 2012) (Barton doctrine; breadth of authority considerations)
- Leonard v. Vrooman, 383 F.2d 556 (9th Cir. 1967) (ultra vires acts; distinction from authorized turnover action)
- Forrester v. White, 484 U.S. 219 (1988) (functional immunity analysis for officials intertwined with judicial process)