Palaxar Group LLC v. Charles T. Rahn
714 F. App'x 926
| 11th Cir. | 2017Background
- Frank Amodeo, through his guardian, appealed the district court’s denial of his motion to intervene and for appointment of counsel in a multi-defendant civil suit challenging a Chapter 11 bankruptcy as filed/ administered in bad faith.
- The underlying civil suit involved two plaintiffs suing 25 defendants (including entities connected to the bankruptcy) asserting conspiracy and related claims that directly challenged the Chapter 11 bankruptcy’s validity and administration.
- The district court concluded it had federal subject-matter jurisdiction under 28 U.S.C. § 1334(b) because the civil action “relates to” the Chapter 11 case and analyzed the applicability of the Barton doctrine, dismissing some claims against certain defendants under that doctrine.
- Amodeo argued on appeal that the plaintiffs waived subject-matter jurisdiction by not pleading it, and that the Barton doctrine required dismissal of suits against defendants who were debtors or affiliates in the Chapter 11 proceeding.
- Amodeo also claimed a right to intervene based on ownership of AQMI Strategy Corporation allegedly returned to him after a criminal forfeiture; the district court (and prior Eleventh Circuit panel) found his ownership interest had been previously divested and not restored.
- The Eleventh Circuit held the district court correctly denied intervention and thus dismissed the appeal for lack of jurisdiction (an appeal of a non-final denial of intervention), and rejected Amodeo’s jurisdiction-waiver and Barton-based arguments as insufficient.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction (related-to bankruptcy) | Amodeo: plaintiffs waived federal jurisdiction by not pleading it | District: action "relates to" Chapter 11 so §1334(b) jurisdiction exists | Court: jurisdiction is proper; subject-matter jurisdiction cannot be waived |
| Barton doctrine applicability | Amodeo: Barton requires dismissal of suits against defendants who are debtors/affiliates | District: applied Barton and dismissed some claims; not all defendants fall under Barton | Court: district court correctly applied Barton and had reasoned distinctions; no broader dismissal required |
| Ownership/standing to intervene (AQMI) | Amodeo: court reopened his criminal case and returned AQMI, so he has an ownership interest giving right to intervene | District: government relinquished interest only after AQMI was sued; prior forfeiture divested Amodeo’s interest and was not disturbed | Court: Amodeo lacks the asserted ownership; intervention denied |
| Ability to appeal denial of intervention | Amodeo: challenges district court denial on merits | District/Eleventh Circuit: denial of leave to intervene is not a final order barring appeal unless denial was improper | Court: because district court correctly denied intervention, appellate jurisdiction evaporates and appeal dismissed |
Key Cases Cited
- Fox v. Tyson Foods, Inc., 519 F.3d 1298 (11th Cir. 2008) (provisional jurisdiction to review denial of intervention; proper denial is not a final appealable order)
- In re Boone, 52 F.3d 958 (11th Cir. 1995) (§1334(b) confers jurisdiction over proceedings "arising under," "arising in," or "related to" bankruptcy cases)
- Matter of Lemco Gypsum, Inc., 910 F.2d 784 (11th Cir. 1990) (defines when a civil proceeding is "related to" bankruptcy based on conceivable effect on the estate)
- In re Bayou Shores SNF, LLC, 828 F.3d 1297 (11th Cir. 2016) (subject-matter jurisdiction cannot be forfeited or waived)
- Lawrence v. Goldberg, 573 F.3d 1265 (11th Cir. 2009) (Barton doctrine applies to trustees and officers appointed or approved by the bankruptcy court)
- E.E.O.C. v. E. Airlines, Inc., 736 F.2d 635 (11th Cir. 1984) (proper denial of intervention is not a final decision for appeal)
- Barton v. Barbour, 104 U.S. 126 (1881) (original source of the Barton doctrine requiring leave of the bankruptcy court for certain suits against bankruptcy officers)