CLYDE THOMAS CARTER v. BOB RODGERS, Individuаlly and, in his capacity as Trustee in the Clyde Thomas Carter Bankruptcy, CLEMENTS ANTIQUES OF TENNESSEE, INC., et al.
No. 99-13703
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
August 2, 2000
D. C. Docket No. 97-03063-CV-S-NE; [PUBLISH]
CLYDE THOMAS CARTER, Plaintiff-Appellant, versus BOB RODGERS, Individually and, in his capacity as Trustee in the Clyde Thomas Carter Bankruptcy, CLEMENTS ANTIQUES OF TENNESSEE, INC., et al., Defendants-Appellees.
Appeal from the United States District Court for the Northern District of Alabama
(August 2, 2000)
HULL, Circuit Judge:
*Honorable Robert B. Propst, District Judge for the Northern District of Alabama, sitting by designation.
Plaintiff-Debtor Clyde Thomas Carter appeals the district court‘s dismissal of his civil action based on his failure to seek leavе first from the bankruptcy court to file this action. We affirm.
I. BACKGROUND
Plaintiff Clyde Thomas Carter was a debtor in a Chapter 7 bankruptcy proceeding. Defendant Bob Rodgers was the initial Bankruptcy Trustee (“Trustee“) in Carter‘s bankruptcy proceeding. As Trustee, Rodgers appоinted Defendant Clements Antiques of Tennessee, Inc. (“Clements Antiques“), and its principals, Defendants Charles W. Clements, Sr. and Charles W. Clements, Jr. (“the Clements“) to conduct a sale of Carter‘s personal property. The bankruptcy court approved these appointments.
Clements Antiques conducted the sale by way of auction on August 5, 1995. Trustee Rodgers and his wife attended the auction, and Rodgers‘s wife successfully bid on an item.1 Likewise, Clements Antiques, Clements Sr., and Clements Jr. (or family members on their behalf) purchased items at the auction.
Uрon learning of these purchases, the bankruptcy administrator for the Northern District of Alabama complained that the purchases rendered all Defendants non-
disinterested parties in contravention of the Bankruptcy Code. See
II. DISCUSSION
A. The Barton Doctrine
This case presents an issue of first impression in this circuit regarding
whether a debtor first must obtain leave from the bankruptcy court before it can initiate an action in the district court when that action is against the trustee or other bankruptcy-court-appointed officer, for acts done in the actor‘s official capacity. Joining the other circuits that have considered this issue, we hold that a debtor must obtain leave of the bankruptcy court before initiating an action in district court when that action is against the trustee or other bankruptcy-court-appointed officer,4 for acts done in the actor‘s official capacity. See Springer v. Infinity Group Co., No. 98-5182, 189 F.3d 478 (10th Cir. Aug. 26, 1999) (unpublished table decision), cert. denied, 120 S. Ct. 1422 (2000); Gordon v. Nick, No. 96-1858, 162 F.3d 1155 (4th Cir. Sept. 2, 1998) (unpublished table decision); In re Linton, 136 F.3d 544, 546 (7th Cir. 1998); Lebovits v. Scheffel (In re Lehal Realty Assocs.), 101 F.3d 272 (2d Cir. 1996); Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1240 (6th Cir. 1993); Vass v. Conron Bros. Co., 59 F.2d 969, 970 (2d Cir. 1932); Kashani v. Fulton (In re Kashani), 190 B.R. 875, 885 (9th Cir. B.A.P. 1995).
“An unbroken line of cases . . . has imposed [this] requirement as a matter of federal common law.” Linton, 136 F.3d at 545. In so holding, these circuit courts have applied the rule referred to as the “Barton doctrine.” See id. The Supreme Court in Barton v. Barbour, 104 U.S. 126, 127 (1881), stated that “[i]t is a general rule that before suit is brought against a receiver[,] leave of the court by which he was appointed must be obtained.” Barton involved a receiver in state court, but the circuit courts have extended the Barton doctrine to lawsuits against a bankruptcy trustee. In Linton, the Seventh Circuit explained the reasons behind its application of the Barton doctrine to a bankruptcy trustee, as follows: “The trustee in bankruptcy is a statutory successor to the equity receiver, and . . . [j]ust like an equity receiver, a trustee in bankruptcy is working in effect for the court thаt appointed or approved him, administering property that has come under the court‘s control by virtue of the Bankruptcy Code.” 136 F.3d at 545.
In addition, the policy behind this leave of court requirement was well-stated by the Seventh Circuit:
If [the trustee] is burdened with having to defеnd against suits by litigants disappointed by his actions on the court‘s behalf, his work for the court will be impeded. . . . Without the requirement [of leave], trusteeship will become a more irksome duty, and so it will be harder for courts to find competent people
to appoint as trustees. Trustees will have to pay higher malpractice premiums, and this will make the administration of the bankruptcy laws more expensive . . . .
Furthermore, requiring that leave to sue be sought enables bankruptcy judges to monitor the work of the trustees more еffectively.
Plaintiff‘s suit is a run-of-the mill Barton case. Carter sued Defendants in district court for breaches of fiduciary duties stemming from their official bankruptcy duties. He needed leave of the bankruptcy court, and absent that leave, the district court correctly found that it did not have subjeсt matter jurisdiction over his cause of action.
B. Federal vs. State Causes of Action
Carter argues that the Barton doctrine requires parties to obtain leave of the bankruptcy court only when they wish to pursue a state court remedy. We disagree, and hold that when leave is required, it is required before pursuing remedies in еither state or other federal courts. We find no reason to distinguish between instances where the trustee is sued in state court and those in which the trustee is sued in federal court. See Kashani v. Fulton (In re Kashani), 190 B.R. 875, 885 (B.A.P. 9th Cir. 1995) (“[L]eave to sue the trustee is required to sue in those federal courts other thаn the bankruptcy court which actually approves the trustee‘s appointment.“); In re Krikava, 217 B.R. 275, 279 (Bankr. D. Neb. 1998) (“Consent of the appointing bankruptcy court is required even when the plaintiff seeks to sue in another federal court.“).
C. Related-To Bankruptcy Requirement
There also is no merit to Carter‘s assertion that his tоrt claims -- breach of fiduciary duty and reasonable care -- are “unrelated to” and “outside the scope” of the bankruptcy proceeding because they do not arise directly from substantive provisions of the Bankruptcy Code. Carter posits the theory that because his claims are unrelated to the bankruptcy proceeding, the bankruptcy court lacks jurisdiction over his lawsuit and, therefore, he was not required to obtain leave of the bankruptcy court before bringing his suit in district court.
We disagree. The bankruptcy court has jurisdiction over Carter‘s claims because his breach of fiduciary duty and reasonable care claims are “related to” and “within the scope” of the bankruptcy proceeding. Because Carter‘s claims are relаted to the bankruptcy proceeding, we need not determine whether leave of the bankruptcy court is required when a debtor sues a trustee for a tort completely “unrelated to” and “outside the scope” of the bankruptcy proceеding.
A proceeding is within the bankruptcy jurisdiction, defined by
court put it, ‘matters that could arise only in bankruptcy.‘” In re Toledo, 170 F.3d 1340, 1345 (11th Cir. 1999) (citations omitted). We have stated, “[t]he usual articulation of the test for determining whether a civil proceeding is related to bаnkruptcy is whether the outcome of the proceeding could conceivably have an effect on the estate being administered in bankruptcy.” Miller v. Kemira, Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784, 788 (11th Cir. 1990).
While Carter‘s action against Defendants arose after the date of the bankruptcy petition, his suit turns solely on allegations of wrongdoing in the sale of property belonging to the bankruptcy estate.5 Any
Further, Carter sued the trustee and other court approved officers of his bankruptcy estate for allеged breaches of their bankruptcy-related duties. The
Bankruptcy Code establishes the office of trustee and defines the trustees’ duties. Moreover, an action against a bankruptcy trustee for breach of bankruptcy-related fiduciary duty can only arise in a bankruptcy case. Thus, Carter‘s “fiduciary claims against [the fiduciaries] are within the bankruptcy jurisdiction defined by
D. The § 959 Exception
Finally, Carter asserts that he should be permitted to file his lawsuit in the district court without first obtaining leave from the bankruptcy court pursuant to section 959‘s statutory exception to the Barton doctrine. Section 959 provides for a limited exception to the Barton doctrine, permitting suits against “[t]rustees, receivers or managers of any property . . . withоut leave of the court appointing them, with respect to any of their acts or transactions in carrying on the business connected with such property.”
The “carrying on business” exception in
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.” Lehal Realty Assocs., 101 F.3d at 276.
Carter‘s action against the Defendants was for breach of fiduciary duty and involves the Defendants’ duties as they relate to the administration and liquidation of his estate. Because the alleged breaches attributed to Defendants are not premised on an act or transaction of a fiduciary in carrying out Carter‘s business operations,
970 (B.A.P. 9th Cir. 1989) (“[S]ection [989] was not intended to apply to a breach of
III. CONCLUSION
Plaintiff Carter failed to obtain leave from the bankruptcy court when such leave was a pre-requisite to filing this civil action against the Defendants outside of that court. Therefore, the district court lacked subject matter jurisdiction and properly dismissed this civil action against these Defendants.
AFFIRMED.
HULL
CIRCUIT JUDGE