Court Opinion

ID: 9950270
Source: CourtListenerOpinion
Date Created: 2024-03-13 18:00:30.104004+00
Date Added: 2024-06-11T14:36:18.926154
License: Public Domain

Case: 22-11242            Document: 98-1         Page: 1      Date Filed: 03/13/2024

           United States Court of Appeals
                for the Fifth Circuit                                          United States Court of Appeals
                                                                                        Fifth Circuit
                                   ____________                                       FILED
                                                                                   March 13, 2024
                                     No. 22-11242
                                   ____________                                    Lyle W. Cayce
                                                                                        Clerk
Securities and Exchange Commission,

                                                                    Plaintiff—Appellee,

                                          versus

Timothy Barton,

                                            Defendant—Appellant.
                   ______________________________

                   Appeal from the United States District Court
                       for the Northern District of Texas
                            USDC No. 3:22-CV-2118
                   ______________________________

Before Stewart, Dennis, and Wilson, Circuit Judges.
Per Curiam:*
       Appellant Timothy Barton appeals the district court’s order ratifying
a settlement agreement and release executed by a court-appointed receiver.
Because of subsequent developments in the underlying litigation, we dismiss
this appeal, one of a series of such appeals Barton has filed challenging the
receiver’s actions, as moot.

       _____________________
       *
           This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 22-11242         Document: 98-1        Page: 2    Date Filed: 03/13/2024

                                   No. 22-11242

                                        I.
       This case stems from a September 2022 action the Securities and
Exchange Commission (SEC) brought against Timothy Barton. The SEC
alleges that Barton defrauded more than 100 investors out of $26,000,000.
Barton purportedly told putative investors that their money would be used to
purchase land for development into residential lots, promising that they
would receive interest payments and repayment of their principal. But
Barton only purchased a fraction of the land and never made the promised
payments. Instead, he used investors’ money to fund both his lifestyle and
other real estate projects involving entities under Barton’s control.
       The SEC moved to appoint a receiver over all “Barton-controlled
entities to determine the value of the property interests . . . and to secure,
preserve, and potentially monetize that value for the benefit of the defrauded
investors.” The district court granted the SEC’s motion and entered an
order appointing Cortney C. Thomas as receiver (the First Receivership
Order). The First Receivership Order authorized the receiver, inter alia, to
“transfer, compromise, or otherwise dispose of any [r]eceivership
[p]roperty, other than real estate, in the ordinary course of business,” “enter
into and cancel contracts . . . as the [r]eceiver deems necessary or advisable,”
and “pursue, resist, defend, compromise, or otherwise dispose of all suits,
actions, claims, and demands which may now be pending or which may
be . . . asserted against the [r]eceivership [e]ntities[.]”
       In the present appeal, Barton challenges the district court’s order
ratifying a settlement agreement and release entered into by the receiver and
two non-parties (the DLP Order). The settlement agreement arose from a
series of real estate development transactions involving certain Barton-
controlled entities and affiliates of DLP Real Estate Capital, Inc.
(collectively, DLP). These transactions included: (1) the sale of three

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                                       No. 22-11242

properties by JMJ Development LLC, a business for which Barton served as
Chief Executive Officer, to DLP; (2) the Barton-controlled entities’
agreements with DLP to provide development and construction management
services for each of the three conveyed properties; and (3) agreements
between the Barton-controlled entities and DLP whereby the Barton entities
would potentially receive participation fees in connection with the
development of two of the conveyed properties.
        DLP provided notice that the Barton-controlled entities were in
breach of their obligations to DLP to provide development and construction
management services. Thereafter, DLP and the receiver, acting on behalf of
the Barton entities, negotiated and ultimately executed the settlement
agreement. The agreement released both sides from all claims and rights
arising from the transactions described above, including breach claims
against the Barton entities and the Barton entities’ potential entitlement to
fees associated with the original DLP transactions. DLP paid the receiver
$750,000 pursuant to the settlement agreement. The settlement agreement
also provided that the receiver would seek ratification of the agreement by
the district court.
        Over Barton’s opposition, the district court ratified the settlement
agreement via the DLP Order in December 2022, finding that the agreement
was “in the best interests of the [r]eceivership.” Barton shortly filed the
instant appeal. In this court, the parties contest the threshold issue of
whether this court has jurisdiction to review the DLP Order. Barton argues
that we do, under either 28 U.S.C. § 1291 or the collateral order doctrine.
The SEC and the receiver disagree;1 they contend that the DLP Order is
        _____________________
        1
          The receiver, as amicus curiae, has moved this court to dismiss Barton’s appeal
for lack of jurisdiction. Because of our disposition of this appeal, the receiver’s motion is
DENIED as unnecessary.

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                                        No. 22-11242

neither a “final order,” nor a receivership order subject to immediate appeal,
nor an order subject to interlocutory appeal per the collateral order doctrine.
                                    *        *         *
        Before analyzing these contentions, we note that subsequent events in
the underlying litigation have somewhat overtaken this case. Since the
district court entered the First Receivership Order, Barton has appealed
multiple actions by the receiver in addition to the challenge before us today.2
In one of those, this court vacated the First Receivership Order “effective 90
days from the issuance of th[e] court’s mandate” and remanded for the
district court to determine “whether to appoint a new receivership” under
the factors enunciated in Netsphere, Inc. v. Baron, 703 F.3d 296 (5th Cir.
2012). SEC v. Barton, 79 F.4th 573, 579–81 (5th Cir. 2023). This court also
partially granted Barton’s motion for a stay and suspended “the receiver’s
power to sell or dispose of property belonging to receivership entities,
including the power to complete sale or disposals of property already
approved by the district court.” Id. at 581. However, this court made clear
that “[t]his suspension d[id] not apply to activities in furtherance of sales or
dispositions of property that ha[d] already occurred or been approved by the
district court.” Id. at 581–82.
        Before the vacatur of the First Receivership Order took effect, the
SEC again moved the district court to appoint a receiver. On November 29,
2023, the district court did so, entering a new receivership order. The same
day, the district court entered an order ratifying its previous orders issued in

        _____________________
        2
         See, e.g., SEC v. Barton, No. 22-11226, 2023 WL 5671292, at *1 (5th Cir. Sep. 1,
2023) (challenging the receiver’s attempted sale of Barton’s home); see also SEC v. Barton,
No. 23-10515 (challenging the district court’s order authorizing the receiver’s sale of
property); SEC v. Barton, No. 23-10516 (same).

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                                       No. 22-11242

the course of the initial receivership, including the DLP Order, nunc pro tunc
(the Ratification Order).
                                            II.
        This appeal proceeds no further than the issue of jurisdiction. Harris
v. Clay County, 47 F.4th 271, 275 (5th Cir. 2022). Indeed, we “may not rule
on the merits of a case without first determining [our] jurisdiction[.]” Daves
v. Dallas County, 64 F.4th 616, 623 (5th Cir. 2023) (en banc) (citing Steel Co.
v. Citizens for Better Env’t, 523 U.S. 83, 93–95 (1998)). Here, Barton argues
that this court has jurisdiction to review the DLP Order as a final order under
28 U.S.C. § 1291.3 He contends alternatively that we have jurisdiction under
the collateral order doctrine. By contrast, the SEC and the receiver contend
that the DLP Order is neither a “final order” subject to review under § 1291,
nor within the scope of 28 U.S.C. § 1292(a)(2), which encapsulates the
exhaustive list of receivership-related orders subject to immediate
interlocutory appeal. They also argue that the collateral order doctrine does
not apply to the DLP Order.
        We requested supplemental briefing from the parties on whether the
district court’s November 29, 2023 orders moot Barton’s challenge to the
DLP Order. Again, the parties disagree: Barton argues that “[t]he [d]istrict
[c]ourt’s order creating a new receivership has no effect on this [c]ourt’s
ruling holding the prior receivership illegal and vacating it or on what should
be done with the actions of the prior receiver.” The SEC contends that the
        _____________________
        3
           28 U.S.C. § 1291 provides this court with “jurisdiction of appeals from all final
decisions of the district courts of the United States.” “These decisions ‘end[] the litigation
on the merits and leave[] nothing for the court to do but execute the judgment.’” Netsphere,
799 F.3d at 331 (citation omitted). We have previously held that “[a]n order confirming a
judicial sale of property is a final order from which an appeal may be taken pursuant to 28
U.S.C. § 1291.” Citibank, N.A. v. Data Lease Fin. Corp., 645 F.2d 333, 337 (5th Cir. Unit
B May 1981).

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                                 No. 22-11242

Ratification Order, “which ratified and adopted the DLP Order nunc pro
tunc,” moots this appeal. We agree with the SEC.
       “[T]here is no mandatory ‘sequencing of jurisdictional issues,’ and a
federal court has leeway to ‘choose among threshold grounds for denying
audience to a case on the merits.’” Daves, 64 F.4th at 623 (quoting Sinochem
Int’l v. Malay. Int’l Shipping, 549 U.S. 422, 431 (2007)). Mootness is a
“coequal” jurisdictional ground for dismissing a case. Id. at 633. This is so
because “[u]nder Article III of the Constitution, federal courts may
adjudicate only ‘actual, ongoing controversies.’” Id. at 634 (quoting Honig
v. Doe, 484 U.S. 305, 317 (1988)). Accordingly, we sidestep the parties’ more
nuanced arguments over whether the DLP Order is immediately appealable
under 28 U.S.C. § 1291 or § 1292, or as an appealable collateral order,
because Barton’s appeal of the DLP Order is plainly moot.
       A case is moot when “the issues presented are no longer ‘live’ or the
parties lack a legally cognizable interest in the outcome.” Id. (quoting
Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013)); see also U.S. Navy SEALs
1–26 v. Biden, 72 F.4th 666, 672 (5th Cir. 2023) (noting that a case is moot
when it becomes impossible for a court to grant “any effectual relief” to the
prevailing party). The Ratification Order—which ratified the DLP Order
entered before the First Receivership Order was vacated—is now the
“operative” ruling of the district court. In other words, regardless of
whether Barton were to prevail in the present appeal, Barton would need to
attack the DLP Order through an appeal of the Ratification Order. Tellingly,
Barton appears to recognize this, having already filed a putative interlocutory
appeal of the Ratification Order. See Barton v. SEC, No. 3:22-cv-2118,
Docket 429 (N.D. Tex. Dec. 7, 2023) (showing notice of interlocutory appeal
filed December 7, 2023).

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                                 No. 22-11242

                                    III.
       Given the shifting landscape of the underlying litigation since Barton
lodged this appeal of the DLP Order, the present appeal is “no longer ‘live,’”
Daves, 64 F.4th at 634, and it is therefore DISMISSED AS MOOT.

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