Court Opinion

ID: 4277987
Source: CourtListenerOpinion
Date Created: 2018-05-24 14:00:45.094347+00
Date Added: 2024-06-11T14:34:15.460325
License: Public Domain

Case: 17-13279   Date Filed: 05/24/2018   Page: 1 of 7

                                                      [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 17-13279
                        Non-Argument Calendar
                      ________________________

                  D.C. Docket No. 9:16-cv-81342-KAM

BRUCE C. ROSETTO,
ROXANNE ROSETTO,
Plaintiff,

                                              Plaintiffs - Appellants,

versus

CHARLES MURPHY,
CLARK HILL, PLC,

                                              Defendants - Appellees.

                      ________________________

               Appeal from the United States District Court
                   for the Southern District of Florida
                     ________________________

                             (May 24, 2018)

Before TJOFLAT, NEWSOM, and EDMONDSON, Circuit Judges.
               Case: 17-13279     Date Filed: 05/24/2018   Page: 2 of 7

PER CURIAM:

       Plaintiffs Bruce Rosetto and Roxanne Rosetto appeal the district court’s

dismissal of their civil action against Defendants Charles Murphy and Clark Hill

PLC. The district court -- under the doctrine established in Barton v. Barbour, 104
U.S. 126 (1881) -- concluded that it lacked subject matter jurisdiction. No

reversible error has been shown; we affirm.

       This appeal arises out of events that occurred in connection with an

enforcement action filed by the Securities and Exchange Commission against

Legisi Marketing, Inc. (“SEC Enforcement Action”). As part of those proceedings,

the United States District Court of the Eastern District of Michigan appointed

Robert Gordon as receiver (“Receiver”). The Receiver then retained Defendants

Murphy and Clark Hill PLC as court-approved counsel to represent the Receiver

and to assist in his duties.

       In 2009, the Receiver -- through Defendants -- filed suit against Plaintiffs in

the Eastern District of Michigan, alleging violations of federal securities laws (the

“Michigan Action”). Briefly stated, the complaint alleged that Mr. Rosetto

controlled the day-to-day activities and management of an investment fund in

which Legisi invested millions of dollars and that Mr. Rosetto knew or should have

known that Legisi was operating a Ponzi scheme.

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      In 2014, Murphy -- acting as counsel for and with prior express

authorization from the Receiver -- made statements to the media about the

Michigan Action. The published article quoted Murphy as having made this

statement: “The investigation that we conducted to date has confirmed that Mr.

Rosetto participated in securities fraud with respect to the Royal Palm Real Estate

Investment Fund.”

      Based on Murphy’s alleged statement, Plaintiffs filed a complaint in state

court purporting to assert claims for libel per se and for loss of consortium.

Defendants removed the case to federal court based on diversity of citizenship.

The district court then granted Defendants’ motion to dismiss, concluding that the

court, under Barton, lacked subject matter jurisdiction.

      “When evaluating a district court’s conclusions on a Rule 12(b)(1) motion,

we review the district court’s legal conclusions de novo and its factual findings for

clear error.” Odyssey Marine Exploration, Inc. v. Unidentified Shipwrecked

Vessel, 657 F.3d 1159, 1169 (11th Cir. 2011) (quotations and alteration omitted).

      “It 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, 104 U.S. at 128.

Without such leave, a court lacks jurisdiction over a suit filed against a receiver

“based on his negligence or that of his servants in the performance of their duty in

respect of [the property administered by the receiver.]” Id. at 136-37. The Barton

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doctrine also extends to court-approved lawyers retained by the receiver.

Lawrence v. Goldberg, 573 F.3d 1265, 1270 (11th Cir. 2009).

      That Plaintiffs failed to obtain leave of the appointing court before filing this

civil action against Defendants is undisputed. Because Plaintiffs have not shown

that this case falls outside the scope of the Barton doctrine, the district court

concluded correctly that it lacked subject matter jurisdiction over Plaintiffs’ claims.

      First, we reject Plaintiffs’ contention that the Barton doctrine is inapplicable

because the Michigan Action was administratively closed when Murphy made his

alleged statement to the media. The status of the Michigan Action is not the

pertinent inquiry. Instead, we look to the action in which the Receiver was

appointed: the SEC Enforcement Action. The parties do not dispute that the SEC

Enforcement Action was still open and ongoing when Murphy made the alleged

statement and when Plaintiffs filed suit against Defendants. Thus, Plaintiffs were

obligated to first obtain leave from the appointing court before filing this civil

action.

      We also reject Plaintiffs’ argument that the jurisdictional issue in this case is

“intertwined with the merits” of their claims for defamation and for loss of

consortium. “[J]urisdiction becomes intertwined with the merits of a cause of

action when a statute provides the basis for both the subject matter jurisdiction of

the federal court and the plaintiff’s substantive claim for relief.” Morrison v.

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Amway Corp., 323 F.3d 920, 926 (11th Cir. 2003) (quotations omitted)

(determining that the issue of “eligible employee” status under the Family Medical

Leave Act implicated both the court’s jurisdiction and the underlying merits of the

plaintiff’s claim). Here, the statute that serves as the basis for subject matter

jurisdiction over Plaintiffs’ diversity action (28 U.S.C. § 1332) is unrelated to

Plaintiffs’ substantive claims, which are governed by state law. Cf. Odyssey

Marine Exploration, Inc., 657 F.3d at 1170 (jurisdiction was not intertwined with

the merits of the claim where the statute providing subject matter jurisdiction did

not also govern plaintiff’s substantive claims).

       Because no intertwining of the jurisdictional issue and the merits of

Plaintiffs’ claims existed, the district court applied properly the standard under

Fed. R. Civ. P. 12(b)(1) for factual challenges to subject matter jurisdiction. See

id.; see also Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990) (when

considering a factual attack to subject matter jurisdiction under Rule 12(b)(1), “the

trial court is free to weigh the evidence and satisfy itself as to the existence of its

power to hear the case. . . . [N]o presumptive truthfulness attaches to the plaintiff’s

allegations . . . .”).

       Plaintiffs also contend that Murphy’s statement constituted defamation per

se and, thus, falls under the ultra vires exception to the Barton doctrine. We are

not persuaded that Murphy acted outside the scope of his lawful authority. As an

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initial matter, we have said that a receiver’s release of defamatory reports to the

media is insufficient to demonstrate that the receiver “engaged in activities prima

facie beyond the scope of the official function of a state court receiver.” Property

Mgmt. & Invest., Inc. v. Lewis, 752 F.2d 599, 603 (11th Cir. 1985) (affirming the

dismissal of claims against a receiver on judicial immunity grounds).

      About the Receiver’s authority in this case, the Order Appointing Receiver

authorized the Receiver “to communicate with all such persons as he deems

appropriate to inform them of the status of this matter and the financial condition

of the Receiver Estates.” The Receiver testified (1) that he considered the media to

be among the people appropriate to inform about the status of the proceedings; and

(2) that he authorized Murphy to speak with the media about the Michigan Action

and about a subpoena served on Mr. Rosetto’s employer.

      In the complaint filed in the Michigan Action, the Receiver alleged that Mr.

Rosetto knew or should have known about the Ponzi scheme. In response to a

motion to quash the subpoena served on Mr. Rosetto’s employer, the Receiver

alleged further that “Bruce Rosetto was not only an attorney for the Respondents,

but also participated directly in the fraud by creating the Royal Palm Fund

specifically for the purpose of soliciting the funds of McKnight and Legisi

Marketing.” On this record, the district court committed no clear error in

determining that Murphy’s alleged statement “originate[d] from the Receiver’s

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court filings” and constituted “a reiteration of the position asserted by the Receiver

in the pending litigation.” Because Murphy acted within the scope of the authority

given him by the Receiver, Plaintiffs have failed to show that his conduct falls

within an exception to the Barton doctrine.

      The district court dismissed properly Plaintiffs’ complaint for lack of subject

matter jurisdiction.

      AFFIRMED.

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