Court Opinion

ID: 2807573
Source: CourtListenerOpinion
Date Created: 2015-06-11 18:01:04.204356+00
Date Added: 2024-06-11T11:30:04.808708
License: Public Domain

Case: 14-31230    Document: 00513075059    Page: 1   Date Filed: 06/11/2015

          IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT    United States Court of Appeals
                                                                        Fifth Circuit

                                                                       FILED
                                 No. 14-31230                       June 11, 2015
                                                                    Lyle W. Cayce
                                                                         Clerk
WILLIAM D. CARROLL, JR.; CAROLYN K. CARROLL; PAMELA
CARROLL ALONSO,

              Plaintiffs–Appellants,

v.

SAMERA L. ABIDE; XYZ INSURANCE COMPANY,

              Defendants–Appellees.

                  Appeal from the United States District Court
                      for the Middle District of Louisiana

Before REAVLEY, OWEN, and HIGGINSON, Circuit Judges.
PRISCILLA R. OWEN, Circuit Judge:
         William and Carolyn Carroll and their daughter Pamela Alonso seek
damages against Samera Abide.          They claim Abide violated their Fourth
Amendment rights while serving as the bankruptcy trustee for the Carrolls’
bankrupt estate and the bankrupt estate of their closely held corporation. The
district court dismissed the complaint for lack of subject-matter jurisdiction,
concluding that the plaintiffs were required to request leave of the bankruptcy
court to bring suit against the trustee. We vacate and remand to the district
court.
    Case: 14-31230         Document: 00513075059   Page: 2   Date Filed: 06/11/2015

                                    No. 14-31230

                                          I
      This matter is related to two proceedings currently pending in the
Bankruptcy Court for the Middle District of Louisiana. The Carrolls filed for
bankruptcy in May 2008 and subsequently filed for bankruptcy on behalf of
their closely held corporation, RedPen Properties, LLC (RedPen), in July 2008.
Abide was appointed to serve as the trustee for both the Carrolls’ and RedPen’s
bankrupt estates.
      The Carrolls’ children requested a determination from the bankruptcy
court that certain movable properties had been transferred to them through
documents executed prior to the filing of the bankruptcy petitions. In response,
Abide filed counterclaims on behalf of the estates seeking a determination of
ownership of the movables. Abide argued that the transfer documents were
void under Louisiana law. Because of uncertainty regarding the bankruptcy
court’s jurisdiction in light of the Supreme Court’s decision in Stern v.
Marshall, 1 the United States District Court for the Middle District of
Louisiana withdrew the referral of this dispute to the bankruptcy court.
      Subsequently, the district court entered an order requiring the Carrolls
and their children to “produce to the trustee by 5:00 p.m. on March 8, 2012, all
of the original documents, records, computer disks, financial, and legal folders
of Redpen LLC from its inception until this date.” The order also directed “that
all computers and any disks of Redpen LLC be turned over to the trustee.” On
March 8, Abide came to the Carrolls’ residence to collect the items listed in the
district court’s order. The Carrolls insisted that a particular computer was
purely personal and not a RedPen computer. Nonetheless, the computer was
listed on the schedule of RedPen’s assets, and Abide removed it from the
premises.

      1   131 S. Ct. 2594 (2011).
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       The Carrolls requested twice by fax that Abide return their personal
computer. When these efforts were unsuccessful, the Carrolls filed a motion
with the district court requesting the computer’s release.                   The Carrolls
asserted that the computer held private and privileged information and did not
contain information related to RedPen’s business. The district court held a
hearing on the Carrolls’ motion but deferred ruling and allowed Abide to retain
the computer for the purpose of having it evaluated by a forensic expert. The
Carrolls allege that the district court did not give Abide permission to access
the computer. Over a year later, the district court granted summary judgment
in favor of Abide on the issue of the ownership of the movable properties, and
in the same ruling, the court ordered Abide to return the computer to the
Carrolls. This court affirmed the grant of summary judgment. 2
       After Abide returned the computer, the Carrolls employed a computer
specialist to perform a forensic examination. The specialist’s report indicated
that the computer had been accessed on three separate dates while in Abide’s
custody.
       The Carrolls and one of their daughters, Pamela Alonso, filed the present
action for damages against Abide in a separate proceeding in the United States
District Court for the Middle District of Louisiana. They allege Abide violated
their Fourth Amendment rights by seizing and accessing their personal
computer. They also assert that Abide committed an unconstitutional search
in 2013 when the Carrolls were required to vacate their house pursuant to a
district court order and Abide searched the Carrolls’ personal belongings.
       Abide moved the district court to dismiss for lack of subject-matter
jurisdiction and alternatively asserted that the Carrolls failed to state a claim.

       2 Alonso v. Abide (In re RedPen Props., L.L.C.), 568 F. App’x 338, 340 (5th Cir. 2014)
(per curiam).
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                                        No. 14-31230

The district court did not consider the merits of the complaint because it agreed
with Abide that it lacked jurisdiction. The court reasoned that under the
Barton doctrine, 3 the Carrolls were required to seek leave of the bankruptcy
court before bringing a tort action against the bankruptcy trustee, and because
the Carrolls failed to seek leave, the district court dismissed the complaint for
lack of jurisdiction. This appeal followed.
                                               II
       We review the district court’s dismissal for lack of jurisdiction de novo. 4
We must accept all of the plaintiff’s factual allegations in the complaint as true
and may consider “(1) the complaint alone, (2) the complaint supplemented by
undisputed facts evidenced in the record, or (3) the complaint supplemented by
undisputed facts plus the court’s resolution of disputed facts.” 5 We will not
dismiss for lack of jurisdiction unless “it appears certain that the plaintiff
cannot prove a plausible set of facts that establish subject-matter
jurisdiction.” 6
                                              III
       The district court based its decision to dismiss on a doctrine that stems
from the Supreme Court’s 1881 decision in Barton v. Barbour, which held that
“before suit is brought against a receiver leave of the court by which he was

       3   See Barton v. Barbour, 104 U.S. 126, 128 (1881).
       4Tewari De-Ox Sys., Inc. v. Mountain States/Rosen, Ltd. Liab. Corp., 757 F.3d 481,
483 (5th Cir. 2014) (citing Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420,
424 (5th Cir. 2001)).
       5Den Norske, 241 F.3d at 424 (citing Barrera-Montenegro v. United States, 74 F.3d
657, 659 (5th Cir. 1996) and Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981)).
       6 Venable v. La. Workers’ Comp. Corp., 740 F.3d 937, 941 (5th Cir. 2013) (quoting
Castro v. United States, 560 F.3d 381, 386 (5th Cir. 2009), vacated on other grounds, 608 F.3d
266 (5th Cir. 2010)).
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                                           No. 14-31230

appointed must be obtained.” 7 An action against a receiver without court
permission, the Court reasoned, is an attempt “to obtain some advantage over
the other claimants upon the assets in the receiver’s hands.” 8 If such a suit
were allowed, “the court which appointed the receiver and was administering
the trust assets would be impotent to restrain him.” 9
         In an “unbroken line of cases,” 10 beginning with JUDGE LEARNED HAND’s
decision in Vass v. Conron Bros., 11 the circuit courts have unanimously applied
the Barton doctrine in bankruptcy cases. 12 A panel of this court recently
confirmed that the rationale of Barton applies in this circuit to bankruptcy
trustees and that a plaintiff must seek leave of the bankruptcy court before
bringing suit against a bankruptcy trustee. 13 However, because the Carrolls
and Alonso complain of the bankruptcy trustee’s conduct while carrying out
district court orders, we conclude that the plaintiffs were not required to seek
permission from the bankruptcy court before filing suit in the district court
regarding the challenged conduct.

        Barton v. Barbour, 104 U.S. 126, 128 (1881) (citing Davis v. Gray, 83 U.S. (16 Wall.)
         7

203 (1872)).
         8   Id.
         9   Id.
         10   In re Linton, 136 F.3d 544, 545 (7th Cir. 1998).
         11   59 F.2d 969 (2d Cir. 1932) (HAND, J.).
          Alexander v. Hedback, 718 F.3d 762, 767 (8th Cir. 2013); Satterfield v. Malloy, 700
         12

F.3d 1231, 1234-35 (10th Cir. 2012); In re Vistacare Grp., LLC, 678 F.3d 218, 224 (3d Cir.
2012); McDaniel v. Blust, 668 F.3d 153, 156-57 (4th Cir. 2012); Beck v. Fort James Corp. (In
re Crown Vantage, Inc.), 421 F.3d 963, 970 (9th Cir. 2005); Muratore v. Darr, 375 F.3d 140,
143, 147-48 (1st Cir. 2004); Carter v. Rodgers, 220 F.3d 1249, 1252 (11th Cir. 2000); In re
Linton, 136 F.3d at 545; Lebovits v. Scheffel (In re Lehal Realty Assocs.), 101 F.3d 272, 276
(2d Cir. 1996); Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1241 (6th Cir.
1993).
         13   Villegas v. Schmidt, No. 14-40423, -- F.3d --, 2015 WL 3439254 (5th Cir. May 28,
2015).
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       In Barton, the Supreme Court held that a District of Columbia court did
not have jurisdiction to entertain a suit against a receiver of a railroad that
had been appointed by a Virginia court. 14 The circuit courts applying Barton
in bankruptcy cases in which the plaintiffs brought or intended to bring suit in
state courts have all required leave of the bankruptcy court before the plaintiffs
could proceed in state courts. 15 Additionally, the Barton doctrine has been
applied consistently to require leave of the bankruptcy court even when the
suit was filed in the federal district court of the same district. 16 However, the
situation presented here is different. The adversary proceeding between the
Carrolls’ children and Abide surrounding the ownership of certain movable
property was withdrawn from the bankruptcy court to the district court due to
jurisdictional concerns arising from Stern v. Marshall. 17 Abide’s seizure of the
computer and the 2013 search of the Carrolls’ home were pursuant to orders of
the district court, not the bankruptcy court, and the Carrolls filed the present
suit in the same district court.
       Furthermore, the rationales underlying the Barton doctrine do not
support requiring permission from the bankruptcy court in this case. The
Barton Court’s primary concern when holding that leave of the appointing

       14   Barton, 104 U.S. at 126-28, 131.
       15 In re Vistacare Grp., 678 F.3d at 222 (plaintiff sought leave to proceed in state court);
McDaniel, 668 F.3d at 155 (plaintiff filed suit in state court); In re Crown Vantage, 421 F.3d
at 969 (same); In re Linton, 136 F.3d at 544 (same); In re Lehal Realty, 101 F.3d at 274 (same);
In re DeLorean Motor, 991 F.2d at 1238 (same); Vass, 59 F.2d at 970 (HAND, J.) (same).
       16 See, e.g., Villegas, 2015 WL 3439254, at *1-2 (trustee appointed by Bankruptcy
Court of the Southern District of Texas, and leave of bankruptcy court was required to bring
suit in the District Court for the Southern District of Texas); Alexander, 718 F.3d at 764-65,
767 (same with District of Minnesota); Lawrence v. Goldberg, 573 F.3d 1265, 1267-69 (11th
Cir. 2009) (same with Southern District of Florida); see also Blixseth v. Brown, 470 B.R. 562,
566 (D. Mont. 2012) (“[T]he District Court is a different forum than the Bankruptcy Court for
purposes of the Barton Doctrine. This is true despite the fact that a bankruptcy court’s
jurisdiction is derivative of the district court’s.”).
       17   131 S. Ct. 2594 (2011).
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                                             No. 14-31230

court was required before suit could be brought against the receiver was the
“usurpation of the powers and duties which belonged exclusively to [the
appointing] court [that] . . . would have made impossible of performance the
duty of that court to distribute the trust assets to creditors equitably and
according to their respective priorities.” 18 The Seventh Circuit articulated a
related and similar concern that if debtors could sue the trustee in a foreign
jurisdiction, the foreign “court would have the practical power to turn
bankruptcy losers into bankruptcy winners.” 19                        But this concern is not
implicated by the Carrolls’ complaint.                    The Carrolls’ attempt to become
“bankruptcy winners” was filed in the same court that presided over the
adversary bankruptcy proceeding in which the conduct of the trustee that is at
issue occurred.
         Another rationale that generally supports the application of the Barton
doctrine is that because a bankruptcy trustee is considered an officer of his
appointing court, 20 the bankruptcy court “has a strong interest in protecting
him from unjustified personal liability for acts taken within the scope of his
official duties.” 21 In the present case, Abide served as an officer of both the
bankruptcy court and the district court.                    The bankruptcy court approved
Abide’s appointment, but when Abide seized the Carrolls’ personal computer
and conducted the 2013 search of the Carrolls’ home, she did so under the

         18   Barton, 104 U.S. at 136.
         19   In re Linton, 136 F.3d at 546.
         20   See, e.g., River Prod., Co. v. Webb (In re Topco, Inc.), 894 F.2d 727, 739 n.16 (5th Cir.
1990).
         21In re Lehal Realty, 101 F.3d at 276; see also Vass v. Conron Bros., 59 F.2d 969, 970
(2d Cir. 1932) (HAND, J.) (“A trustee is equally an officer of the court[,] and his possession is
protected because it is the court’s[,] quite like a receiver’s. If so, and if, as is the case, it is an
interference with a receiver’s custody to establish claims against him by judgment, it is
difficult to see why the same should not hold of a trustee.” (citations omitted)); 1-10 COLLIER
ON BANKRUPTCY ¶ 10.01(1) (16th ed. 2015).

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                                        No. 14-31230

authority of the district court. The district court shared the strong interest in
protecting Abide from personal liability for acts taken within the scope of
official duties under the supervision of the district court.
       This court’s recent decision in Villegas does not compel the opposite
conclusion. In Villegas, we rejected an argument that the Barton doctrine does
not apply when the bankruptcy court lacked jurisdiction under Stern. 22 We
also joined our sister circuits in holding that the fact that the district court has
supervisory authority over the bankruptcy court does not alter Barton’s rule. 23
Our decision today is not in conflict with Villegas. We hold only that when a
bankruptcy trustee acts pursuant to an order by the district court, and the
trustee’s actions pursuant to that order are the basis of the claim, the district
court has jurisdiction to entertain a suit with respect to that conduct.
                                              IV
       The district court did not address the merits of Abide’s Rule 12(b)(6)
motion. 24 Because we hold the district court should not have dismissed the
Carrolls’ complaint, the district court may consider Abide’s 12(b)(6) motion in
the first instance. 25

       22Villegas v. Schmidt, No. 14-40423, -- F.3d --, 2015 WL 3439254, at *1-2 (5th Cir.
May 28, 2015); see generally Stern, 131 S. Ct. at 2600-20.
       23   Villegas, 2015 WL 3439254, at *2-3.
       24Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (per curiam) (“When a
Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should
consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits.
This requirement prevents a court without jurisdiction from prematurely dismissing a case
with prejudice.” (citation omitted)).
       25Corwin v. Marney, Orton Invs., 843 F.2d 194, 199 n.1 (5th Cir. 1988) (“The district
court has not passed on the merits of the substantive claims, and we feel that these issues
should be first considered by the district court. Thus, we express no opinion on the merits of
the plaintiffs’ substantive claims.”).
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                             *        *         *
     For the foregoing reasons, the judgment of the district court is
VACATED. We REMAND for further proceedings consistent with this opinion.

                                      9