Court Opinion

ID: 4263418
Source: CourtListenerOpinion
Date Created: 2018-04-12 16:00:29.565447+00
Date Added: 2024-06-11T14:30:20.628737
License: Public Domain

FILED
                                                                    United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                        Tenth Circuit

                             FOR THE TENTH CIRCUIT                          April 12, 2018
                         _________________________________
                                                                        Elisabeth A. Shumaker
                                                                            Clerk of Court
ROBERT D. ORR,

      Plaintiff - Appellant,

v.                                                         No. 17-3214
                                               (D.C. No. 2:16-CV-02694-CM-GLR)
HUSCH BLACKWELL, LLP; DOUGLAS                               (D. Kan.)
J. SCHMIDT; JOHN J. CRUCIANI,

      Defendants - Appellees.
                      _________________________________

                             ORDER AND JUDGMENT*
                         _________________________________

Before MORITZ, McKAY, and KELLY, Circuit Judges.
                  _________________________________

      Robert D. Orr, proceeding pro se, appeals the district court’s dismissal of his

malpractice claims against Husch Blackwell, LLP, Douglas J. Schmidt, and John J.

Cruciani (collectively, “Husch”). We exercise jurisdiction under 28 U.S.C. § 1291

and affirm.

      *
        After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
I. Background

      Mr. Orr was an officer and shareholder of Brooke Corporation and Brooke

Capital Corporation (collectively, “Brooke”), public corporations in the insurance

agency franchise business. In September 2008, Mr. Orr, Brooke, and several

affiliated companies were sued for fraudulent conduct and other charges in the

United States District Court for the District of Kansas. The court appointed a special

master to manage the companies, and the special master hired Husch as counsel.

Mr. Orr objected numerous times to the special master’s business decisions, in

particular the decision to cease franchise support activities. After Brooke filed for

bankruptcy under Chapter 11, the special master became the Chapter 11 trustee for

the Brooke bankruptcy estate. Husch was counsel for the trustee. The Chapter 11

bankruptcy was later converted to a Chapter 7 bankruptcy, and the trustee’s

appointment ended.

      In August 2010, Mr. Orr unsuccessfully sued the special master. Orr v.

Riederer, No. 10-1303-CM, 2012 WL 2583393 (D. Kan. July 3, 2012).

      In October 2016, Mr. Orr sued Husch for its representation of the special

master and the Chapter 11 trustee. The gist of his initial claims is that Husch’s

alleged misconduct caused Brooke’s financial collapse. After Husch filed a motion

to dismiss, Mr. Orr added claims based on the theory that he sustained additional

damages as a result of Husch’s alleged misconduct. Husch then supplemented its

motion to dismiss. After the motion was fully briefed, the district court dismissed all

of Mr. Orr’s claims, concluding that he lacked standing; that his claims were barred

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by res judicata, judicial estoppel, and the applicable statute of limitations; and that he

failed to state a claim. As pertinent to this appeal, the court ruled, “If Husch

committed any torts arising out of its representation of the Special Master or Chapter

11 Trustee, they were against Brooke or the bankruptcy estate and the cause of action

lies with Brooke or the Trustee.” R., Vol. 4, at 134. Because Mr. Orr did not

establish that he had either a distinct and disproportionate injury or a contractual

relationship with Husch, the court determined that he lacked standing to bring such

claims.

      Mr. Orr challenges the dismissal of only four of his malpractice claims against

Husch. We affirm on the ground that Mr. Orr lacks standing to bring these claims,

and therefore we do not address his other arguments.

II. Analysis

      We review de novo whether Mr. Orr has standing. See Bixler v. Foster,

596 F.3d 751, 756 (10th Cir. 2010). Because Mr. Orr is proceeding pro se, we

liberally construe his pleadings. See Garrett v. Selby Connor Maddux & Janer,

425 F.3d 836, 840 (10th Cir. 2005). But pro se parties must follow the same rules of

procedure that govern other litigants, and we will not take on the responsibility of

constructing arguments and searching the record on Mr. Orr’s behalf. See id.

      “[C]onduct which harms a corporation confers standing on the corporation, not

its shareholders.” Bixler, 596 F.3d at 756. “A shareholder may only litigate as an

individual if the wrong to the corporation inflicts a distinct and disproportionate

injury on the shareholder, or if the action involves a contractual right of the

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shareholder which exists independently of any right of the corporation.” Lightner v.

Lightner, 266 P.3d 539, 546 (Kan. Ct. App. 2011) (internal quotation marks omitted).

Orr disavows that he is making any derivative claims, see Opening Br. at 61, so we

analyze his claims under the requirements for bringing direct actions. “Direct actions

by a shareholder against officers or directors of a corporation are generally reserved

for injuries affecting the individual legal rights of that shareholder.” Lightner,

266 P.3d at 545. Thus, Mr. Orr must show that he “has suffered an injury that is not

dependent on an injury to the corporation.” Id. (internal quotation marks omitted).

      Mr. Orr has not shown he can meet the requirements for bringing an individual

action against Husch. Even if Husch caused Brooke’s bankruptcy and Brooke has

potential causes of action against Husch for malpractice, as Mr. Orr alleges, his own

claims are inextricably linked to Brooke and cannot exist independently of any rights

of the corporations. He has not shown either a distinct disproportionate injury from

Husch’s alleged conduct or a contractual relationship that would confer standing on

him. Although he claims to have consented to the appointment of the special master

and the Chapter 11 trustee, such actions undertaken as an officer of Brooke do not

establish a contractual relationship between Husch and Mr. Orr individually.

Accordingly, he does not have standing to pursue these malpractice claims against

Husch.

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III. Conclusion

      We affirm the district court’s judgment of dismissal and deny Husch’s motion

for summary affirmance as moot.

                                         Entered for the Court

                                         Monroe G. McKay
                                         Circuit Judge

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