Court Opinion

ID: 4158958
Source: CourtListenerOpinion
Date Created: 2017-04-07 21:00:45.378809+00
Date Added: 2024-06-11T07:45:39.401076
License: Public Domain

FILED
                                                                    United States Court of Appeals
                                      PUBLISH                               Tenth Circuit

                      UNITED STATES COURT OF APPEALS                        April 7, 2017

                                                                         Elisabeth A. Shumaker
                             FOR THE TENTH CIRCUIT                           Clerk of Court
                         _________________________________

DAVID LANKFORD;
LEE ANN LANKFORD,

      Plaintiffs - Appellants,

v.                                                         No. 16-2221

JUDITH WAGNER, Chapter 11 Trustee of
the bankruptcy estate of the Vaughan
Company Realtors; ARLAND &
ASSOCIATES, LLC; JAMES A. ASKEW;
EDWARD A. MAZEL; DANIEL WHITE,
of Askew & Mazel, LLC,

      Defendants - Appellees.
                      _________________________________

                     Appeal from the United States District Court
                           for the District of New Mexico
                         (D.C. No. 1:15-CV-01013-JCH-LF)
                       _________________________________

Submitted on the briefs:*

David Lankford and Lee Ann Lankford, Pro Se.

Briggs Cheney, Joshua A. Allison, Sheehan & Sheehan, P.A., Albuquerque,
New Mexico, for Judith Wagner, James A. Askew, Edward A. Mazel, and Daniel White,
Defendants-Appellees.

      *
        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.
Terry R. Guebert, Elizabeth M. Piazza, Guebert Bruckner P.C., Albuquerque,
New Mexico, for Arland & Associates, L.L.C., Defendant-Appellee.
                        _________________________________

Before KELLY, MATHESON, and McHUGH, Circuit Judges.
                  _________________________________

McHUGH, Circuit Judge.
                    _________________________________

       David and Lee Ann Lankford filed this lawsuit against a bankruptcy trustee

and her counsel without first applying for and receiving permission under Barton v.

Barbour, 104 U.S. 126 (1881), and its progeny (the “Barton doctrine”). The district

court concluded that Barton barred the suit and dismissed for lack of subject matter

jurisdiction. We affirm.

                                  I.     Background

       The Lankfords unwittingly invested in a Ponzi scheme operated by Vaughan

Company Realtors (VCR), wherein investors paid money to VCR in return for

interest-bearing promissory notes. After the Ponzi scheme collapsed, VCR filed for

bankruptcy under Chapter 11 of the Bankruptcy Code. Unlike many others, the

Lankfords actually profited from their investment. So the court-appointed trustee of

VCR’s bankruptcy estate, Judith Wagner, brought an adversary proceeding against

them in the United States Bankruptcy Court for the District of New Mexico (the

“adversary proceeding”). Through this and related “clawback” proceedings, the

trustee sought to avoid, or undo, pre-bankruptcy fraudulent transfers and thus recoup

fictitious profits from investors with net gains for the benefit of all of VCR’s

creditors.

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      The Lankfords agreed they owed some amount to the estate but disagreed

vehemently with the trustee’s calculations, alleging an overstatement of about

$4,000. They went so far as to accuse the trustee of extortion, incompetence, and

fraud, but the bankruptcy court twice denied formal requests under Barton to file

counterclaims on these grounds. Ultimately, the bankruptcy court accepted the

trustee’s figure of $45,939.32 for the Lankfords jointly and $21,465.07 for

Mr. Lankford individually—entering summary judgment in those amounts. The

Lankfords then moved to vacate summary judgment under Federal Rule of Civil

Procedure 60(b)(3) and (d)(3), repeating earlier allegations that the trustee engaged in

fraud by deliberately miscalculating the amount owed. The bankruptcy court denied

their motion.

      The Lankfords appealed the order denying the motion to vacate, but not the

preceding rulings (i.e., the summary judgment order itself or the two denials of

requests to file counterclaims per Barton). The district court affirmed. The

Lankfords believed the court system was engaged in a conspiracy against them, such

that a further appeal would be fruitless; accordingly, they did not appeal the district

court’s decision in the adversary proceeding. Instead, the Lankfords filed the

underlying lawsuit against the trustee and her counsel, accusing them of committing

fraud and violating criminal statutes during the adversary proceeding. See Aplt.

Opening Br. at 54. The magistrate judge concluded that the Barton doctrine

precludes those claims and, in her Proposed Findings and Recommended Disposition

(PFRD), recommended dismissal under Federal Rule of Civil Procedure 12(b)(1) for

                                            3
lack of subject matter jurisdiction. The Lankfords objected to the PFRD,

complaining generally of judicial bias, cronyism, corruption, and a conspiracy. The

district court noted the lack of specific objections, adopted the PFRD, and dismissed

the case.

      Proceeding pro se, the Lankfords filed this appeal, raising ten issues relating to

the applicability of the Barton doctrine, the propriety of the bankruptcy court’s

summary judgment ruling in the adversary proceeding, purported judicial

misconduct, and alleged violations of criminal statutes.1 Most are not properly

before us. Having chosen not to appeal the summary judgment ruling in the

adversary proceeding, the Lankfords cannot circumvent appellate procedural rules

simply by filing a separate proceeding to collaterally attack that judgment. And the

district court aptly explained why judicial misconduct and alleged criminal violations

are not proper areas of inquiry for a civil lawsuit by a private citizen against the

trustee and her counsel. This leaves only one question: Does the Barton doctrine

preclude the Lankfords from filing this lawsuit against the bankruptcy trustee and her

attorneys, given the Lankfords’ failure to seek and receive permission from the

bankruptcy court? It does.

      1
        Absent from this extensive list is whether the district court properly struck
the Lankfords’ motion to file a second amended complaint. Still, the appellees
identify and address this issue, presumably out of an abundance of caution. Even if
the Lankfords had properly raised and briefed this issue in compliance with Federal
Rule of Appellate Procedure 28, the outcome of this appeal would be the same under
the Barton doctrine. Further, we discern no abuse of discretion in the district court’s
ruling given the futility of the proposed amendments. See Jefferson Cty. Sch. Dist.
No. R-1 v. Moody’s Inv’r’s Servs., Inc., 175 F.3d 848, 859 (10th Cir. 1999).
                                            4
                                    II.    Analysis

      Because the Lankfords are proceeding pro se, “we construe [their] pleadings

liberally.” Ledbetter v. City of Topeka, 318 F.3d 1183, 1187 (10th Cir. 2003). We

make some allowances for deficiencies, such as unfamiliarity with pleading

requirements, failure to cite appropriate legal authority, and confusion of legal

theories. See Garrett v. Selby Connor Maddux & Janer, 425 F.3d 836, 840 (10th Cir.

2005). But we “cannot take on the responsibility of serving as [their] attorney in

constructing arguments and searching the record.” Id.

      The Supreme Court held in Barton that “before suit is brought against a

receiver leave of the court by which he was appointed must be obtained.” 104 U.S.

at 128. In Satterfield v. Malloy, 700 F.3d 1231, 1234-35 (10th Cir. 2012), we

followed the lead of our sibling circuits and extended the Barton doctrine beyond

receivers to encompass trustees. We held that the doctrine “precludes suit against a

bankruptcy trustee for claims based on alleged misconduct in the discharge of a

trustee’s official duties absent approval from the appointing bankruptcy court.” Id.

This is true even if the trustee allegedly acted “with improper motives.” Id. at 1236.

And although we have not previously addressed this issue, we now join our sibling

circuits in holding that the protections of the Barton doctrine also extend to the

trustee’s counsel, where counsel acts under the direction of, or as the functional

equivalent of, the trustee. See, e.g., McDaniel v. Blust, 668 F.3d 153, 156-57

(4th Cir. 2012); Lawrence v. Goldberg, 573 F.3d 1265, 1269-70 (11th Cir. 2009);

                                           5
Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1241 (6th Cir.

1993). The Sixth Circuit’s reasoning in DeLorean is especially persuasive:

      In authorizing the [t]rustee to bring the [adversary proceeding], the
      court authorized the [t]rustee’s attorneys to aid the [t]rustee in bringing
      the suit. The protection that the leave requirement affords the [t]rustee
      and the estate would be meaningless if it could be avoided by simply
      suing the [t]rustee’s attorneys. Therefore, leave of the Bankruptcy
      Court must be granted before a suit may be brought against counsel for
      trustee, in their capacity as counsel for trustee, since such suit is
      essentially a suit against the trustee.
991 F.2d at 1241.

      Even so, the Barton doctrine is not without its limitations. Though we have

refused to recognize a general tort exception to the Barton doctrine, we have

acknowledged an “ultra vires exception” that allows suits by individuals whose

property is wrongfully seized. See Satterfield, 700 F.3d at 1235-36.

      Against this backdrop, we conduct a de novo review of the district court’s

decision. See id. at 1234. We affirm for substantially the same reasons set forth in

the PFRD and the district court’s September 14, 2016, order adopting it. In essence,

the Barton doctrine applies here because (1) the actions underlying the claims were

related to the trustee’s and counsel’s duties and the administration of the bankruptcy

estate and (2) the Lankfords have not established an exception. Yet the Lankfords

filed suit without first receiving permission to file claims against the trustee or her

counsel. Indeed, the bankruptcy court twice denied their Barton-based request to file

counterclaims in the adversary proceeding—on February 14, 2014, and

November 26, 2014—and they did not even submit a request to file this lawsuit.

                                            6
Consequently, the Lankfords failed to comply with the Barton doctrine, which is

“jurisdictional in nature.” See id. (citing Barton, 104 U.S. at 131).

                                  III.   Conclusion

      The purposes behind the Barton doctrine are well served by a Rule 12(b)(1)

dismissal. See id. at 1236-37 (explaining that the doctrine prevents trusteeship from

“becom[ing] a more irksome duty” and ensures that competent people are available

for appointment; reduces the expenses of bankruptcy; “enables bankruptcy judges to

monitor the work of the trustees more effectively”; and “ensure[s] other courts do not

intervene in the bankruptcy court’s administration of an estate without permission”

(internal quotation marks omitted)). We affirm.

      The Lankfords’ motion to supplement the record on appeal is granted.

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