Eleventh Circuit Holds That Federal Lawsuit Against Receiver Whose Appointment Has Ended Survives Barton Doctrine, Creating Circuit Split

In Chua v. Ekonomou, No. 20-12576 (11th Cir. June 15, 2021), the Eleventh Circuit holds that there is federal subject-matter jurisdiction over a lawsuit against a state-court-appointed receiver whose appointment has expired, notwithstanding the Barton doctrine, though the claim was properly dismissed on judicial immunity grounds.

Plaintiff Chua prescribed hydrocodone for a college student who overdosed and died. “The district attorney obtained an indictment against Chua for felony murder and violations of the Georgia Controlled Substances Act. He also initiated a civil-forfeiture action, allegedly to deprive Chua of the resources needed to mount a defense in the criminal trial.” The court appointed a receiver in the forfeiture action, who was represented by counsel (defendants Ekonomou, Lambros, The Lambros Firm, LLC, and Berry).

Chua was eventually convicted and sentenced to life imprisonment, but irregularities emerged post-trial; eventually Chua and the district attorney entered a plea agreement with a sentence of time served. “Under a separate consent agreement, Chua would forfeit his claims to the assets seized by the State, except for about $14,000. Chua agreed to these terms and received his new convictions and sentence in September 2017, after which he was released from prison.”

In his lawsuit, Chua alleged a conspiracy between the local district attorney’s office, a state court judge, and the receiver “to pin the blame for the student’s death on him.” He “alleged that the defendants conspired to deprive him of his civil rights, 42 U.S.C. § 1985; violated the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961–1968; and violated the Georgia Racketeer Influenced and Corrupt Organizations Act, Ga. Code Ann. §§ 16-14-1 to -12.”

The district court dismissed the claims against the receiver “taken within the scope of the receivership. It determined that, under the Barton doctrine, Chua could not sue a receiver without first obtaining permission from the court that appointed the receiver. See Barton v. Barbour, 104 U.S. 126, 128 (1881). Because Chua did not have permission, the district court lacked subject-matter jurisdiction over those claims.”

The Eleventh Circuit, though, holds that there was jurisdiction over the receiver. “In Barton v. Barbour, the Supreme Court recognized the ‘general rule that before suit is brought against a receiver[,] leave of the court by which he was appointed must be obtained.’”  

The panel notes that while the Barton doctrine – a rule of federal common law – applies to active matters, “where any decision by a district court would have ‘no conceivable effect’ on a bankruptcy estate, the Barton doctrine does not deprive the district court of subject-matter jurisdiction.” The panel goes on to say “[t]his limitation on the Barton doctrine is informed by a fundamental principle of in rem jurisdiction: the court that first exercises jurisdiction over certain property may exclude others from exercising jurisdiction over it.”

In so holding, the Eleventh Circuit acknowledges that it is running against “our sister circuits [that] have concluded that the Barton doctrine applies even after a bankruptcy trusteeship has ended because it protects the court-appointed trustee from suit.” (It cites decisions from the First, Seventh, Ninth, and Tenth Circuits.) “We disagree with our sister circuits that the need to protect court-appointed receivers and bankruptcy trustees is relevant to the Barton doctrine. Their opinions fail to grapple with the fact that the Barton doctrine is grounded in the exclusive nature of in rem jurisdiction. The need to attract qualified individuals to serve as receivers and bankruptcy trustees might be a legitimate policy concern, but it has nothing to do with subject-matter jurisdiction.”

After finding subject-matter jurisdiction, though, the panel holds that the case must be dismissed on judicial immunity grounds. “As a court-appointed receiver, Lambros receives ‘judicial immunity for acts within the scope of [his] authority’ . . . . And it extends to his counsel as well . . . . Chua does not allege that Lambros acted outside the scope of his authority as receiver . . . . So Lambros, Ekonomou, and the law firms are protected for their acts in performing the duties of the receiver.”

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