Now Updating
In re Barbara Wigley

Summarizing by Bradley Pearce

Lankford v. Wagner

Case Type:
Business
Case Status:
Affirmed
Citation:
16-2221 (10th Circuit, Apr 07,2017) Published
Tag(s):
Ruling:
The 10th Circuit affirmed the order of dismissal. The Barton doctrine, derived from Barton v. Barbour, 104 U.S. 126 (1881) and its progeny, "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." The Court held that the doctrine barred the plaintiffs' lawsuit against the trustee and the trustee's counsel.
Procedural context:
The district court dismissed the underlying action under Federal Rule of Civil Procedure 12(b)(1) due to the Barton doctrine and lack of subject matter jurisdiction. The plaintiffs appealed the dismissal to the 10th Circuit.
Facts:
The plaintiffs (the Lankfords) unwittingly invested in a Ponzi scheme operated by Vaughan Company Realtors, which collapsed and filed chapter 11 bankruptcy. A trustee was appointed, who filed an adversary proceeding against the Lankfords for fictitious profits they received, as fraudulent transfers, from their investment. The trustee prevailed on summary judgment. In the course of that proceeding, the Lankfords accused the trustee of extortion, incompetence, and fraud, and twice requested permission to file counterclaims on these grounds, which were denied. When the adversary proceeding was concluded, and appeals exhausted, the Lankfords filed a separate lawsuit in the district court, accusing the trustee and her counsel of fraud and criminal violations committed during the adversary proceeding. They did not obtain bankruptcy court approval to file this lawsuit. The district court dismissed the suit under Federal Rule of Civil Procedure 12(b)(1) and the Barton doctrine, due to the lack of subject matter jurisdiction based on the plaintiffs' failure to obtain bankruptcy court approval to file the suit. The plaintiffs appealed to the 10th Circuit.
Judge(s):
Kelly, Matheson, and McHugh, Circuit Judges

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