Orr v. Husch Blackwell, LLP

Case Type:
Case Status:
No. 17-3214 (10th Circuit, Apr 12,2018) Published
A former officer and shareholder of bankrupt companies did not have standing to sue counsel for the Chapter 11 trustee and special master for malpractice. With absolutely no reference to the Barton doctrine, the Tenth Circuit curtly noted that the appellant's claims were derivative of the companies' claims. As a result, the appellant did not have standing to bring the claims.
Procedural context:
A former shareholder and officer of bankrupt companies appealed from the district court's dismissal of his malpractice claims against the law firm that represented the special master (and, subsequently, the Chapter 11 trustee) for the bankrupt companies. The district court dismissed the former shareholder's complaint because he did not have standing -- his claims were derivative of any claims that the companies could have asserted.
In 2008, Brooke Corporation and Brooke Capital Corporation (together, Brooke) were sued for fraudulent conduct. The US District Court appointed a special master for Brooke. The special master hired Husch Blackwell, LLP as his counsel. Brooke subsequently filed Chapter 11 petitions, and the special master was appointed as the Chapter 11 trustee for Brooke. Husch Blackwell was counsel for the trustee. The case converted to a Chapter 7 liquidation. The appellant, Orr, was a former officer and shareholder of Brooke. He objected to various actions and decisions of the special master. Orr unsuccessfully sued the special master in 2010. In 2016, Orr took his last bite at the proverbial apple and sued the special master's legal counsel. Orr claimed that Husch Blackwell's alleged misconduct caused the failure of Brooke. Husch Blackwell moved to dismiss, and the district court granted the motion to dismiss on the grounds that Orr did not have standing.

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