Satterfield v. Malloy

Citation:
Satterfield v. Malloy III, No. 11–5144 (10th Cir. Nov. 28, 2012)
Tag(s):
Ruling:
The Barton Doctrine precludes litigation in district court by a debtor against a trustee in bankruptcy when the cause of action arises out of the trustee's official duties unless the movant can establish that the cause of action arises from ultra vires acts of the trustee. See Barton v. Barbour, 104 US 126 (1881). This rule applies even if the bankruptcy proceedings have concluded.
Procedural context:
This was an appeal from the Northern District of Oklahoma. The Tenth Circuit reviewed de novo the District Court’s barring of the litigation under the Barton Doctrine. The Tenth Circuit affirmed the District Court.
Facts:
William Satterfield, the debtor/appellant, consulted with Patrick J. Malloy, III, the appellee, prior to filing bankruptcy. During these meetings, Satterfield provided Malloy with information regarding his financial wherewithal. Malloy declined representation. Satterfield filed a chapter 11 bankruptcy petition in August 2004 following a guilty plea for federal criminal charges that ordered restitution in the amount of $1.7 million. Following the filing of his petition, the Office of the United States Trustee successfully moved for the appointment of Malloy as the Chapter 11 Trustee. In February 2006, the case was converted to a chapter 7. At this time, Malloy continued to serve as trustee for the debtor’s estate and also moved for appointment as attorney for the debtor’s estate. Satterfield moved to disqualify Malloy as both attorney and the trustee. This motion was unsuccessful. In January 2010, Satterfield filed suit in federal district court alleging that Malloy retaliated against the debtor for bringing the motion to disqualify by undermining the value of the debtor estate and mismanaging the estate. The District Court found that the allegations were barred by the Barton Doctrine because the allegations stemmed from Malloy’s official duties as trustee. Therefore, Satterfield required the permission of the bankruptcy court to bring the action in district court. The Tenth Circuit affirmed, finding that trustees in bankruptcy are similar to receivers and the Barton Doctrine applies to actions taken in a trustee’s official capacity.
Judge(s):
Lucero, O'Brien and Matheson

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