Opinion
Case No. 03-4136-JAR.
June 4, 2004
MEMORANDUM ORDER AND OPINION GRANTING DEFENDANTS' MOTION TO DISMISS
Plaintiffs, proceeding pro se and in forma pauperis, bring suit against the bankruptcy trustee, Carl R. Clark, and Mr. Clark's law firm, Lentz Clark, P.A., for the fraudulent sale of a vehicle in David Novak's bankruptcy proceedings. This matter is before the Court on defendants' motion and supplemental motion to dismiss (Docs. 10 and 13) for lack of jurisdiction and standing as well as failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons stated below, the Court grants defendants' motions.
Standards Governing Motions
Rule 12(b)(1)
Although defendants move for dismissal pursuant to Rule 12(b)(6), dismissal for lack of standing and jurisdiction are properly raised under Rule 12(b)(1). Since federal courts are courts of limited jurisdiction, there is a strong presumption against federal jurisdiction. A court lacking subject matter jurisdiction "must dismiss the case at any stage of the proceeding in which it becomes apparent that such jurisdiction is absent." When a defendant brings a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, the plaintiff must carry the burden of proving jurisdiction.
Penteco Corp. Ltd. Partnership 1985A v. Union Gas System, Inc., 929 F.2d 1519, 1521 (10th Cir. 1991).
Basso v. Utah Power Light Co., 495 F.2d 906, 909 (10th Cir. 1974).
Mounkes v. Conklin, 922 F. Supp. 1501, 1505 (D. Kan. 1996).
Pro se plaintiffs
Because plaintiffs appear pro se, the Court must remain mindful of additional considerations. A pro se litigant's pleadings are to be construed liberally and held to a less stringent standard than pleadings drafted by lawyers. Thus, if a pro se plaintiff's complaint can reasonably be read "to state a valid claim on which the plaintiff could prevail, it [the court] should do so despite the plaintiff's failure to cite proper legal authority, his confusion of various legal theories, his poor syntax and sentence construction, or his unfamiliarity with pleading requirements." However, it is not "the proper function of the district court to assume the role of advocate for the pro se litigant." For that reason, the court should not "construct arguments or theories for the plaintiff in the absence of any discussion of those issues," nor should it "supply additional factual allegations to round out a plaintiff's complaint or construct a legal theory on plaintiff's behalf." In addition, 28 U.S.C. § 1915(e)(2) provides that an in forma pauperis action shall be dismissed "at any time if the court determines that the action is frivolous or malicious, fails to state a claim on which relief may be granted or seeks monetary relief against a defendant who is immune from such relief.
Hall v. Bellmon, 935 F.2d at 1110 (citing Haines v. Kerner, 404 U.S. 519, 520-21 1972)).
Id.
Id.
Drake v. City of Fort. Collins, 927 F.2d 1156, 1159 (10th Cir. 1991).
Whitney v. State of New Mexico, 113 F.3d 1170, 1173-74 (10th Cir. 1997).
Background/Facts as Alleged in Plaintiffs' Complaint
David Novak filed a voluntary Chapter 7 bankruptcy on June 23, 1995, in the District of Kansas. Carl Clark was the Chapter 7 Trustee for the proceedings. On March 18, 2002, Mr. Clark, "acting as a U.S. bankruptcy trustee," filed a motion with the Bankruptcy Court seeking approval of the sale of a vehicle by public auction, specifically a 1994 Dodge Viper that plaintiff claims was owned by his father, Dr. Alfred Novak. On March 20, 2002, Mr. Clark filed a "Notice of Opportunity to file a written objection and/or response" to the Motion for Approval of the sale of the vehicle. Mr. Clark sent this notice to the plaintiffs, and both plaintiffs sent their "Objection and Response" to the Clerk of the U.S. Bankruptcy Court.
Novak is currently serving a 63-month sentence after being convicted of five counts of concealment of assets and false oaths and claims under 18 U.S.C. § 152 and 2; one count of money laundering under 18 U.S.C. § 1956(a)(1)(B)(I); and one count of conspiracy under 18 U.S.C. § 371. These convictions resulted from his attempts, along with his father Alfred Novak, to conceal property from his creditors and/or the trustee in his bankruptcy proceedings.
Mr. Novak filed this complaint on July 7, 2003, in his individual capacity and as "authorized agent" of the estate of Dr. Alfred Novak. Plaintiffs allege that on April 22, 2002, Mr. Clark, acting under the color of law of a U.S. Bankruptcy Trustee," submitted a "fraudulent order approving trustee's sale" of the vehicle by public auction. Clark stated that "no objections were timely filed . . ." even though plaintiffs filed a timely objection to the sale asserting that the Viper was not part of the bankruptcy estate because it belonged to Dr. Novak. Plaintiffs allege that Clark "knowingly, intentionally, and fraudulently submitted an Order" for the sale of the vehicle. Lentz Clark, P.A. has been sued as "acting as representing U.S. Bankruptcy Trustee, Carl R. Clark." Plaintiff contends that Clark committed a fraud upon the court and violated plaintiffs' Fourteenth Amendment rights to due process. Plaintiffs seek damages for the value of the Viper, the sentimental value of the unlawful liquidation of the Viper that belonged to Dr. Novak, and punitive damages of $1 million for fraud on the court. Plaintiffs also request that felony charges of fraud be filed against Clark.
Analysis
1. Jurisdiction
Defendants argue that plaintiffs' claim was filed in violation of the Barton doctrine, which mandates that any claim against a bankruptcy trustee for conduct not arising out of the operation of a debtor's business be brought in the appointing court. Under Barton, Chapter 7 trustees and non-operating debtors in possession cannot be sued in courts other than the bankruptcy court unless the bankruptcy court specifically permits the action to proceed in another jurisdiction. In this case, plaintiffs did not seek leave of the bankruptcy court to bring this lawsuit.
Barton v. Barbour, 104 U.S. 126 (1881); In re DeLorean Motor Co., 991 F.2d 1236 (6th Cir. 1993); In re Kashani, 190 B.R. 875, 885 (9th Cir. BAP 1995).
Id.
Plaintiffs respond that they are not suing defendant Clark in his official capacity as trustee of his bankruptcy estate, but rather, in his "personal capacity, under the pretense of acting under the color of law as a bankruptcy trustee." This distinction is without merit. Plaintiffs' complaint specifically challenges the trustee's actions taken while administering or liquidating the bankruptcy estate. In selling the Viper, Mr. Clark was clearly acting in his official capacity as the bankruptcy trustee and pursuant to the order of the bankruptcy court. Moreover, Lentz Clark, as counsel for the trustee, is the functional equivalent of a trustee. Because plaintiffs' complaint was filed without first obtaining leave of the bankruptcy court, this Court lacks jurisdiction and the claim must be dismissed.
Alternatively, Clark is entitled to quasi-judicial immunity because the acts of which plaintiffs complain were taken in his capacity as court-appointed trustee and at the direction of the United States Bankruptcy Court for the District of Kansas, and thus plaintiffs fail to state a claim upon which relief can be granted. Gregory v. U.S./U.S. Bankruptcy Court for the Dist. of Colorado, 942 F.2d 1498, 1500 (10th Cir. 1991).
See In re Balboa Improvements, Ltd., 99 B.R. 966 (9th Cir. 1989).
2. Standing
Assuming, arguendo, that this Court has jurisdiction, plaintiffs' claims must also be dismissed because they lack standing. Article III, § 2 of the United States Constitution limits the jurisdiction of federal courts to actual "cases" or "controversies." Plaintiffs, based on their complaint, must establish that they have standing. More specifically, plaintiffs must demonstrate that they meet each of the following requirements: 1) they have suffered an "injury in fact" that is (a) concrete and particularized and (b) actual and imminent, not conjectural or hypothetical; 2) the injury is fairly traceable to the challenged action of the defendant[s]; and 3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
Raines v. Byrd, 521 U.S. 811, 818 (1997).
Id. (citation omitted).
Friends of the Earth, Inc. v. Laidlaw Env. Servs., Inc., 528 U.S. 167, 180-81 (2000); see also Schaffer v. Clinton, 240 F.3d 878, 882 (10th Cir. 2001) (citations omitted).
On February 19, 2004, the Tenth Circuit held in a related case involving the same plaintiffs that they lacked the requisite standing to maintain their complaint against the defendants. In In re: David Novak v. The Honorable John T. Flannagan, et al., plaintiffs raised similar issues in an appeal of the bankruptcy court's order granting Mr. Clark's trustee's motion to sell the Viper as part of David Novak's bankruptcy estate. As in this case, plaintiffs argued that the Viper was not part of the bankruptcy estate as it belonged to his father, Dr. Novak. The Tenth Circuit concluded that David Novak lacked standing to proceed, either on his own behalf of as "authorized agent" of the estate of Alfred Novak. The court found that David Novak had suffered no personal "injury in fact" nor did he make a showing that the Alfred Novak estate had suffered any "injury in fact," because there is no indication that the estate, as opposed to the Alfred Novak Living Trust, owned the Viper.
2004 WL 309336 (10th Cir. Feb. 19, 2004).
Id. At *3-4.
Id.
Defendants contend that the issue of standing is barred by the doctrine of collateral estoppel. Under that doctrine, also known as issue preclusion, a court's decision on an issue of fact or law that is necessary to its judgment precludes relitigation of the same issue in a different cause of action between the same parties. Invocation of collateral estoppel "relieve[s] parties of the cost and vexation of multiple lawsuits, conserve[s] judicial resources, and, by preventing inconsistent decisions, encourage[s] reliance on adjudication."
See Montana v. United States, 440 U.S. 147, 153 (1979).
Allen v. McCurry, 449 U.S. 90, 94 (1980).
For collateral estoppel to apply, the following conditions must be satisfied: 1) the issue previously decided must be identical with the one presented in the current action; 2) the party against whom the doctrine is invoked must have been a party or in privity with a party to the prior action; 3) the party against whom the doctrine is raised must have had a full and fair opportunity to litigate the issue in the prior action; and 4) the prior action must have been finally adjudicated on the merits. The case before the Court concerns the same parties as well as the same issue of plaintiffs' standing with regard to claims arising from Mr. Clark's sale of the Viper in Novak v. Flannagan. Plaintiffs had a full opportunity to litigate the issue. The Tenth Circuit analyzed the very legal issue presently before this Court. Thus, the Court is bound by that decision, and concludes that Mr. Novak lacks standing to bring this action, either on his own behalf or as "authorized agent" of his father's estate. IT IS THEREFORE ORDERED BY THE COURT that defendants' motion and supplemental motion to dismiss (Docs. 10 and 13) are GRANTED.
See Murdock v. Ute Indian Tribe, 975 F.2d 683, 687 (10th Cir. 1992) (citing United States v. Rogers, 960 F.2d 1501, 1508 (10th Cir. 1992) (quotation omitted).
The Tenth Circuit noted in Novak v. Flannagan that there is a potential party with standing: the legitimate trustee of the Alfred Novak Living Trust. 2004 WL 309336 at *3. As in that case, however, the trustee is not present in this Court to defend the Trust's interests.
IT IS SO ORDERED.