Lawrence v. Goldberg

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 08-11034 ELEVENTH CIRCUIT
JULY 10, 2009
Non-Argument Calendar
THOMAS K. KAHN
________________________
CLERK

D. C. Docket No. 06-21952-CV-ASG

STEPHAN JAY LAWRENCE,

Plaintiff-Appellant,

versus

ALAN L. GOLDBERG,
CRISIS MANAGEMENT, INC.,
BERGER SINGERMAN, P.A.,
PAUL S. SINGERMAN,
JAMES H. FIERBERT,
PAUL AVRON,
MELAND RUSSIN & BUDWICK, P.A.,
MICHAEL BUDWICK, et al.,

Defendants-Appellees.

________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________

(July 10, 2009)
Before DUBINA, Chief Judge, CARNES and WILSON, Circuit Judges.

DUBINA, Chief Judge:

Appellant Stephan Jay Lawrence, appearing pro se, appeals the district

court’s dismissal of his civil suit for lack of subject matter jurisdiction under

Barton v. Barbour, 104 U.S. 126 (1881) (“the Barton doctrine”). For the reasons

that follow, we affirm.

I. BACKGROUND

The present appeal arises out of events occurring in connection with

Lawrence’s ongoing Chapter 7 bankruptcy proceeding, which has been the subject

of litigation before the bankruptcy court in the Southern District of Florida since

1997.

Lawrence, an options trader, incurred a large margin default debt with the

investment firm Bear Stearns & Co., Inc. (“Bear Stearns”). An arbitrator entered

an award of $20.4 million against Lawrence in favor of Bear Stearns. Bear Stearns

confirmed this arbitration award in the Southern District of New York and then

registered the New York judgment in the Southern District of Florida. Because

Lawrence admitted that he had placed $7 million of his assets in an offshore

spendthrift trust (“the Mauritian trust”), the district court in Bear Stearns’s suit to

enforce the $20.4 million judgment granted Bear Stearns leave to implead a trust

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representative. Lawrence responded in June 1997 by voluntarily filing for

bankruptcy. Thereafter, all collection efforts were pursued under the aegis of the

Chapter 7 trustee for Lawrence’s estate, Alan L. Goldberg (“the Trustee”).

The bankruptcy proceeding has been contentious. Lawrence unsuccessfully

sought to have the Trustee’s counsel disqualified. In addition, Lawrence

represented that although he initially reserved authority to appoint trustees and

designate himself as a beneficiary of the Mauritian trust, a March 1995 amendment

to the trust labeled him an “excluded person,” depriving him of any beneficial

interest in, control over, or knowledge of, the trust’s assets or activities. The

Trustee disputed Lawrence’s characterization of the effect of the 1995 amendment

to the Mauritian trust and argued that the Mauritian trust’s assets belonged in

Lawrence’s bankruptcy estate.

Because the bankruptcy court concluded that Lawrence’s failure to respond

to discovery requests concerning the Mauritian trust was willful and in bad faith,

the bankruptcy court entered a default judgment against Lawrence, finding that the

Mauritian trust was property of the estate. In July 1999, the Trustee sought an

order directing Lawrence to turn over the assets of the Mauritian trust (“the Turn

Over Order”), which the bankruptcy court granted.

At a status conference convened to determine Lawrence’s compliance with

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the Turn Over Order, the bankruptcy court rejected Lawrence’s impossibility

defense and found that Lawrence controlled the Mauritian trust through his

retained powers to remove and appoint trustees and to add and exclude

beneficiaries. The bankruptcy court issued a contempt order against Lawrence for

failing to turn over the assets of the Mauritian trust, fining Lawrence at the rate of

$10,000 per day if he did not comply.

In October 1999, after Lawrence’s continued failure to comply with the Turn

Over Order and the related contempt order, the bankruptcy court ordered Lawrence

incarcerated pending compliance. In July 2000, the district court affirmed both the

Turn Over Order and the contempt order, and Lawrence was incarcerated in

September 2000. This court affirmed the district court’s rulings on the Turn Over

Order and the contempt order. Lawrence v. Goldberg (In re Lawrence), 279 F.3d

1294, 1296 (11th Cir. 2002).

Seeking release from prison, Lawrence filed a petition for mandamus or

prohibition in March 2004. The district court denied Lawrence’s petition, and this

court affirmed. Lawrence v. U.S. Bankruptcy Court, 153 Fed. Appx. 552, 553

(11th Cir. 2005) (unpublished). Despite the district court’s order prohibiting

Lawrence from making further filings with the district court, Lawrence’s

bankruptcy proceeding remained pending. Id. at 554.

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 Lawrence filed the instant 18-count amended complaint in August 2006,

alleging, inter alia, that the Trustee and a group of creditors conspired to enforce

the Turn Over Order and to gain a litigation advantage by: wrongfully obtaining

orders authorizing the filing of sealed ex parte pleadings, hiring private

investigators, holding in camera discovery hearings, and obtaining Lawrence’s

tape-recorded telephone conversations from prison. Lawrence alleged that such

conduct violated federal wiretapping law, 18 U.S.C. §§ 2510-2522, 2701(a),

2702(a), 2703 and 2707(g); the Racketeer-Influenced Corrupt Organizations Act

(“RICO”), 18 U.S.C. § 1962; the Fair Debt Collection Practices Act, 15 U.S.C.

§§ 1692d(1), 1692e(10) and 1692f; federal and constitutional rights under 42

U.S.C. § 1983 and Bivens v. Six Unknown Narcotics Agents, 403 U.S. 388, 91 S.

Ct. 1999 (1971); and Florida state laws.

Lawrence named twelve “Trustee” defendants: the Trustee; Crisis

Management, Inc. (“CM”), the Trustee’s consulting firm;1 Berger Singerman, P.A.

(“Berger”), a law firm that represented the Trustee; Paul S. Singerman, a Berger

partner; James H. Fierberg, a Berger attorney who allegedly filed a false affidavit;

Paul Avron, a Berger attorney who presented arguments to the bankruptcy court;

1
While Lawrence lists CM as a party in the statement of facts in his appellate brief, he does
not challenge the district court’s dismissal of CM in his arguments to this court. Accordingly, he
has waived any claim in this respect. See Lucas v. W.W. Grainger, Inc., 257 F.3d 1249, 1255 n.1
(11th Cir. 2001) (holding that claims not raised in an initial brief on appeal are deemed waived).

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Michael Budwick, the Trustee’s special counsel; Budwick’s law firm, Meland

Russin & Budwick, P.A. (“MRB”); Edward Tillinghast III, an attorney with the

Coudert Brothers law firm; the Coudert Brothers law firm;2 Interfor, Inc., an

investigative services firm; and Juval Aviv, an investigator and Interfor’s owner.

Lawrence also named seven “Creditor” defendants: Bear Stearns; Daniel

Taub, a Bear Stearns managing director; Mark Lehman, a Bear Stearns managing

director; Mark Cohen, a creditors’ attorney; Mark D. Cohen, P.A., Cohen’s law

firm; Howard Kahn, a second creditors’ attorney; and Kahn, Zuckerman, P.A.3

The district court dismissed Lawrence’s amended complaint in its entirety

for lack of subject matter jurisdiction under Barton v. Barbour, 104 U.S. 126

(1881). Lawrence then perfected this appeal.4

II. DISCUSSION

“We review a dismissal for lack of subject matter jurisdiction de novo.”

Carter v. Rodgers, 220 F.3d 1249, 1252 n.3 (11th Cir. 2000).

The district court dismissed Lawrence’s complaint on the basis of the Barton

2
Lawrence dismissed his claims against the Coudert Brothers law firm after it declared
bankruptcy.
3
Kahn, Zuckerman, P.A. is not an existing law firm.
4
Although Lawrence challenges the district court’s order denying his post-dismissal motion
to quash judicial notice with regard to the district court’s alternative dismissal of his amended
complaint under Federal Rule of Civil Procedure 12(b)(6), it is not necessary for us to resolve the
validity of that order in light of our disposition of this appeal on other grounds.

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doctrine. In Barton, a court in equity had appointed a receiver “of all the property,

rights, and franchises” of a railroad company. Barton, 104 U.S. at 126–27. While

the receiver was operating the railroad, one of the company’s train cars derailed,

and a passenger sustained personal injuries. Id. at 127. The injured passenger

attempted to sue the receiver without obtaining the leave of the court that had

appointed the receiver. Id. The Supreme Court reasoned that allowing the

plaintiff’s action to proceed without leave of the appointing court would have been

“an usurpation of the powers and duties which belonged exclusively to [the

appointing] court.” Id. at 136. Therefore, the Supreme Court held that a court

does not have “jurisdiction, without leave of the court by which the receiver was

appointed, to entertain a suit against him for a cause of action . . . based on his

negligence or that of his servants in the performance of their duty in respect of [the

property administered by the receiver].” Id. at 137.

In 2000, we held—in our only published case interpreting the Barton

doctrine—that, as a matter of federal common law, “a debtor must obtain leave of

the bankruptcy court before initiating an action in district court when that action is

against the trustee or other bankruptcy-court-appointed officer, for acts done in the

actor’s official capacity.” Carter, 220 F.3d at 1252. We also held that the Barton

doctrine applies to actions against officers approved by the bankruptcy court when

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those officers function “as the equivalent of court appointed officers.” Id. at 1252

n.4; cf. Lowenbraun v. Canary (In re Lowenbraun), 453 F.3d 314, 321 (6th Cir.

2006) (holding that the Barton Doctrine “applies to trustees’ counsel as well as to

trustees themselves”). In Carter, we explained that the Barton doctrine helps to

ensure the proper functioning of the bankruptcy process:

If [the trustee] is burdened with having to defend against suits by
litigants disappointed by his actions on the court’s behalf, his work for
the court will be impeded. . . . Without the requirement [of leave],
trusteeship will become a more irksome duty, and so it will be harder
for courts to find competent people to appoint as trustees. Trustees
will have to pay higher malpractice premiums, and this will make the
administration of the bankruptcy laws more expensive. . . .
Furthermore, requiring that leave to sue be sought enables bankruptcy
judges to monitor the work of the trustees more effectively.

Carter, 220 F.3d at 1252–53 (alteration in original) (quoting In re Linton, 136 F.3d

544, 545 (7th Cir. 1998)).

Lawrence argues that the district court should not have applied the Barton

doctrine to all of the defendants in his civil suit. We disagree. It is undisputed that

Lawrence did not obtain leave of the bankruptcy court before filing his amended

complaint in the district court. The Trustee was appointed by the bankruptcy court,

and the Trustee’s court-approved counsel—the Berger firm and attorneys

Singerman, Berger, Fierberg, and Avron; the MRB firm and attorney Budwick; and

attorney Tillinghast of the Coudert Brothers firm—functioned as the equivalent of

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court-appointed officers by helping the Trustee execute his official duties. While

Lawrence claims that the Trustee, through counsel, abused his official position, he

concedes that the Trustee ostensibly undertook the challenged actions in his

official capacity and for the purpose of enforcing the bankruptcy court’s Turn Over

Order. See 11 U.S.C. § 704(a)(1) (The Trustee has a duty to “collect and reduce to

money the property of the estate.”). The bankruptcy court also approved the

Trustee’s hiring of investigator Aviv and his company Interfor, Inc. to help him

discharge his duty to locate assets belonging to the bankruptcy estate. Thus, Aviv

and Interfor, Inc. also functioned as the equivalent of court appointed officers, and

Lawrence’s claims that they violated the terms of their retainers concerned actions

taken in their official capacities.

With regard to the creditor defendants, the bankruptcy court approved a

financing arrangement in which the creditors—namely Bear Stearns, acting

through managing partners Taub and Lehman—would advance the costs necessary

to recover property of the estate and would receive repayment from recovered

assets, if any. Thus, to the extent the creditors financed the Trustee’s efforts to

locate hidden assets on behalf of the estate, they likewise functioned as the

equivalent of court appointed officers, as did their counsel. By alleging that the

creditors, through counsel, hired professionals for their own benefit but billed their

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fees to the estate, Lawrence essentially claimed that they breached their official

fiduciary duties to the Trustee and the bankruptcy court.

Lawrence next contends that the Barton doctrine does not apply because his

civil suit is unrelated to his bankruptcy proceeding.5 We disagree. Bankruptcy

courts have jurisdiction to hear “any or all cases under title 11 and any or all

proceedings arising under title 11 or arising in or related to a case under title 11,”

upon referral by a district court. 28 U.S.C. § 157(a) (2006). “‘Arising under’

proceedings are matters invoking a substantive right created by the Bankruptcy

Code. The ‘arising in a case under’ category is generally thought to involve

administrative-type matters . . . .” Cont’l Nat’l Bank of Miami v. Sanchez (In re

Toledo), 170 F.3d 1340, 1345 (11th Cir. 1999) (citations omitted). We have

adopted the following guidelines for determining whether a civil proceeding is

“related to” a bankruptcy proceeding:

The . . . test for determining whether a civil proceeding is related to
bankruptcy is whether the outcome of the proceeding could conceivably
have an effect on the estate being administered in bankruptcy. The
proceeding need not necessarily be against the debtor or against the debtor's
property. An action is related to bankruptcy if the outcome could alter the
debtor’s rights, liabilities, options, or freedom of action (either positively or

5
In Carter, we left open the question “whether leave of the bankruptcy court is required
when a debtor sues a trustee [or other bankruptcy-court-approved officer] for a tort completely
‘unrelated to’ and ‘outside the scope’ of the bankruptcy proceeding.” Carter, 220 F.3d at 1253.
Because we conclude that Lawrence’s civil claims are related to his bankruptcy proceeding, we need
not answer the question left open in Carter.

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 negatively) and which in any way impacts upon the handling and
administration of the bankrupt estate.

Miller v. Kemira, Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784, 788 (11th Cir.

1990) (quoting Pacor Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)).

Although Lawrence raises claims under a variety of state and federal laws,

the essence of Lawrence’s complaint is that the Trustee and the other defendants

colluded to enforce the Turn Over Order, an order of the bankruptcy court, and

otherwise unlawfully attempted to bring assets into the bankruptcy estate. The

outcome of Lawrence’s civil suit clearly could have an effect on the handling and

administration of his bankruptcy estate. All of Lawrence’s civil claims fall within

the scope of the Barton doctrine because they are “related to” his bankruptcy

proceeding.

For the reasons set forth above, we affirm the district court’s order

dismissing Lawrence’s amended complaint in its entirety.6

AFFIRMED.

6
Because of our disposition of this appeal, we decline to consider the parties’ remaining
arguments.

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