97-493
No. 97-493
IN THE SUPREME COURT OF THE STATE OF MONTANA
1997
RONALD U. LURIE,
Plaintiff and Appellant,
v.
ROBERT J. BLACKWELL, individually and in his capacity
as Liquidating Trustee of the Popkin & Stern Liquidating Trust,
Defendant and Respondent.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Mike A. Salvagni, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Ronald U. Lurie, Pro Se, Bozeman, Montana
For Respondent:
Michael F. McMahon; Harrison, Loendorf, Poston & Duncan;
Helena, Montana
Submitted on Briefs: October 9, 1997
Decided: November 13, 1997
Filed:
__________________________________________
Clerk
Justice Terry N. Trieweiler delivered the Opinion of the Court.
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Ronald Lurie filed a complaint in the District Court for the Eighteenth Judicial
District in Gallatin County in which he alleged abuse of process against Robert J.
Blackwell, individually and in his capacity as liquidating trustee of the Popkin &
Stern
Liquidating Trust. Blackwell removed the case to the United States District Court
for the
District of Montana, but that court dismissed the complaint and remanded it to the
Montana District Court in Gallatin County. Blackwell filed a motion to dismiss the
claim. After oral argument, the District Court granted the motion to dismiss. Lurie
appeals. We affirm the order of the District Court.
The sole issue on appeal is whether the District Court erred when it granted the
motion to dismiss.
FACTUAL BACKGROUND
In October 1994, a judgment was entered against Ronald Lurie in the United
States
Bankruptcy Court for the Eastern District of Missouri. The judgment was in favor of
Robert Blackwell, the liquidating trustee for the Popkin & Stern Liquidating Trust.
On November 9, 1994, Blackwell filed the foreign judgment in the District Court
for Gallatin County and, pursuant to the judgment, a writ of execution was issued
against
Lurie. The notice of filing foreign judgment identified Blackwell as the plaintiff
and
foreign judgment creditor. He was not identified in his representative capacity.
Pursuant
to the writ of execution, the Gallatin County Sheriff seized property from the Lurie
home.
The parties to the bankruptcy proceeding eventually reached settlement
agreements,
which were approved by the Bankruptcy Court in October 1995. In January 1996, the
Bankruptcy Court held as a matter of law that the Luries were unable to close the
agreements on the scheduled dates. In April 1996, that court held that the
agreements
were unenforceable as releases. It also held that Lurie's attempts to implement the
agreements were tainted with bad faith.
Nonetheless, Lurie sought a release from the Bankruptcy Court judgment in the
District Court in October 1996. Among other claims, Lurie alleged that the
agreements
operated to release the judgment, that the notice of filing foreign judgment was
ineffective
pursuant to õ 25-9-504, MCA, because it incorrectly identified Blackwell in his
individual
capacity, rather than in his representative capacity, and that the judgment was
unenforceable. Both the District Court and then this Court held that Blackwell did
in fact
comply with õ 25-9-504, MCA, and that the judgment was effective. See Blackwell v.
Lurie (Mont. 1997), 943 P.2d 1318, 54 St. Rep. 916.
This appeal involves a complaint for abuse of process that Lurie filed on
December 3, 1996, against Blackwell individually and in his representative
capacity. The
first count alleged that Blackwell's failure to identify his representative capacity
in the
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notice of filing foreign judgment constituted abuse of process and claimed over one
million dollars in actual damages and ten million dollars in punitive damages. The
second count sought to recover an additional eleven million dollars in damages for
abuse
of process based upon Blackwell's alleged failure to file a sufficient bond pursuant
to õ
27-18-602, MCA, when the Sheriff seized the Lurie property. Although not at issue
here, Lurie filed an additional abuse of process claim against Blackwell, based upon
his
assertion that the agreements had supposedly released the judgment and Blackwell
continued to attempt to enforce it.
Blackwell removed the case to the United States District Court for the District
of
Montana and filed a motion to dismiss, based upon a lack of subject matter
jurisdiction.
The U.S. District Court dismissed and remanded to state court. It held that it
lacked
jurisdiction because Lurie failed to obtain leave of the Bankruptcy Court before he
brought suit.
Once back in State District Court, Blackwell again filed a motion to dismiss
for,
among other reasons, a lack of subject matter jurisdiction. That motion was granted
based on the same reasoning applied in Federal District Court.
DISCUSSION
Did the District Court err when it granted the motion to dismiss?
Whether to dismiss a claim based on lack of subject matter jurisdiction is a
question of law. We review a district court's conclusion of law to determine if it
is
correct. See Poteat v. St. Paul Mercury Ins. Co. (1996), 277 Mont. 117, 119, 918
P.2d
677, 679. See also Matter of Beneficial Water Use Permit Nos. 66459-76L, Ciotti;
64988-G76L, Starner (1996), 278 Mont. 50, 54, 923 P.2d 1073, 1076.
The basis for the District Court's conclusion that it lacked subject matter
jurisdiction over Lurie's abuse of process claim is the Barton doctrine. The Barton
doctrine provides that "leave of the appointing forum must be obtained by any party
wishing to institute an action in a non-appointing forum against a trustee, for acts
done
in the trustee's official capacity and within the trustee's authority as an officer
of the
court." In re DeLorean Motor Co. (6th Cir. 1993), 991 F.2d 1236, 1240 (applying
Barton v. Barbour (1881), 104 U.S. 126, 26 L. Ed. 672). Without leave from the
appointing court, no other court has jurisdiction to entertain suits against a
trustee for acts
done in an official capacity. See In re Kashani (B.A.P. 9th Cir. 1995), 190 B.R.
875,
884; In re Jacksen (B.A.P. 9th Cir. 1989), 105 B.R. 542, 545.
Lurie contends that the Barton doctrine does not apply here because he maintains
that Blackwell was not acting in an official capacity, and that even if he was
acting in his
representative capacity, his actions were ultra vires and unprotected. It is true
that a
trustee who exceeds his authority will not be protected by the Barton doctrine. See
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Leonard v. Vrooman (9th Cir. 1967), 383 F.2d 556, cert. denied (1968), 390 U.S. 925,
88 S. Ct. 856, 19 L. Ed. 2d 985. See also In re Markos Gurnee Partnership (Bankr.
N.D. Ill. 1995), 182 B.R. 211, 222 ("'ultra vires' actions involve only the personal
liability of trustees . . . . [and] generally implicate none of the bases for
bankruptcy
jurisdiction, and are properly determined in a nonbankruptcy forum with no input from
the bankruptcy court"). However, we disagree with Lurie's characterization of
Blackwell's conduct and conclude as a matter of law that Blackwell's actions were
within
the scope of his authority.
In Markos Gurnee Partnership, the court noted that a trustee is "immune from
suit
for actions arising out of the operation of the estate," and that only a breach of a
fiduciary duty or "willful violations of applicable nonbankruptcy law" are
sufficient bases
for a court to find that a trustee has acted outside the operation of the estate and
should
therefore be personally liable. Markos Gurnee Partnership, 182 B.R. at 216-19. For
example, it observed that "trustees have been most commonly found to have acted
outside
of their authority . . . in seizing property which is found not to be property of
the estate."
Markos Gurnee Partnership, 182 B.R. at 217 (citing Vrooman and Barton).
Lurie failed to submit any evidence that Blackwell acted in willful violation
of the
law or that he breached a fiduciary duty. Nor did he make any allegation that
Blackwell
improperly seized non-estate property. Rather, Lurie relies solely on the fact that
Blackwell did not allege his representative capacity when he filed his foreign
judgment.
It is undisputed that the only conduct complained of was the fact that Blackwell
filed the
foreign judgment. In doing so, he clearly was performing his official duties as a
trustee
in the administration of the estate. Accordingly, we conclude that Blackwell did
not act
individually or outside his official capacity.
Lurie also alleges that even if Blackwell acted in his representative capacity,
his
actions were ultra vires and, therefore, beyond his authority as a trustee and not
protected
by the Barton doctrine. However, the doctrine of ultra vires applies when a trustee
is
without authority to perform an act in any circumstances or for any purpose. See
Larry
C. Iverson, Inc. v. Bouma (1981), 195 Mont. 351, 366, 639 P.2d 47, 55 (contrasting
ultra vires acts with acts committed without proper agency authority); Sibert v.
Community College of Flathead County (1978), 179 Mont. 188, 191, 587 P.2d 26, 28
(labeling a statutorily unauthorized act as ultra vires). Here, Blackwell's actions
were not
ultra vires because they were neither unlawful nor beyond his authority.
We held in Blackwell v. Lurie (Mont. 1997), 943 P.2d 1318, 1323, 54 St. Rep.
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916, 919, a previous attempt by Lurie to fault Blackwell for failing to identify
himself
in his representative capacity, that "[t]here is no requirement that the judgment
creditor
must acknowledge his representative capacity." Accordingly, Blackwell did not exceed
his authority as a trustee, substantively or procedurally, when he filed the notice
of filing
foreign judgment in his name. Therefore, we hold that the District Court was correct
when it applied the Barton doctrine and dismissed Lurie's claim for lack of subject
matter
jurisdiction.
Blackwell has asked this Court to decide that Lurie's claim should be dismissed
not only for lack of subject matter jurisdiction, but also on its merits based on
collateral
estoppel, and based on our holding in Blackwell v. Lurie (Mont. 1997), 943 P.2d 1318,
54 St. Rep. 916. Once a court has determined that it lacks subject-matter
jurisdiction,
however, the only further action it can take is to dismiss the case. See In re
Marriage
of Miller (1993), 259 Mont. 424, 427, 856 P.2d 1378, 1380; Rule 12(h)(3), M.R.Civ.P.
Thus, despite the fact that we rejected Lurie's nearly identical allegations in that
case, the
Barton doctrine precludes the consideration of substantive defenses no matter how
meritorious they might be.
We understand Blackwell's frustration with Lurie's repeated efforts to avoid
satisfaction of the judgment against him; this is the fourth appeal to this Court by
Lurie
and his family in cases involving Blackwell in just the last seven months. However,
despite our past holdings and the concomitant recognition of the dubious allegations
put
forth by Lurie in the present action, we lack jurisdiction to review the merits or to
dismiss the claim as a matter of collateral estoppel. We affirm the District Court's
judgment.
/S/ TERRY N. TRIEWEILER
We Concur:
/S/ J. A. TURNAGE
/S/ W. WILLIAM LEAPHART
/S/ JAMES C. NELSON
/S/ KARLA M. GRAY
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