Opinion
Civil Action No. SA-04-CA-0641-XR.
March 22, 2006
ORDER
On this date, the Court considered Defendant United States of America's Motion to Dismiss, or in the Alternative, for Summary Judgment (docket no. 11).
Background
On May 1, 2004, John Fleming filed a tort claim with the Administrative Office of the United States Courts seeking over $20 million in damages because of the actions of Bankruptcy Judge Leif Clark and others.
This claim was denied on September 20, 2005. The Administrative Office concluded that the claims arose entirely from the performance of official duties integral to the judicial process and that the United States possessed absolute immunity from any liability. Further, the AO concluded that Fleming had not proven any negligence that could give rise to any state tort liability. Finally, the AO concluded that Fleming's constitutional claims were excluded from the Federal Tort Claims Act.
On May 5, 2004, John and Ellen Fleming filed suit in the 37th Judicial District Court of Bexar County, Texas against United States Bankruptcy Judge Leif Clark and others in their official and individual capacities. John Fleming is a lawyer who regularly practiced in Bankruptcy Court. On June 4, 2004, a First Amended Original Petition was filed which deleted Mrs. Fleming as a Plaintiff.
Nancy Ratchford (Assistant United States Trustee), Kevin Epstein (Trial Attorney for the United States Trustee), Marsha Milligan (Chapter 7 Trustee), Marion A. Olson, Jr. (Chapter 13 Trustee), Richard Simmons (United States Trustee), Henry Hobbs (Assistant United States Trustee), Randolph Osherow (Chapter 7 Trustee), Helen Schwartz, Ronald Ingalls (Chapter 7 Trustee), Kelly Green (former client of Fleming), Juan Luna (former client of Fleming) and Edward Rebeaud (former client of Fleming).
John Fleming alleges that the Defendants made false and defamatory statements and abused their government positions. Fleming also alleges that the Defendants committed the following: "assault, battery, intentional infliction of emotional distress, slander, libel, breach of contract, quantum meruit, slander of business, civil conspiracy, intentional and negligent interference with business relationships and business activities, destruction of property, deprivation of rights guaranteed by the U.S. Constitution and Constitution of the State of Texas, deprivation of rights guaranteed by the civil rights laws of the United States and the State of Texas, Bivens-type constitutional torts, statutory torts, abuse of process, theft, attempt, replevin and trespass."
See paragraph 4 of Plaintiff's First Amended Original Petition.
Fleming complains that on or about May 12, 2003, Bankruptcy Judge Clark entered an order that barred Chapter 13 Trustees from disbursing any funds to Fleming in any Chapter 13 cases in the Western District of Texas. Fleming complains that this Order affected approximately 32 cases where other bankruptcy judges previously authorized payment of attorney's fees he earned. Fleming further complains that his earned attorney's fees were thereafter distributed to creditors or debtors. Fleming argues that Bankruptcy Judge Clark had no authority for his actions, and that he also exceeded his authority by disbarring him from practice in the Western District of Texas.
On July 19, 2004, this Court considered Fleming's appeal of that order. This Court concluded that pursuant to Western District of Texas Local Rule AT-1, a Bankruptcy Judge in this District may not unilaterally disbar an attorney and vacated the disbarment order and also authorized the Trustees to distribute any attorney's fees awarded prior to May 6, 2003. See Order filed July 19, 2004 in In re Juan Jose Luna, Civ. No. SA-03-CA-0472 (docket no. 16).
On July 21, 2004, Defendants Clark, Ratchford, Epstein, Simmons and Hobbs ("Federal Defendants") filed their Notice of Removal. On that date the Federal Defendants also filed a Notice of Substitution seeking, pursuant to the Federal Tort Claims Act, that the United States of America be substituted in their place inasmuch as they were acting within the course and scope of their federal employment.
On September 7, 2004, this Court granted the Federal Defendants' motion for substitution and dismissed the individual claims made against the Federal Defendants. Fleming thereafter filed a notice of interlocutory appeal to the Fifth Circuit.
The Fifth Circuit denied Plaintiff's interlocutory appeal for lack of jurisdiction on January 13, 2006.
While this claim was on interlocutory appeal, on October 26, 2004, Plaintiff filed a "Notice of Nonsuit" as to Randolph Osherow, Ronald Ingalls, Helen Schwartz, Marion Olson, Marsha Milligan and Richard Simmons.
On February 8, 2006, Fleming filed an Amended Complaint in this district court and claimed his lawsuit was being filed against the United States of America (Leif Clark, Kevin Epstein, Richard Simmons, Henry Hobbs), Juan and Kelly Luna and Edward Rebeaud. To date Plaintiff has never served Juan Luna, Kelly Luna or Kelly Green, or Edward Rebeaud.
In this amended complaint, Fleming again reiterates that Bankruptcy Judge Clark disbarred him without authority, wrongfully divested him of attorney's fees, that the United States Trustee employees did not have any authority to investigate his fitness to practice law, that "much goes on behind the scenes at the courthouse in San Antonio where both Clark and the UST have their offices", that Bankruptcy Judge Clark had no authority to order the Trustee's office to refer him to the State Bar of Texas Grievance Committee, that Trustee employees made certain unspecified "disparaging things" ostensibly about Fleming at "public hearings", that Luna, Green and Rebeaud made false statements to Judge Clark [ostensibly about Fleming], and that Green made comments to third parties that she got Fleming disbarred. Fleming infers that a conspiracy was created to remove him from practice, and that "the only thing to discover is the extent of the conspiracy to disbar Plaintiff. Part of this may be a response to the fact that personal injury trial lawyers have had to "retool" in the wake of HB4, and some are starting to practice bankruptcy law, and the field is getting crowded." Fleming further characterizes Judge Clark's order as a "hit job."
Government's motion for summary judgment
The Government argues that all of Plaintiff's claims regarding the actions of Judge Clark are barred by judicial immunity. With regard to all of Plaintiff's claims regarding the actions of Epstein, Simmons, and Hobbs (and any other individual employed by the United States Trustee's Office), the Government argues that such claims are barred by absolute immunity.
Analysis
A. Judicial Immunity
Plaintiff argues that Judge Clark's order which precluded the Chapter 13 Trustees from distributing any attorney's fees he may have earned was an act wholly done in the absence of any jurisdiction. Plaintiff argues that this order affected cases in which other bankruptcy judges were presiding. Accordingly, Plaintiff argues that Judge Clark wrongfully "converted" his fees and no immunity is available for this conversion. An examination of Plaintiff's live pleading indicates that Plaintiff also complains that Judge Clark engaged in the following acts: issued an order disbarring him from practice in the Western District; denied Fleming's motion for continuance of the show cause hearing; questioned witnesses and Fleming's clients at the show cause hearing; denied Fleming's motion for reconsideration; made "insulting" remarks about Fleming during the hearing; and participated in a conspiracy to disbar Fleming.
"Judicial immunity is an immunity from suit and not just from the ultimate assessment of damages. Although unfairness and injustice to a litigant may result on occasion, 'it is a general principle of the highest importance to the proper administration of justice that a judicial officer, in exercising the authority vested in him, shall be free to act upon his own convictions, without apprehension of personal consequences to himself.' Judicial immunity is not overcome by allegations of bad faith or malice and 'applies even when the judge is accused of acting maliciously and corruptly.' 'It is the Judge's actions alone, not intent, that we must consider.' Notwithstanding the aforementioned, judicial immunity can be overcome in two sets of circumstances: (1) 'a judge is not immune from liability for nonjudicial actions, i.e., actions not taken in the judge's judicial capacity'; and (2) 'a judge is not immune for actions, though judicial in nature, taken in the complete absence of all jurisdiction.'" Ballard v. Wall, 413 F.3d 510, 515 (5th Cir. 2005) (citations omitted).
In this case Fleming does not argue that Clark undertook any action in any nonjudicial capacity. Indeed, all of Plaintiff's complaints stem from actions Judge Clark performed while on the bench hearing a matter related to a bankruptcy case. Rather, Fleming argues that Clark is not immune because he undertook his judicial acts in the absence of all jurisdiction.
The record reflects that Judge Clark issued an Order on March 20, 2003, requiring that Fleming appear and show cause why the bankruptcy court should not reduce or annul any entitlement Fleming may have in attorney's fees and why it should not consider other restrictions on his ability to practice before the Western District of Texas. On May 5, 2003, Fleming filed a continuance requesting that the hearing scheduled for May 6 be continued. On May 6, Judge Clark denied the continuance, granted the debtors request for new counsel, made various verbal findings of fact and conclusions of law, suspended Fleming from practice before the U.S. Bankruptcy Courts for the Western District of Texas, ordered that the Trustee refer Fleming to the appropriate disciplinary authority for the State Bar of Texas, ordered that Fleming refund to his clients/debtors Rebeaud, Luna and Kelly certain fees, and ordered that the Chapter 13 Trustees in the Western District not distribute any attorney's fees to Fleming and that this provision superceded "any other Orders, including Chapter 13 plans, in all such cases in which John T. Fleming represents the debtors. . . ."
Judge Clark clearly had the authority to sign the Show Cause Order, deny the motion for continuance, grant the debtors' motions for substitution of counsel, make findings of fact and conclusions of law, suspend Fleming from practice before him, and order that Fleming reimburse his clients for fees paid. Pursuant to the Western District of Texas Local Rules, Judge Clark should have referred Fleming to the District's attorney admission/grievance committee prior to ordering him disbarred from practice in the District. It is also uncertain whether Judge Clark had the authority to order the Trustee to refer Fleming to the State Bar disciplinary committee or prohibit the Trustees from disbursing to Fleming attorney's fees already approved by other Bankruptcy Judges in the District in other cases.
In any event, this Court does not need to determine whether Judge Clark exceeded his authority by ordering these last few actions. "Where a court has some subject matter jurisdiction, there is sufficient jurisdiction for immunity purposes." Ballard, 413 F. 3d at 517. If Judge Clark "merely acted in excess of [his] authority, he is still protected by judicial immunity." Id.; see also Mullis v. U.S. Bankruptcy Court for Dist. of Nevada, 828 F.2d 1385 (9th Cir. 1987).
B. Absolute Immunity
In Plaintiff's First Amended Complaint (docket no. 17), Plaintiff alleges that "the Austin Chapter 13 Trustee" continues to withhold disbursement of his approved attorney's fees. Further, Fleming complains that the "Trustee's office has neither the power nor authority to exercise disciplinary oversight of attorneys in private practice." He also appears to complain that the Trustee's Office complied with Judge Clark's order requiring the Trustee to refer Fleming to the State Bar disciplinary committee. Further, Fleming complains that certain attorneys employed by the Trustee's Office "said disparaging things to his clients" at public hearings, posed questions to clients asking them if they knew that Fleming had been disbarred, made "threats to summon the Bexar County district attorney", and extended "offers to the clients of additional time to find other lawyers." Finally, Plaintiff alleges that "Epstein and Hobbs [attorneys employed by the Trustee's Office] questioned debtors extensively at public hearings to intimidate the clients, inquiring into privileged matters . . ., and continued this conduct until warned in writing . . . of action at the state bar if [they] continued."
Plaintiff appears to argue that Trustee Offices in other cases have engaged in investigations of attorneys. Plaintiff further relies upon Goldstein v. Moatz, 364 F.3d 205 (4th Cir. 2004) for the proposition that it was error to award certain officials of the Patent and Trademark Office absolute immunity for their conduct in an attorney disciplinary investigation. The Fourth Circuit concluded that these officials, who conducted a pre-probable cause investigation, should enjoy no more protection than qualified immunity. However, Fleming presents no argument (much less evidence) that the Trustee's Office here did anything but comply with Judge Clark's order to refer Plaintiff to the State Bar. Neither the Trustees or attorneys were conducting any investigation such as that conducted by the PTO in Goldstein.
In Chapter 7 cases, the United States Trustee litigates issues that affect the integrity of the bankruptcy system. For example, the United States Trustee might argue that granting the debtor a bankruptcy discharge would constitute a "substantial abuse" of the bankruptcy process. Also, a Trustee may object to excessive fees requested by the debtor's attorney. In Chapter 13 cases, the United States Trustee supervises the Chapter 13 standing trustees' administration of individual bankruptcy estates; monitors the trustees' financial record-keeping; and imposes other requirements to ensure that the trustees carry out their fiduciary duties. The United States Trustee's supervisory actions include: periodically reviewing the trustees' case reports, budget reports, bank account information, management skills, court performance, and similar information.
The trustees perform both adjudicatory and administrative functions. In re Castillo, 297 F.3d 940, 951 (9th Cir. 2002). In this case, the Trustee's withholding of funds until Fleming's appeal to the Fifth Circuit was resolved, and attorney questioning of debtors during bankruptcy proceedings were functions protected by absolute liability. Id.; See also In re Heinsohn, 247 B.R. 237, 246 (Bankr. E.D. Tenn. 2000) ("Since the criminal referral concerned bankruptcy fraud and was made during and in relation to a bankruptcy proceeding by the trustee of the relevant estate, the logical inference is the trustee was acting pursuant to his statutory duty when making the criminal referral. The referral and subsequent testimony at the trial concerning the alleged bankruptcy fraud were acts related to those general functions that are normally performed by a bankruptcy trustee."); In re Bryan, 308 B.R. 583 (Bankr. N.D. Ga. 2004) (Chapter 7 trustee who, in order to protect estate assets from being dissipated in frivolous litigation on pleadings allegedly prepared by plaintiff, had filed inquiry/complaint form with the Georgia state bar for plaintiff's alleged unauthorized practice of law did so in his official capacity as bankruptcy trustee, so as to be entitled to absolute immunity for his acts.); In re Weisser Eyecare, Inc., 245 B.R. 844, 848 (Bankr. N.D. Ill. 2000) ("Because trustees serve an important function as officers of the court, they enjoy limited personal immunity when operating pursuant to their authority and enjoy absolute immunity if operating pursuant to a court order.").
Courts have also extended immunity to government attorneys under certain circumstances. In re Bryan, 308 B.R. 583 (Bkrtcy. N.D. Ga. 2004) would appear to extend absolute immunity to the attorneys' actions in this case.
Further, any referral by the Trustee or attorneys to the State Bar disciplinary committee is absolutely privileged. McAfee v. Feller, 452 S.W.2d 56, 58 (Tex.Civ. App-Hous. [14th Dist.] 1970, no writ) ("Members of the general public have the right to make complaints against attorneys to the various committees, and such complaints so made cannot constitute the basis of a civil action for slander or libel.").
Failure to serve former clients
Plaintiff initially filed suit against Juan Luna, Kelly Luna or Kelly Green, and Edward Rebeaud on May 5, 2004. To date, he has not effectuated service on these individuals.
Fed.R.Civ.P. 4(c)(1) dictates that in order to properly affect service upon a defendant, a "plaintiff is responsible for service of a summons and complaint within the time allowed under subdivision (m)." Rule 4(m) allows a plaintiff 120 days to effect service of process upon a defendant. If service of the summons and the complaint is not made within 120 days of the filing of the complaint, a court, on its own initiative after notice to the party, may dismiss the action without prejudice to that defendant. See id.
Accordingly, the Court ORDERS the plaintiff to show cause in writing on or before April 7, 2006, why his case against Juan Luna, Kelly Luna or Kelly Green, and Edward Rebeaud should not be dismissed for failing to diligently serve these defendants. Failure to respond to this order by that date may result in this cause being dismissed under Rule 4(m). Should Plaintiff seek to continue his state tort claims against his former clients, Plaintiff should address why that portion of his case should not be remanded to the state court inasmuch as all claims against the government are now dismissed.
Government's Motion to Dismiss
In the alternative, the United States moves to dismiss Plaintiff's claims because Plaintiff has failed to effectuate proper service upon the government. The Court notes, however, that Plaintiff effectuated service upon the government on February 10, 2006. Accordingly, the Government's alternative motion to dismiss is DENIED.
Conclusion
Defendant United States of America's Motion for Summary Judgment (docket no. 11) is GRANTED. All of Plaintiff's claims against Judge Clark are barred by judicial immunity. All of Plaintiff's claims against the Trustees and attorneys are barred by absolute immunity. Alternatively, any claims based upon the referral of Plaintiff to the state bar disciplinary committee are barred by absolute privilege. The Court ORDERS the plaintiff to show cause in writing on or before April 7, 2006, why his case against Juan Luna, Kelly Luna or Kelly Green, and Edward Rebeaud should not be dismissed for failing to diligently serve these defendants. The Government's alternative motion to dismiss is DENIED.