On May 26, 2017, Appellants filed the Barton Motion, seeking permission to sue the Trustee and his bankruptcy counsel, Ciardi Ciardi & Astin ("Ciardi"), including for claims of conversion and tortious interference with business relationships against the Trustee. (D.I. 10 at 3) The Barton doctrine is traced to the Supreme Court's decision Barton v. Barbour, 104 U.S. 126, 128-29 (1881), and it "requires a party-in-interest to seek stay relief from the bankruptcy court in order to sue a bankruptcy trustee in another forum." In re Day, 2014 WL 636797, *22 (Bankr. D.N.J. Feb. 7, 2014). "It is for the appointing court, in its discretion, to decide whether it will determine for itself all claims of or against the receiver, or will allow them to be litigated elsewhere."
According to the Bankruptcy Court, neither the proposed countersuit against the Trustee and Special Counsel nor the frivolous ligation claims had any foundation whatsoever; consequently, the Barton doctrine, in concert with "applicable immunities," operated to bar those claims. In re Day, No. 08-18384 (MS), 2014 WL 636797, at *27 (Bankr. D.N.J. Feb. 7, 2014). The Bankruptcy Court further concluded that Appellants could not pursue the Debtor for frivolous litigation sanctions in state court because the Debtor was never actually a party to the state action.
The Trustee did not operate a business in the administration of these cases, so the statutory exception to the Barton doctrine is inapplicable.Wasserman v. Durie Props., LLC (In re Day) , Adv. No. 13-1959, 2014 WL 636797, at *23 (Bankr. D.N.J. Feb. 7, 2014), aff'd sub nom.Durie Props., LLC v. Wasserman (In re Day) , No. 14-01908 (SRC), 2014 WL 4271647 (D.N.J. Aug. 28, 2014).In re VistaCare Grp., LLC , 678 F.3d 218, 226-27 (3d Cir. 2012).
• the “ ultra vires ” exception.E.g., In re Day, 2014 WL 636797, at *23 (Bankr.D.N.J. Feb. 7, 2014) (per Stern, J.); Summit Metals, 477 B.R. at 496. The Trustee asserts that both of these exceptions apply.