590 F.3d 730 (9th Cir. 2009), 07-56310, In re Harris
|Citation:||590 F.3d 730|
|Opinion Judge:||BEA, Circuit Judge:|
|Party Name:||In the Matter of Jean Leonard HARRIS, Debtor, v. Sandra Wittman, an individual; Jack Swain, an individual; Pyle Sims Duncan & Stevenson, a Professional Corporation; Grant & Zeko, a Professional Corporation, Appellees. Jean Leonard Harris, Appellant,|
|Attorney:||M. Lance Jasper, Munger, Tolles & Olson, LLP, Los Angeles, CA, for Jean Leonard Harris, the plaintiff-appellant. Eric R. Deitz, Wingert Grebing Brubaker & Goodwin, LLP, San Diego, CA, for Sandra Wittman, defendant-appellee. Manuel Corrales, Jr., Law Office of Manuel Corrales, Jr., San Diego, CA, ...|
|Judge Panel:||Before: RONALD M. GOULD and CARLOS T. BEA, Circuit Judges, and DONALD W. MOLLOY,[*] District Judge.|
|Case Date:||December 21, 2009|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Argued and Submitted Nov. 3, 2009.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Appeal from the United States District Court for the Southern District of California, William Q. Hayes, District Judge, Presiding. D.C. No. CV-06-01939-WQH.
Appellant Jean Leonard Harris (" Harris" ) was the petitioner-debtor in a now-closed Chapter 7 bankruptcy case. Here, he sued the bankruptcy trustee and other estate representatives for breach of contract. Harris alleges the bankruptcy trustee and her agents breached a contract that was entered into during the course of his underlying bankruptcy case and was directly related to the administration of bankruptcy estate assets.
This appeal requires us to answer whether the bankruptcy court had subject matter jurisdiction over this state law breach of contract claim, and whether the bankruptcy court's approval of the acts Harris now alleges breached the contract entitle the defendants to derived quasi-judicial immunity. We answer yes to both questions and so we affirm.
I. Factual and Procedural History
In July 1999, appellant Harris filed a voluntary petition for bankruptcy relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court, Southern District of California. The bankruptcy court appointed appellee Sandra Wittman (" Wittman" ) as trustee of the bankruptcy estate (the " estate" ) shortly thereafter. In March 2000, Wittman filed an adversary proceeding against Harris and his wife, Mrs. Harris, for fraudulent conveyance. Wittman's complaint alleged the transfer from Harris to Mrs. Harris in June 1999-the month before he filed his voluntary bankruptcy petition-of a 1957 Mercedes-Benz, as well as a storage business and related property called Alpine Personal Storage
(the " Alpine property" ), was voidable and recoverable by the estate.
Trustee Wittman then entered into an Agreement for Use and Assignment of Interests and Prosecution of Claims (the " Assignment Agreement" ) with appellee Jack Swain, an unsecured creditor of the estate, which assigned to Swain the right to prosecute the adversary proceeding to set aside the alleged fraudulent conveyance. In exchange, Swain was to be paid 68% of the net recovery he obtained, and to be reimbursed for any of his costs. The Assignment Agreement also specified that Swain's counsel-the law firms of Pyle, Sims, Duncan & Stevenson, APC; and Grant & Zeko, APC (the " Attorney defendants" )-would be entitled to recover their attorneys' fees from the estate. Wittman filed a motion for the bankruptcy court to approve the Assignment Agreement and appoint Swain as Special Representative of the estate. Harris received notice of the time and place of the motion. The bankruptcy court granted the motion, specifically approving all aspects of the Assignment Agreement, including the Attorney defendants' attorneys' fees.
In November 2002, Harris, Mrs. Harris, Sandra Wittman, and Jack Swain executed a written agreement that settled all the proceedings in the case (the " Settlement Agreement" ). The bankruptcy court approved the Settlement Agreement in January 2003. According to the terms of that agreement, Harris and Mrs. Harris were required to transfer title to the Alpine property and the 1957 Mercedes-Benz to the bankruptcy estate. However, Mrs. Harris retained an allowed secured claim for $218,000 as a lien against the Alpine property. Further, Wittman was not to sell the Alpine property unless the sale would yield sufficient funds to pay Mrs. Harris's said secured claim in full. As a final matter, the parties agreed to execute written mutual releases of any and all claims each had against the other that had arisen as of the date of the execution of the Settlement Agreement. A written release between Swain and Wittman, on the one hand, and Mr. and Mrs. Harris, on the other, was executed on November 22, 2002. The written release stated " the Parties agree this Agreement is a complete release of all claims the Parties have against one another arising from the ... Bankruptcy."
On May 2, 2003, Wittman filed a Notice of Motion and Motion for Sale of Personal Property under 11 U.S.C. § 363(b), seeking an order permitting her to sell the Alpine property and the 1957 Mercedes-Benz to Swain. In support of her motion, Wittman filed a sworn declaration that stated the sale would be in the best interest of the bankruptcy estate because Swain would pay the estate $125,000; pay Mrs. Harris's $218,000 claim at the close of the sale of the Alpine property to satisfy her secured claim against the Alpine property, thereby relieving the estate of this liability; waive Swain's own claims against the estate for his costs and fees from the fraudulent conveyance proceeding; and assume the estate's liability for the attorneys' fees of the Attorney defendants. Altogether, Swain's waiver of claims and assumption of liability totaled around $900,000. Wittman's notice of sale set out a detailed accounting of the source of the estate liabilities that Swain was assuming. As in all noticed bankruptcy motions, Harris received notice of this motion.
The bankruptcy court approved the sale after a hearing on June 30, 2003. The court noted that the sale was free and clear of Mrs. Harris's secured claim and that Jack Swain was to pay her claim in full at the close of the sale of the Alpine property.1 Almost three years later,
on May 2, 2006, Harris filed the present suit in California state court in the Superior Court for the County of San Diego. He alleged breach of contract, breach of fiduciary duty, fraud, negligent misrepresentation, and constructive fraud. Harris alleged that Wittman, Swain, and the Attorney defendants breached the Settlement Agreement in two ways: (1) by agreeing that Swain and the Attorney defendants were entitled to approximately $1 million in " contrived claims" against the estate stemming from the fraudulent conveyance proceeding because those claims had already been released by the Settlement Agreement, and (2) by Wittman's sale of the Mercedes-Benz and the Alpine property to Swain in exchange for $125,000 and the release of the one million in " contrived claims."
On May 15, 2006, Wittman successfully removed the case to the bankruptcy court that was administering Harris's estate. Harris filed a motion for remand, which was denied. All of the defendants filed motions to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) on the grounds that: (1) the complaint was barred under the Barton doctrine due to Harris's failure to obtain approval of the bankruptcy court prior to filing suit in state court, and (2) each defendant was entitled to derived quasi-judicial immunity as a result of the entry of the June 30, 2003 order, which approved the sale of the assets.
While the motions to dismiss were pending, Harris amended his complaint and eliminated all claims for relief except the breach of contract claim, which remained exactly as it was in the original complaint.
The bankruptcy court dismissed the complaint with respect to each defendant. The court held that (1) Harris's breach of contract claim was a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (N) and (O); (2) it had jurisdiction over the core proceeding pursuant to 28 U.S.C. § 1334; (3) Harris's complaint had to be dismissed under the Barton doctrine because Harris had not sought leave of the bankruptcy court before suing in state court; and (4) Wittman, Swain and the Attorney defendants were entitled to derived quasi-judicial immunity because the bankruptcy court had originally approved all aspects of the sale of the property.
Harris appealed this decision to the United States District Court for the Southern District of California. The district court affirmed on the same grounds. This timely appeal followed.
II. Jurisdiction and Standard of Review
This is an appeal from a final order of the district court affirming the bankruptcy...
To continue readingFREE SIGN UP