Asset Recovery Grp., LLC v. Cabrera, 3D17–1517

• Decision Date: 22 November 2017
• Docket Number: No. 3D17–1517,3D17–1517
• Citation: 233 So.3d 1173
• Parties: ASSET RECOVERY GROUP, LLC, and Wayne Ginter, Petitioners, v. Lazaro CABRERA, et al., Respondents.
• Court: Florida District Court of Appeals

233 So.3d 1173

ASSET RECOVERY GROUP, LLC, and Wayne Ginter, Petitioners,

v.Lazaro CABRERA, et al., Respondents.

No. 3D17–1517

District Court of Appeal of Florida, Third District.

Opinion filed November 22, 2017

BeharBehar, and Jaclyn Ann Behar and Sharita R. Young (Sunrise), for petitioners.

Law Offices of Stephen M. Cohen, P.A., and Stephen M. Cohen (Palm Beach Gardens), for respondent Lazaro Cabrera.

Before ROTHENBERG, C.J., and LAGOA and SCALES, JJ.

ROTHENBERG, C.J.

The defendants below, Asset Recovery Group, LLC, and Wayne Ginter (collectively, "the Receiver"), petition this Court for a writ of prohibition, challenging the trial court's non-final order denying the Receiver's motion to dismiss for lack of subject matter jurisdiction Counts IV and V of the amended complaint filed by Lazaro Cabrera ("Cabrera").¹ Because Cabrera was required to obtain leave of court from the trial court appointing the Receiver prior to filing his negligence action against the Receiver, we grant the petition for writ of prohibition, quash the order under review, and remand with directions to enter an order granting the motion to dismiss without prejudice.²

I. FACTS AND PROCEEDINGS BELOW

The petition relates to two cases filed in the Miami–Dade Circuit Court. First, Case No. 11–38747 (Judicial Section CA05) is a commercial foreclosure action, during which the trial court (Judge Schumacher) appointed the Receiver and ordered the Receiver to take control of the mortgaged property—an apartment complex located in Homestead, Florida ("the apartment complex"). Second, Case No. 16–31938 (Judicial Section CA06) is a premises liability action filed by Cabrera against the owners of the apartment complex and the Receiver for injuries sustained during a stabbing that occurred at the apartment complex on May 7, 2013, prior to the discharge of the Receiver in Case No. 11–38747. The facts in each case are as follows:

A. Case No. 11–38747—Commercial Foreclosure

In November 2011, U.S Century Bank filed a commercial foreclosure action against 1200 Homestead 72, LLC ("1200 Homestead"). Thereafter, U.S. Century Bank filed an emergency motion to appoint a receiver, or in the alternative, a motion for sequestration of rent. In February 2012, the trial court (Judge Schumacher) granted the motion and appointed the Receiver. The order appointing the Receiver provides that the Receiver shall take possession, custody, and control of the mortgaged real property—the apartment complex. Paragraph 16 of the appointing order provides:

Judicial Immunity. The Receiver and the Receiver's attorneys and agents: ... (iii) shall not be liable to anyone for their good faith compliance with the duties and responsibilities as a receiver, or as attorney or agent for Receiver; and (iv) shall not be liable to anyone for their acts or omissions, except upon a finding by this Court that such acts or omissions were outside the scope of their duties or were grossly negligent.

Samjack Homestead, LLC ("Samjack"), was substituted as the plaintiff for U.S. Century Bank. In March 2013, a final judgment of foreclosure was entered in favor of Samjack and against defendant 1200 Homestead and others. In April 2013, the apartment complex was sold at the foreclosure sale to Samjack, and on July 9, 2013, the Receiver was discharged.

B. Case No. 16–31938—Premises Liability Action

On December 14, 2016, Cabrera filed a negligence (premises liability) action against Samjack and 1200 Homestead, asserting that on May 7, 2013, he was stabbed at the apartment complex while he was an invitee and that Samjack and 1200 Homestead were negligent by failing to maintain the premises in a reasonably safe condition by not keeping it free from third party criminal conduct. Two days after filing his complaint, Cabrera filed a motion to amend the complaint to add the Receiver as a defendant, explaining that the apartment complex was in receivership when Cabrera was stabbed. The trial court granted the motion to amend, and thereafter, in January 2017, Cabrera filed an amended complaint adding the Receiver as a named defendant and asserting negligence claims against the Receiver (Count IV as to Asset Recovery Group, LLC, and Count V as to Wayne Ginter).

In March 2017, the Receiver filed a motion to dismiss Counts IV and V of the amended complaint for lack of subject matter jurisdiction, arguing that the trial court lacked subject matter jurisdiction because, prior to filing suit, Cabrera had not sought leave of court from the court that had appointed the Receiver, as required by Barton v. Barbour, 104 U.S. 126, 128, 26 L.Ed. 672 (1881), in which the Supreme Court of the United States held that "before suit is brought against a receiver[,] leave of the court by which he was appointed must be obtained." (" Barton doctrine").

Cabrera filed a memorandum in opposition, arguing that he was not required to seek leave from the appointing court based on two applicable exceptions to the Barton doctrine. First, a receiver may be personally liable and not claim the protection of the court if he "steps outside the authority granted by the court or does things in his personal capacity and not as a receiver." Murtha v. Steijskal, 232 So.2d 53, 55 (Fla. 4th DCA 1970).³ Second, Cabrera contended that he was not required to seek leave from the appointing court based on the "carrying on business" exception to the Barton doctrine, which is set forth in 28 U.S.C. § 959(a) and provides as follows:

(a) Trustees, receivers or managers of any property, including debtors in possession, may be sued, without leave of the court appointing them, with respect to any of their acts or transactions in carrying on business connected with such property. Such actions shall be subject to the general equity power of such court so far as the same may be necessary to the ends of justice, but this shall not deprive a litigant of his right to trial by jury.

Following a hearing in Case No. 16–31938, the trial court (Judge Cohen) denied the Receiver's motion to dismiss. Although the trial court's order simply states that the motion to dismiss is denied, the transcript of the hearing indicates that it was denied based on Murtha and Patco Energy Express, LLC. v. Lambros, 353 Fed.Appx. 379 (11th Cir. 2009). The Receiver's petition for writ of prohibition followed. See Floridian Cmty. Bank, Inc. v. Bloom, 25 So.3d 43 (Fla. 4th DCA 2009) ("Prohibition lies where a petitioner has demonstrated that a trial court lacks subject matter jurisdiction over a lawsuit.").

II. ANALYSIS

In seeking the petition for writ of prohibition, the Receiver claims that the trial court erred by denying the motion to dismiss the amended complaint because the "carrying on business" exception to the Barton doctrine does not apply to receivers appointed by state courts, and therefore, Cabrera was required to seek leave from the appointing court prior to filing suit against the Receiver. We agree.

In Barton, Barbour was appointed as the receiver of a railroad company. Id. at 126–27. While Barbour was acting as receiver, Barton was injured when he was aboard a railroad car. Id. at 127. Barton filed suit against the receiver, Barbour. Id. at 126. The Supreme Court of the United States held that "before suit is brought against a receiver[,] leave of the court by which he was appointed must be obtained." Barton, 104 U.S. at 128.

The Barton doctrine has been recognized in Florida, see One S. Ocean Drive 2000, Ltd. v. One Ocean Boca, LLC, 182 So.3d 872 (Fla. 4th DCA 2016), and "applies equally whether a state court appointed receiver is sued in state court ... [or] in federal court." Patco Energy, 353 Fed.Appx. at 381. Further, even when the receiver has been discharged, as in the instant case, leave from the court that had appointed the receiver must still be obtained to file suit against the receiver. See Murtha, 232 So.2d at 55. The requesting party must demonstrate a prima facie case of liability before the appointing court may grant leave to file suit. Id.

An exception to the Barton doctrine—the "carrying on business" exception—which is currently set forth in section 959(a), was enacted six years after Barton. As the Third Circuit explained in In re VistaCare Group, LLC, 678 F.3d 218, 226 (3d Cir. 2012), it appears that section 959(a) was enacted in response to Justice Miller's dissent in Barton. The Third Circuit explained as follows:

This provision, originally enacted in 1887, just six years after Barton, seems to have been in direct response to the concerns raised in Justice Miller's dissent in Barton. Criticizing the scope of the Court's holding, Justice Miller noted that the role of a receiver had expanded well beyond winding up the affairs of a defunct corporation and liquidating its assets, to in some situations, essentially running the company. Barton, 104 U.S. at 137–38 (Miller, J., dissenting). Justice Miller opined that it would be fundamentally unfair to require a party to obtain court permission to pursue claims against the receiver arising out of the receiver's operation of the business. Id. at 138. Such a system would render the everyday operations of the corporation "exempt[ ] from the operation of common law" and deprive potential litigants of the right "to have their complaints tried by [a] jury or by the ordinary courts of justice." Id. Rather, a party's only remedy against the corporation would be in "the hands of ... the court which appointed [the receiver]." Id.

(footnotes omitted; alterations in In re VistaCare Group ); see also Fin. Indus. Ass'n v. Sec. & Exch. Comm'n, 2013 WL 11327681 (M.D. Fla. 2013) (explaining that the " ‘carrying on business' exception in section § 959(a) is intended to permit actions redressing torts committed in furtherance of the debtor's business, such as the common situation of a negligence claim in a slip and fall case where a bankruptcy trustee, for example, conducted a retail store") (emphasis omitted); Carter v. Rodgers, 220 F.3d...