Gregory v. U.S./U.S. Bankruptcy Court for Dist. of Colorado

• Decision Date: 26 August 1991
• Docket Number: No. 91-1011,91-1011
• Citation: 942 F.2d 1498
• Parties: , Bankr. L. Rep. P 74,214 Ronald W. GREGORY, Dorothy L. Gregory, Ronald W. Gregory, Jr., and Gregory Estate, Plaintiffs-Appellants, v. UNITED STATES/UNITED STATES BANKRUPTCY COURT for the DISTRICT of COLORADO, Jointly, Hon. Charles E. Matheson, Hon. Patricia A. Clark, Hon. Sidney Brooks, Ross J. Wabeke, Interim Trustee, United States District Court for the District of Colorado, Hon. Sherman G. Finesilver, Jointly and Individually, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1498

942 F.2d 1498

21 Fed.R.Serv.3d 607, Bankr. L. Rep. P 74,214

Ronald W. GREGORY, Dorothy L. Gregory, Ronald W. Gregory, Jr., and Gregory Estate, Plaintiffs-Appellants, v. UNITED STATES/UNITED STATES BANKRUPTCY COURT for the

DISTRICT of COLORADO, Jointly, Hon. Charles E. Matheson,

Hon. Patricia A. Clark, Hon. Sidney Brooks, Ross J. Wabeke,

Interim Trustee, United States District Court for the

District of Colorado, Hon. Sherman G. Finesilver, Jointly

and Individually, Defendants-Appellees.

No. 91-1011.

United States Court of Appeals,

Tenth Circuit.

Aug. 26, 1991.

Ronald W. Gregory, Dorothy L. Gregory & Ronald W. Gregory, Jr., pro se.

Michael J. Norton, U.S. Atty., and William J. Pharo, Asst. U.S. Atty., Denver, Colo., for defendants-appellees U.S., U.S. Bankruptcy Court for the Dist. of Colorado, Hon. Charles E. Matheson, Hon. Patricia A. Clark, Hon. Sidney B. Brooks, U.S. Dist. Court for the Dist. of Colorado & Hon. Sherman G. Finesilver.

Michael S. McCarthy and Russell O. Stewart, Faegre & Benson, Denver, Colo., for defendant-appellee Ross J. Wabeke.

Before LOGAN, MOORE and BALDOCK, Circuit Judges. ^*

BALDOCK, Circuit Judge.

Plaintiffs-appellants appeal from the district court's order granting judgment in favor of the defendants and dismissing their complaint with prejudice. Plaintiffs Ronald W. Gregory and Dorothy L. Gregory are debtors in an underlying bankruptcy. Plaintiff Ronald W. Gregory, Jr. was involved in business ventures with the debtors. This action has its genesis in plaintiffs' dissatisfaction with bankruptcy and related proceedings. In the main, plaintiffs sought damages against the defendants, alleging a myriad of federal constitutional and state law claims. They also sought a stay of all bankruptcy proceedings pending consideration of this case. Finally, they asked that the bankruptcy code be declared unconstitutional. All defendants filed motions to dismiss. See Fed.R.Civ.P. 12(b).

Under Fed.R.Civ.P. 12(b)(1) and 12(b)(6), the district court first dismissed the judicial defendants (Judge Finesilver and Bankruptcy Judges Matheson, Clark and Brooks) based on absolute judicial immunity. See Stump v. Sparkman, 435 U.S. 349, 356-57, 98 S.Ct. 1099, 1104-05, 55 L.Ed.2d 331 (1978). Then the district court dismissed the governmental defendants (United States, federal district and bankruptcy courts) based on sovereign immunity. See United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 953, 47 L.Ed.2d 114 (1976). Finally, relying on Fed.R.Civ.P. 12(b)(5), the district court dismissed the defendant bankruptcy trustee (Mr. Wabeke) because plaintiffs attempted to serve the summons and complaint by leaving a copy with a secretary at the trustee's law firm. See Fed.R.Civ.P. 4(d)(1); Daly-Murphy v. Winston, 837 F.2d 348, 355 (9th Cir.1987); Pollack v. Meese, 737 F.Supp. 663, 666-67 (D.D.C.1990). All dismissals were with prejudice.

Liberal construction is accorded the pro se pleadings in this case. Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 595, 30 L.Ed.2d 652 (1972); Jaxon v. Circle K Corp., 773 F.2d 1138, 1140 (10th Cir.1985); Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.1991). In reviewing a district court's decision on a motion to dismiss for failure to state a claim, the allegations of the complaint are accepted as true and dismissal of the complaint is warranted "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984). Applying these standards, the district court's dismissal of the complaint, insofar as it seeks money damages, against the judicial and governmental defendants is affirmed based on absolute judicial and sovereign immunity. Although plaintiffs also sought to have the entire bankruptcy code declared unconstitutional, the complaint lacks any legal or factual specificity which would allow us reasonably to read the pleadings as stating a recognized claim, despite the plaintiffs' nonlawyer status. See Hall, 935 F.2d at 1109-10. Thus, insofar as the complaint seeks declaratory and injunctive relief, the dismissal of the complaint is affirmed.

The district court's dismissal with prejudice of the trustee is slightly more complex. The general rule is that "when a court finds that service is insufficient but curable, it generally should quash the service and give the plaintiff an opportunity to re-serve the defendant." Pell v. Azar Nut Co., 711 F.2d 949, 950 n. 2 (10th Cir.1983). In this case, proper service of process would be futile, however, because, after stripping the complaint of its many unsupported legal conclusions, see Hall, 935 F.2d at 1110, plaintiffs seek to hold the trustee liable for executing the bankruptcy court's orders concerning collection and disposition of estate property. For example, plaintiffs seek to recover on claims that the trustee, in the course of regular bankruptcy proceedings, obtained and executed bankruptcy court orders authorizing the sale of mining property and declaring a mining bond the property of the estate.

In T & W Inv. Co. v. Kurtz, 588 F.2d 801 (10th Cir.1978), we held that a state court receiver following the orders of a state district court judge was absolutely immune from civil liability on civil rights claims concerning the application and disposition of receivership assets. Id. at 802-03. Like the plaintiff in T & W, the plaintiffs in this case had opportunity and did object throughout the underlying proceedings. The debtors have appealed virtually every order of the bankruptcy court, including the order converting the case from chapter eleven to chapter seven bankruptcy and orders allowing the sale of real property and equipment. This case is indistinguishable from T & W which we have followed in granting absolute immunity to those executing facially valid judicial orders. ¹ See Turney v. O'Toole, 898 F.2d 1470, 1472-74 (10th Cir.1990); Valdez v. City & County of Denver, 878 F.2d 1285, 1287-88 (10th Cir.1989). Thus, it "appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief" and the district court's dismissal of the trustee with prejudice should be upheld. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).

We recognize that this issue had not yet been raised below because the trustee sought a Rule 12(b)(5) dismissal which the district court granted. Still, sua sponte invocation of Rule 12(b)(6) on appeal may be appropriate in those rare instances in which a plaintiff cannot...