In re Triple S Restaurants, Inc.

• Decision Date: 17 March 2008
• Docket Number: No. 07-5452.,07-5452.
• Parties: In re TRIPLE S RESTAURANTS, INC., Debtor. Donald M. Heavrin, Appellant, v. J. Baxter Schilling, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

519 F.3d 575

In re TRIPLE S RESTAURANTS, INC., Debtor.

Donald M. Heavrin, Appellant, v. J. Baxter Schilling, Appellee.

No. 07-5452.

United States Court of Appeals, Sixth Circuit.

Submitted: January 16, 2008.

Decided and Filed: March 17, 2008.

ON BRIEF: R. Kenyon Meyer, Dinsmore & Shohl, Louisville, Kentucky, for Appellant. Donald L. Cox, William H. Mooney, Lynch, Cox, Gilman & Mahan, Louisville, Kentucky, for Appellee.

Before: MARTIN, GIBBONS, and GRIFFIN, Circuit Judges.

OPINION

BOYCE F. MARTIN, JR., Circuit Judge.

Donald Heavrin appeals the district court's decision affirming the bankruptcy court's dismissal of his claim for intentional infliction of emotional distress, and imposition of sanctions. We AFFIRM.

I

Heavrin served as general counsel for Triple S Restaurants in the early nineties. The company filed for bankruptcy under Chapter 7 in 1994 and J. Baxter Schilling was appointed Trustee in bankruptcy. The long history of litigation between these parties was chronicled in our previous case, Triple S Restaurants, Inc., v. Heavrin, 422 F.3d 405 (6th Cir.2005).

In 1996, Schilling sought to obtain through the bankruptcy court approximately $252,000 from Heavrin alleging that the money, which came from a life insurance policy, belonged to the estate for which he was serving as trustee. During settlement negotiations, Schilling allegedly threatened to report Heavrin to the United States Attorney for criminal charges if he did not pay $240,000 in settlement. On November 1, 2005, Heavrin filed a complaint in Kentucky in the Jefferson Circuit Court alleging outrage and intentional infliction of emotional distress. On November 21, Schilling removed the case to federal bankruptcy court. Schilling then moved for dismissal and sanctions under Bankruptcy Rule 9011 (which parallels FED.R.CIV.P. 11). The bankruptcy court granted both motions. Heavrin appealed the bankruptcy court's decision to federal district court on July 5, 2006. The district court found no error in the bankruptcy court's decision, and affirmed. Heavrin now appeals to this Court.

II

In an appeal from a bankruptcy court, we review questions of law de novo and questions of fact for clear error. In re Lowenbraun, 453 F.3d 314, 319 (6th Cir. 2006). We review the decisions of the bankruptcy court directly, rather than the decision of the district court. Id.

The bankruptcy court properly exercised jurisdiction over this case. See Barton v. Barbour, 104 U.S. 126, 127, 26 L.Ed. 672 (1881). Under the Barton doctrine, "leave of the [bankruptcy] forum must be obtained by any party wishing to institute an action in a [state] forum against a trustee, for acts done in the trustee's official capacity and within the trustee's authority as an officer of the court." Allard v. Weitzman, 991 F.2d 1236, 1240 (6th Cir.1993) (quoted in Lowenbraun, 453 F.3d at 321). This rule allows bankruptcy courts to retain greater control over administration of the estate. Lowenbraun, 453 F.3d at 321.

Heavrin argues that Schilling was not acting in his official capacity when he stated he would refer the matter for criminal investigation if Heavrin would not agree to the settlement, and therefore the Barton doctrine does not apply. By suggesting he might breach his duty to report a criminal violation relating to the bankruptcy, Heavrin argues, Schilling necessarily acted outside the scope of his authority as a trustee. However, the bankruptcy court found that Schilling had acted within the scope of his authority because the negotiations pertained to recovering assets for the estate. It is also difficult to say the threat itself was outside the scope of Schilling's authority since, as Heavrin points out in his brief, Schilling was under a duty to report any criminal activity related to the bankruptcy proceedings. See 18 U.S.C. § 3057(a). Because the negotiations were within the context of recovering assets for the estate, we cannot find the bankruptcy court's determination that Schilling acted within the scope of his authority as trustee clearly erroneous.

In the exercise of its jurisdiction, the bankruptcy court correctly dismissed Heavrin's claim of intentional infliction of emotional distress and outrage.¹ A complaint may be dismissed if it does not contain either direct or inferential allegations respecting all the material elements required to sustain the claim. See In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993). "In order to establish [intentional infliction of emotional distress] the plaintiff must prove the following elements: The wrongdoer's conduct must be intentional or reckless; the conduct must be outrageous and intolerable in that it offends against the generally accepted standards of decency and morality; there must be a causal connection between the wrongdoer's conduct and the emotional distress and the distress suffered must be severe." Osborne v. Payne, 31 S.W.3d 911, 913-14 (Ky.2000). Here, the bankruptcy court found that there "is a complete absence of facts to support a claim that the actions of the Trustee were so intolerable as to reach beyond the bounds of decency and morality," and therefore the alleged actions could not rise to the level of intentional infliction of emotional distress. We agree and further note that Heavrin does not allege emotional distress of any kind, much less of a severe nature. This is a particularly...