Richman v. Straley, 93-4189

• Decision Date: 14 February 1995
• Docket Number: No. 93-4189,93-4189
• Citation: 48 F.3d 1139
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: , 32 Collier Bankr.Cas.2d 1795 Barbara W. RICHMAN, Plaintiff-Appellant, v. M. John STRALEY; David D. Bird; John E. Logan; United States of America, by and through the the Justice Department, Office of United States Trustee, Defendants-Appellees.

Page 1139

48 F.3d 1139

63 USLW 2559, 32 Collier Bankr.Cas.2d 1795

Barbara W. RICHMAN, Plaintiff-Appellant, v. M. John STRALEY; David D. Bird; John E. Logan; United

States of America, by and through the the Justice

Department, Office of United States

Trustee, Defendants-Appellees.

No. 93-4189.

United States Court of Appeals, Tenth Circuit.

Feb. 14, 1995.

Barbara W. Richman (Glen M. Richman, with her on the briefs) of Richman & Richman, Salt Lake City, UT, for plaintiff/appellant.

Carlie Christensen, Asst. U.S. Atty. (Scott M. Matheson, Jr., U.S. Atty., with her on the brief), Salt Lake City, UT, for defendants/appellees.

Before SEYMOUR, Chief Judge, and LOGAN, and EBEL, Circuit Judges.

SEYMOUR, Chief Judge.

Barbara W. Richman brought an action against the United States and three federal officials, asserting that defendants' appointment of a new standing trustee in the District of Utah and assignment of all new cases to the new trustee constituted a de facto removal of Ms. Richman as the standing trustee in violation of her right to due process under the Fifth Amendment to the Constitution. Because we conclude that Ms. Richman did not have the requisite property interest to support a due process claim, we agree with the district court that she failed to allege a due process violation. We also affirm the court's dismissal of Ms. Richman's related state tort claims.

I.

From January 20, 1988 to the present, Ms. Richman has been a standing trustee in the district of Utah pursuant to 28 U.S.C. Sec. 586(b). In that capacity, she serves as the trustee in federal bankruptcy cases filed under chapters twelve and thirteen of the bankruptcy code. The individual defendants are officials in the United States Trustee program. ¹

On June 29, 1992, John Straley and David Bird informed Ms. Richman that they would appoint a new standing trustee for the district of Utah and assign to her all new bankruptcy cases arising under chapters twelve and thirteen. The next day, Mr. Straley made the promised appointment, which John Logan ratified and approved. Mr. Straley subsequently filed a motion to remove Ms. Richman as a standing trustee in her existing cases. Upon stipulation of the parties, however, the court dismissed the removal proceedings.

Ms. Richman filed this suit in federal district court alleging unlawful deprivation of property without due process of law, ² tortious interference with prospective economic relations, and libel and slander. The district court granted defendants' motions to dismiss the complaint for failure to state a claim.

II.

Ms. Richman first asserts on appeal that defendants' refusal to assign her any new cases constitutes a deprivation of her property without due process. A plaintiff has a property interest in those things to which she has "a legitimate claim of entitlement." Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). A claim of entitlement must stem from an independent source such as a state or federal law. Id. In order to invoke the protections of the Due Process Clause, Ms. Richman must prove that her appointment as a standing trustee created a claim of entitlement to serve as trustee in future cases.

Ms. Richman contends that the federal statutory scheme governing the appointment and removal of standing trustees establishes her entitlement. In particular, she relies upon 28 U.S.C. Sec. 586(b) and 11 U.S.C. Sec. 324(a). An analysis of the text and legislative history of each, however, reveals that standing trustees do not have a property right in the assignment of new cases.

Section 586(b) gives the United States Trustee the power to appoint standing trustees subject to approval of the Attorney General. Generally, the power of removal is implicit in the power of appointment unless the appointment carries with it a definite term of office or a constitutional or statutory provision limits the removal power. See Carlucci v. Doe, 488 U.S. 93, 99, 109 S.Ct. 407, 411, 102 L.Ed.2d 395 (1988). Although the standing trustee serves an indefinite term of office, Ms. Richman contends that 11 U.S.C. Sec. 324 explicitly denies the United States Trustee the power of removal and places sole authority to remove in the hands of the district court.

Section 324(a) provides that "[t]he court, after notice and a hearing, may remove a trustee ... for cause." Ms. Richman urges us to apply this requirement to future cases in which the standing trustee might serve. Legislative history suggests to the contrary that section 324(a) applies only to an individual case in which the standing trustee is currently serving. Congress added section 324(b) to the statutory scheme to clarify that "unless the court orders otherwise, removal of a private trustee for cause in one case [pursuant to section 324(a) ] constitutes removal of that trustee in all other cases in which the trustee is serving." H.R.Rep. No. 764, 99th Cong., U.S. Code Cong. & Admin. News 1986, 5227, 5236 (1986) (emphasis added). Although Congress explicitly added the presumption that removal in one case would constitute removal in all current cases, it omitted any mention of future cases. This omission implies that no property right vests until actual assignment of the case. Because the standing trustee serves no definite term and Congress made no explicit provision to the contrary, the party with the power of appointment may terminate that appointment at any time by refusing to assign new cases to the standing trustee.

Ms. Richman argues that allowing the United States Trustee to terminate a standing trustee's appointment is contrary to legislative intent. She asserts that Congress created this statutory scheme "to eliminate the cronyism and appearance of impropriety inherent in the [existing] procedure," which provided for appointment and removal by the bankruptcy court. Aplt. Reply Br., at 9.

Although perceived cronyism was a concern, Ms. Richman has applied this concern to the wrong context. Congress did not view the fact that the same body both appointed and removed trustees as problematic. Instead, the existing system was tainted because the trustees "appeared in bankruptcy court before the very same judges who appointed them." H.R.Rep. 764, 99th Cong., at 5230.

In such circumstances, a trustee would often be reluctant to take positions contrary to the judges who appointed the trustee, even though a trustee was supposed to be an impartial administrator of the estate. This awkward relationship between trustees and judges created an improper appearance of favoritism, cronyism, and bias, and generated great disrespect for the bankruptcy system.

Id. Rather than creating a system of checks and balances as Ms. Richman claims, Congress sought to strip bankruptcy courts of their administrative role so that they could better perform their judicial tasks. Allowing the same nonjudicial body to both appoint and terminate the appointment of standing trustees is thus consistent with legislative intent. ³

Ms. Richman concedes she would not have had a property interest under the prior statutory scheme because the bankruptcy court could decline to give a trustee additional cases for arbitrary reasons. See, e.g., In the Matter of Chapter 13, Pending and Future Cases, 19 B.R. 713, 714-15 (Bankr.W.D.Wash.1982) (court order terminating standing trustee as to new cases without notice and hearing is "entirely proper"). Under the normal rules of statutory construction, "if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent specific." In re Schollett, 980 F.2d 639, 641 (10th Cir.1992) (citing Midlantic Nat'l Bank v. New Jersey Dep't of Envtl. Protection, 474 U.S. 494, 501, 106 S.Ct. 755, 759, 88 L.Ed.2d 859 (1986)). Congress failed to express any intent to expand due process protections to future cases, and in fact made no changes at all to section 324(a), the removal provision upon which Ms. Richman relies. We therefore conclude that the statutory scheme does not create a property right in the assignment of future cases.

Ms. Richman also claims that her alleged property right stems from rules and explicit understandings created by defendants which may be the sources of such rights, see generally Perry v. Sinderman, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972). We find no rules or understandings here which entitle Ms. Richman to due process protections, however. Ms. Richman asserts that none of the regulations pertaining to standing trustees provide authority for their termination. As noted above, such authority is implicit in the statutory power of appointment. Ms. Richman also claims that the order fixing her compensation at a maximum annual amount provides a guarantee of continued employment. We disagree. While the order imposes a cap on the amount a standing trustee may earn, it does not create a right to that amount. Ms. Richman has failed to offer one rule or understanding which explicitly confers upon her an expectancy of appointment in future cases.

On the contrary, other documents explicitly reserve the termination power implicit in section 586. Ms. Richman's official Designation of Appointment as a standing trustee provides that "[t]his appointment ... may be terminated at any time." Aplt.App. at 69. The Ratification and Approval of her appointment contains a caveat that "this approval may be withdrawn at any time." Id. Finally, The Legal Manual for United States Trustees provides, "If the standing trustee is not performing in a manner acceptable to the United States Trustee and in conformity with these guidelines, then the United States Trustee may remove the standing trustee, subject to the approval of the Director." Id. at 385. These documents support our conclusion that Ms. Richman does not have a claim of entitlement to future cases and therefore does not have a constitutionally protected property right.

III.

Ms. Richman also appeals ...