Hunter v. Madrid (In re Hunter)

553 B.R. 866

In re: Jim R. and Dora B. Hunter, Debtors.

Jim R. and Dora B. Hunter, Plaintiffs

v.Dora L. Madrid, Kelley L. Skehen, and Peter A. Keys, Defendants.

Case No. 08–14146 ja13

Adv. No. 16–1022 t

United States Bankruptcy Court, D. New Mexico.

Signed July 8, 2016

Jim R. Hunter, pro se.

Dora B. Hunter, pro se.

Dora L. Madrid, pro se.

Leslie D. Maxwell, Walker & Associates, P.C., Albuquerque, NM, for Defendants.

Peter A. Keys, pro se.

MEMORANDUM OPINION

Hon. David T. Thuma, United States Bankruptcy Judge

Before the Court is Defendant Kelley Skehen's motion to dismiss all claims against her under the “Barton doctrine” and because she is granted immunity as the standing Chapter 13 Trustee. Based on the allegations in Plaintiffs' complaint and the relevant law, the Court agrees the Trustee is immune from this suit. The Court therefore will dismiss Plaintiffs' claims against the Trustee.

I. PLAINTIFFS' ALLEGATIONS

For the limited purpose of ruling on the motion to dismiss, the Court accepts the following allegations as true:¹

Plaintiffs filed a Chapter 13 case on December 4, 2008. They retained Defendant Peter Keys as counsel. Defendant Kelley Skehen is the standing Chapter 13 Trustee (the “Trustee”) who administered Plaintiffs' bankruptcy case. Defendant Dora Madrid is the Treasurer of Luna County, New Mexico.

Plaintiffs filed a plan shortly after the case was filed, which the Court confirmed on March 26, 2009. The plan provided, inter alia, that Luna County's pre-petition property tax claim, would be paid in full by the Trustee from Plaintiffs' plan payments.

On July 30, 2010, Mr. Keys filed a $6,062.02 proof of claim on behalf of Luna County for pre-petition property taxes (“Claim 19”). A few months later Luna County filed a $4,263.09 proof of claim for post-petition property taxes (“Claim 20”). Plaintiffs objected to Claim 20 after they discovered that Luna County was applying the Trustee's payments to post-petition rather than pre-petition taxes. By a stipulated order entered May 18, 2011, the parties agreed that Luna County would apply all Trustee payments to pre-petition taxes, and that Plaintiffs would pay all post-petition property taxes directly, i.e., “outside the plan.”

Between 2008 and 2013, Plaintiffs made all required plan payments. The Trustee paid Luna County $4,263.09 from the funds she received from Plaintiffs.

On April 17, 2013, the Trustee filed a notice that Plaintiffs had made all plan payments and otherwise complied with the plan. Plaintiffs filed a certification in support of discharge on April 22, 2013, and the discharge order was entered on May 24, 2013.

The Trustee filed a Final Report and Account on June 13, 2013, detailing her administration of the estate and the amount she paid on each claim. The Trustee reported she paid all claims in full, including Claim 19—Luna County's pre-petition property tax claim. In fact, the Trustee only paid Luna County $4,263.09 (the post-petition tax amount) instead of $6,061.02 (the pre-petition amount). Her report states in part:

As a result, $1,798.93 in pre-petition taxes remained unpaid.

Plaintiffs allege the Trustee should have discovered the error when she received a letter from Mr. Keys dated May 17, 2012, in which he inquired about the unpaid balance of $1,798.93 on Claim 19. Since Luna County could not contact Plaintiffs directly while they were represented by counsel, Plaintiffs were unaware of the error. The bankruptcy was closed on June 17, 2013.

On January 27, 2016, in response to Plaintiffs' payment of 2014 or 2015 property taxes, Luna County told Plaintiffs they still owed $1,798.93 for pre-petition taxes, plus penalties and interest. Plaintiffs allege that but for the Trustee's error, all pre-petition taxes would have been paid through the plan.

II. DISCUSSION

A. Standard for Evaluating Motions to Dismiss.

1. Rule 12(b)(6) Governs the Immunity Issue. The Trustee seeks dismissal under Rule 12(b)(1)² (lack of subject matter jurisdiction). While this rule applies to the Barton doctrine argument, see Satterfield v. Malloy, 700 F.3d 1231, 1234 (10th Cir.2012) (“[t]he Barton doctrine is jurisdictional in nature”), a motion to dismiss based on quasi-judicial immunity is typically evaluated under Rule 12(b)(6). See Moss v. Kopp, 559 F.3d 1155, 1170 (10th Cir.2009) ; Gregory v. U.S./U.S. Bankruptcy Court for the Dist. of Colorado, 942 F.2d 1498, 1500 (10th Cir.1991). Because the Court's decision hinges on immunity rather than the Barton doctrine, the Court will treat the Trustee's motion as one brought under Rule 12(b)(6). See Gossett v. Barnhart, 139 Fed.Appx. 24, 25–26 (10th Cir.2005) (where defendant moved to dismiss under Rule 12(b)(1) but his argument focused on statute of limitations, “we will treat the defendant's motion as a 12(b)(6) motion to dismiss as opposed to a 12(b)(1) motion to dismiss”); Farmers Alliance Mut. Ins. Co. v. Federal Crop Ins. Corp., 2001 WL 30443, *1 n. 1 (D.Kan.2001) (when a motion to dismiss is brought under Rule 12(b)(1) but asserts grounds for relief under Rule 12(b)(6), courts may treat it as a motion under Rule 12(b)(6)).³

2. Rule 12(b)(6) Standards. Rule 12(b)(6), made applicable by Bankruptcy Rule 7012, allows the Court to dismiss a complaint for “failure to state a claim upon which relief can be granted.” “The nature of a Rule 12(b)(6) motion tests the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true.” Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir.1994). The sufficiency of a complaint is a question of law, and when considering and addressing a Rule 12(b)(6) motion, a court must accept as true all well-pleaded factual allegations in the complaint, view those allegations in the light most favorable to the non-moving party, and draw all reasonable inferences in the plaintiff's favor. Genesee County Employees' Retirement System v. Thornburg Mortgage Securities Trust 2006–3, 825 F.Supp.2d 1082, 1120–21 (D.N.M.2011), citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). Legal conclusions cast in the form of factual allegations need not be taken as true for Rule 12(b)(6) purposes. See Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (“the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions”).

The plaintiff's allegations must “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal citations omitted). See also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (claim has facial plausibility when the allegations allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged).

When entertaining a motion to dismiss, a court is permitted “to take judicial notice of its own files and records, as well as facts which are a matter of public record.” Van Woudenberg v. Gibson, 211 F.3d 560, 568 (10th Cir.2000), abrogated on other grounds by McGregor v. Gibson, 248 F.3d 946, 955 (10th Cir.2001). A court may also consider any documents to which the complaint refers, provided the documents are central to the plaintiff's claim and the parties do not dispute their authenticity. See Jacobsen v. Deseret Book Co., 287 F.3d 936, 941–942 (10th Cir.2002).

B. Trustee Immunity.

The Trustee asserts Plaintiffs' claims against her are barred because she is entitled to quasi-judicial immunity. There is a large, somewhat inconsistent body of case law about whether, when, and to what extent bankruptcy trustees are immune from claims stemming from their estate administration. The Tenth Circuit law on trustee immunity is not a model of clarity, but gives adequate guidance in this instance.

1. Judicial and Quasi–Judicial Immunity. A trustee's immunity has roots in the immunity granted to judges. Forrester v. White, 484 U.S. 219, 225, 108 S.Ct. 538, 98 L.Ed.2d 555 (1988) ; Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978). Judges are given a “sweeping form of immunity.” Forrester, 484 U.S. at 225, 108 S.Ct. 538 (1988). “This absolute immunity insulates judges from charges of erroneous acts or irregular action, even when it is alleged that such action was driven by malicious or corrupt motives.” In re Castillo, 297 F.3d 940, 947 (9th Cir.2002) (quoting Forrester, 484 U.S. at 227–28, 108 S.Ct. 538 ). See also Whitesel v. Sengenberger, 222 F.3d 861, 867 (10th Cir.2000) (“Judges are absolutely immune from civil liability for judicial acts, unless committed in the clear absence of all jurisdiction”). Judicial immunity is a creature of the common law, and can trace its roots back hundreds of years to English law precedents. See Block, Stump v. Sparkman and the History of Judicial Immunity, 1980 Duke L.J. 879; Forrester , 484 U.S. at 225, 108 S.Ct. 538 (“judicial immunity is a well settled doctrine of the English courts for many centuries, and has never been denied, that we are aware of, in the courts of this country”).

Judicial immunity “has been extended to non-judicial officers where their duties had an integral relationship with the judicial process.” Whitesel, 222 F.3d at 867 (quotations omitted). This is referred to as quasi-judicial immunity. Quasi-judicial immunity can extend to law clerks, military and naval officers, prosecutors, administrative law judges, agency officials, jurors, mediators, advocates, and witnesses. Castillo, 297 F.3d at 948. See also Martinez v. Roth, 53 F.3d 342 (10th Cir.1995) (quasi-judicial immunity has been extended to a court-appointed psychologist, law clerks, probation officers, and mediators).

2. Quasi–Judicial Immunity for Bankruptcy Trustees. As mentioned above, application of the quasi-judicial immunity doctrine to suits against bankruptcy trustees varies a great deal. After reviewing the law, it is clear that two general rules apply in the...