J & S Properties LLC v. , 872 F.3d 138 ( 2017 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 16-3366
___________
IN RE: J & S PROPERTIES, LLC,
Debtor
PHOENICIAN MEDITERRANEAN VILLA, LLC,
Appellant
v.
LISA M. SWOPE, Esquire, Trustee of the Bankruptcy Estate
of J & S Properties, LLC; JAMES FOCHT; J & S
PROPERTIES, LLC
__________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 3-15-cv-00268)
District Judge: Honorable Kim R. Gibson
___________
Argued May 23, 2017
Before: HARDIMAN, ROTH, and FISHER, Circuit Judges.
(Filed: September 28, 2017)
Mary B. Sheats [Argued]
Frank Gale Bails Murcko & Pocrass
707 Grant Street
Suite 3300, Gulf Tower
Pittsburgh, PA 15219
Attorney for Plaintiff–Appellant
Robert L. Byer
Duane Morris
600 Grant Street
Suite 5010
Pittsburgh, PA 15219
Andrew R. Sperl [Argued]
Duane Morris
30 South 17th Street
United Plaza
Philadelphia, PA 19103
Attorneys for Defendant–Appellee
Harry J. Giacometti
Flaster Greenberg
1835 Market Street
Suite 1050
Philadelphia, PA 19103
Gary F. Seitz
Gellert Scali Busenkell & Brown
601 Walnut Street
Curtis Center, Suite 280 South
Philadelphia, PA 19106
2
Attorneys for Amicus–Appellee National Association of
Bankruptcy Trustees
William G. Schwab
811 Blakeslee Boulevard Drive East
P.O. Box 56
Leighton, PA 18235
Attorneys for Amicus–Appellee Third Circuit
Bankruptcy Trustees
____________
OPINION OF THE COURT
____________
HARDIMAN, Circuit Judge.
A bankruptcy trustee sometimes must act quickly to
safeguard property of the estate. In this case, Chapter 7
Trustee Lisa Swope took control of a commercial leasehold
possessed by Phoenician Mediterranean Villa, LLC in a
building owned by the debtor. Phoenician requested equitable
relief to regain possession of its leasehold, claiming that
Swope violated the law when she accepted the key to locks
that had been changed. The United States Bankruptcy Court
for the Western District of Pennsylvania denied the relief
sought by Phoenician, holding that Swope was qualifiedly
immune from suit. The District Court affirmed and
Phoenician filed this appeal.
3
The question presented is whether qualified immunity
applies to discretionary actions taken by a trustee to preserve
the bankruptcy estate’s assets, and whether that immunity
protects Trustee Swope’s conduct in this case. We will affirm
because Swope exercised reasonable care under the
circumstances and did not violate clearly established law.
I
J & S Properties, LLC filed a Chapter 7 petition in the
Bankruptcy Court on July 10, 2013. Attorney Lisa Swope was
appointed as Chapter 7 Trustee of the estate. The estate’s
largest asset was a building located in Altoona, Pennsylvania,
in which Phoenician was a lessee and previously operated a
restaurant. In re J & S Props., LLC, 545 B.R. 91, 94 (Bankr.
W.D. Pa. 2015). Pursuant to a court order dated November 5,
2013, Swope rejected Phoenician’s lease to facilitate a sale of
the property. Although Phoenician was not operating the
restaurant at that time, its tenancy had not expired. After the
lease was rejected, Phoenician attempted to remove personal
property from the restaurant, but Swope objected because the
Bankruptcy Court had not determined ownership of the
contents of the restaurant, although Phoenician claimed to
own all of it.
After learning from J & S’s principal, James Focht,
that the restaurant had been shut down, that Phoenician had
cancelled its insurance on the premises, and that heating the
property could be an issue with an “anticipated arctic blast,”
Swope met at the property with Phoenician’s principal,
Husam Obeid, along with his counsel and a contractor on
January 3, 2014. Id. At that meeting, Obeid gave Swope a key
to the premises and the contractor recommended that the
thermostat be set to at least “sixty degrees Fahrenheit to
4
prevent the pipes from freezing.” Phoenician Mediterranean
Villa, LLC v. Swope, 554 B.R. 747, 750–51 (W.D. Pa. 2016).
Unfortunately, Obeid did not heed this advice, the pipes burst,
and the property was flooded on January 13, 2014. Obeid
contacted a disaster restoration company, but they apparently
refused to work on the property “because there were problems
with insurance coverage, the relationship between the parties
was acrimonious, and no one agreed to provide the company
with a lien.” Id. at 751. According to Trustee Swope, Obeid
and Focht “did not trust each other” and had previously tried
to hurt each other’s businesses. Id. at 750. It was in this
context that Swope set about to protect, or “adequately
preserve[],” the largest asset of the bankruptcy estate. Id.
Swope asked for another meeting on January 15, 2014
to assess the damage to the property and discuss the status of
the building’s insurance. Obeid and his counsel did not show
up, asking that the meeting be rescheduled and held without
Focht; Swope declined the request “[g]iven the urgent nature
of the situation.” In re J & S Props., 545 B.R. at 95. Swope
tried to inspect the premises but discovered the key Obeid had
given her did not open the locked interior door to the
building.1 Focht then “had the locks changed and provided
Trustee Swope with the key” on January 16. Phoenician
Mediterranean Villa, 554 B.R. at 751. Swope claimed in an
email to Phoenician that in accepting control of the building,
she was attempting to preserve the assets to the best of her
1
The Bankruptcy Court noted that “the Lease
Agreement [between Phoenician and J & S] provides that
Phoenician was required to provide the lessor with access to
the premises so that it could be inspected and/or repaired.” In
re J & S Props., 545 B.R. at 108 n.8. As such, Phoenician
likely violated its lease. Id.
5
ability. On the same day, Swope filed an emergency motion
asking the Bankruptcy Court to grant her immediate
possession of the property and its contents. In the meantime,
she retained the “sole key” and thus control of the premises,
and subsequently provided both parties with only “supervised
access” to the property. Id.
Phoenician filed a complaint in equity to “regain
possession of the premises,” and the Bankruptcy Court
conducted an emergency hearing on January 24, 2014.
Phoenician Br. 12.2 After the hearing, at which Swope
testified, the Court denied Phoenician’s requests for an
injunction and temporary restraining order on January 27.
During the hearing, the Bankruptcy Court noted that “the
trustee has possession, custody and control of the property,”
and opined that Swope is “protected by the automatic stay,”
which precludes Phoenician from interfering with the
property in any way. App. 399. And on February 7, 2014, the
Bankruptcy Court ordered that Phoenician and J & S and their
associates “are prohibited from entering into or upon the
[Estate] Property without the express authorization of the
Trustee, or further order from this Court.” Order of Court
Granting First Commonwealth Bank Relief from Stay
(hereinafter “Feb. 7, 2014 Order”), Bankruptcy No. 13-
70512-JAD, ECF No. 113, at ¶¶ 7–8 (Bankr. W.D. Pa. Feb. 7,
2014).
2
The parties dispute whether Phoenician ever asked
for and was denied access to the building between January 16
(when the locks were changed) and January 24 (when the
emergency hearing was held). The Bankruptcy Court found
that resolution of the immunity issue did not require a
resolution of this dispute, and so assumed that Phoenician had
been denied access. See In re J & S Props., 545 B.R. at 95.
6
In its complaint, Phoenician also sued Swope under 42
U.S.C. § 1983 for wrongful eviction, claiming violations of
its Fourth and Fourteenth Amendment rights. Swope moved
to dismiss this suit based on quasi-judicial immunity. On
September 30, 2015, the Bankruptcy Court granted Swope’s
motion to dismiss the complaint against her, though because
the Court looked to additional briefing and other hearings, the
Court evaluated the motion under a summary judgment
standard. See In re J & S Props., 545 B.R. at 95. It ultimately
found that “no genuine dispute of material fact exists as to
whether the Trustee exercised her business judgment as to the
steps she deemed necessary to protect Estate Property,” and
thus Swope was entitled to immunity. Id. at 96.
On July 27, 2016, the District Court affirmed the
Bankruptcy Court’s order granting Swope’s motion to
dismiss. The District Court found that Swope was “entitled to
qualified immunity” and that she did not engage in any
wrongful or ultra vires conduct since she “took appropriate
action to administer and preserve the Estate Property” in
accordance “with her duties as the trustee.” Phoenician
Mediterranean Villa, 554 B.R. at 756–57.
Phoenician filed this timely appeal.
II
The Bankruptcy Court had jurisdiction under 28
U.S.C. § 157(a). The District Court exercised jurisdiction
under 28 U.S.C. § 158(a). We have appellate jurisdiction
under 28 U.S.C. § 158(d). Like the District Court, we review
the Bankruptcy Court’s legal determinations de novo and its
factual findings for clear error. In re VistaCare Grp., LLC,
678 F.3d 218, 224 (3d Cir. 2012). A factual finding is clearly
7
erroneous only if we are “left with the definite and firm
conviction that a mistake has been committed.” In re W.R.
Grace & Co., 729 F.3d 311, 319 n.14 (3d Cir. 2013) (citation
omitted).
III
The principal issue on appeal is whether Swope is
immune from Phoenician’s suit complaining of actions she
took between January 16, 2014 and February 7, 2014.3 The
3
It appears undisputed that the Bankruptcy Court’s
Order on February 7 provided Swope with absolute quasi-
judicial immunity for actions taken thereafter. That order
explicitly allowed “changing all locks so that only the Bank
and the Trustee have access to the Property,” Feb. 7, 2014
Order, at ¶ 3, and prohibited Phoenician from entering
“without the express authorization of the Trustee,” id. at ¶ 8.
Because a trustee enjoys absolute immunity from liability
when she carries out a bankruptcy court’s order, see In re
Harris, 590 F.3d 730, 742 (9th Cir. 2009) (finding “derived
quasi-judicial immunity” applies to trustees acting “pursuant
to court order” (citation omitted)); Boullion v. McClanahan,
639 F.2d 213, 214 (5th Cir. Unit A Mar. 1981) (per curiam)
(listing cases so holding from the First, Second, Fourth,
Eighth, and Tenth Circuits), and because the lower courts
didn’t clearly err when they found Swope faithfully carried
out the Bankruptcy Court’s February 7, 2014 Order, Swope is
not amenable to suit for her later actions.
While Phoenician doesn’t explicitly challenge Swope’s
immunity after February 7, it does make passing complaints
about the restrictive nature of Swope’s consent to enter the
property on several dates after the Order. These criticisms are
8
Bankruptcy Court held that Swope is entitled to qualified
immunity because she acted within her statutory duties and
the District Court agreed, finding Swope did not violate
clearly established law. We reach the same conclusion based
on a straightforward application of Harlow v. Fitzgerald, 457
U.S. 800, 818 (1982).
A
The Supreme Court held in Harlow that “government
officials performing discretionary functions generally are
shielded from liability for civil damages insofar as their
conduct does not violate clearly established statutory or
constitutional rights of which a reasonable person would have
known.” Id. But if such officials take actions in their official
capacity which they “knew or reasonably should have known
. . . would violate the [plaintiff’s] constitutional rights,” they
are not entitled to qualified immunity. Id. at 815 (emphasis
and citation omitted).
It appears clear that Chapter 7 Bankruptcy Trustees
like Swope are government officials for purposes of Harlow.
ineffectual, however, because the terms of the Court’s Order
gave Swope discretion over Phoenician’s ability to enter the
property and the record indicates that Swope did allow
Phoenician to enter the premises to remove its personal
property several times. Although it was not entirely satisfied
with the length of each visit or the items it was allowed to
remove, Phoenician doesn’t point to evidence showing the
lower courts clearly erred in finding these decisions
consistent with the Court’s Order.
9
Phoenician does not dispute the finding of the lower courts
that Swope is a public official generally entitled to qualified
immunity. In fact, Phoenician claims that because “the
Chapter 7 Trustee is appointed and supervised by the United
States Trustee [and] is an officer of the appointing Court, . . .
it is appropriate to apply Fourth Amendment limits on
government power” to Swope. Phoenician Br. 22. Regardless
of the Fourth Amendment analysis, Swope is a government
official for purposes of immunity. The Chapter 7 Trustee is
created by Congress, appointed by and “operating under the
aegis of the U.S. Trustee,” and entrusted with the “statutory
duties . . . to gather and liquidate the property of the estate, to
be accountable for the estate, ensure that the debtor performs
his or her obligations,” and “perform[] [other] adjudicatory
and administrative functions.” In re Castillo, 297 F.3d 940,
950–51 (9th Cir. 2002).
We thus hold that bankruptcy trustees are government
officials, entitled under Harlow to qualified immunity from
§ 1983 claims by third parties when they act in their official
capacity in a manner that is not contrary to clearly established
law. See 457 U.S. at 818 & n.30.
B
Qualified immunity, “properly applied, . . . protects all
but the plainly incompetent or those who knowingly violate
the law.” Ashcroft v. al-Kidd, 563 U.S. 731, 743 (2011)
(citation omitted). “To overcome qualified immunity, a
plaintiff must plead facts ‘showing (1) that the official
violated a statutory or constitutional right, and (2) that the
right was “clearly established” at the time of the challenged
conduct.’” Mammaro v. N.J. Div. of Child Prot. &
Permanency, 814 F.3d 164, 168–69 (3d Cir. 2016), cert.
10
denied, 137 S. Ct. 161 (2016) (quoting al-Kidd, 563 U.S. at
735). And an official’s conduct violates clearly established
law if “there [is] sufficient precedent at the time of action,
factually similar to the plaintiff’s allegations, to put defendant
on notice that . . . her conduct is constitutionally prohibited.”
McLaughlin v. Watson, 271 F.3d 566, 572 (3d Cir. 2001).
Such precedent must come either from the Supreme Court or
a “‘robust consensus of cases of persuasive authority’ in the
Court of Appeals.” Mammaro, 814 F.3d at 169 (quoting
Taylor v. Barkes, 135 S. Ct. 2042, 2044 (2015) (per curiam)).
In this case, Swope was not plainly incompetent and
did not violate clearly established law. We agree with the
Bankruptcy Court that there is a “dearth of case law on the
topic” of whether a bankruptcy trustee may take control of a
building which she is obliged to preserve and which is at
imminent risk of destruction or damage, especially in the face
of the lack of cooperation by a third-party tenant. In re J & S
Props., 545 B.R. at 110.
Rather than point to any case balancing a bankruptcy
trustee’s duties to preserve the estate under her care in the
face of “exigent circumstances” and her duties to a third-party
tenant, id., Phoenician cites black-letter Pennsylvania law
indicating that self-help eviction is generally impermissible.
Because “[s]tate law defines property interests for purposes of
procedural due process claims,” and Pennsylvania
leaseholders are entitled to a trial before being evicted,
Phoenician claims that it is clear that “self-help evictions are
unlawful in Pennsylvania.” Phoenician Br. 20–21 (citing, e.g.,
Berman v. City of Philadelphia, 228 A.2d 189 (Pa. 1967)).
Phoenician also argues that since Swope, as trustee of the
property, “stands in the shoes of the landlord debtor,” Reply
Br. 5, 8 (citing Hays & Co. v. Merrill Lynch, Pierce, Fenner
11
& Smith, Inc., 885 F.2d 1149, 1154 (3d Cir. 1989)), and the
lease remained operative even after its rejection by the
Bankruptcy Court, id. at 8 (citing 11 U.S.C.
§ 365(h)(1)(A)(ii)), she constructively evicted Phoenician
without due process when she received the only key to the
building after the locks were changed. Phoenician adds that
its inability to remove its personal items from the property
after the locks were changed effected an impermissible
seizure.
Phoenician’s thorough review of Pennsylvania law
stands in stark contrast to its failure to acknowledge the many
duties imposed upon Trustee Swope by federal bankruptcy
law. Under 11 U.S.C. § 704, Swope had to safeguard,
liquidate, and administer the estate property for the benefit of
creditors. Section 704(a) states that the bankruptcy trustee
“shall”:
(1) collect and reduce to money the property of
the estate for which such trustee serves, and
close such estate as expeditiously as is
compatible with the best interests of parties in
interest;
(2) be accountable for all property received[.]
As the Bankruptcy Court noted, “there is no dispute” that
Swope’s statutory duties “include protecting and preserving
the Estate Property.” In re J & S Props., 545 B.R. at 108.
And the events of January 2014 required Swope to act
to preserve the estate. Phoenician’s inaction caused
significant flooding to the debtor’s estate and Swope did not
have a key to access the building and survey the damage. She
12
accepted the key after the locks had been changed in order to
fulfill her duty to preserve the property from further damage.
Phoenician points to no case that addressed, much less
established, whether such conduct by a trustee amounts to an
unconstitutional eviction. In fact, the DOJ’s own guidance for
bankruptcy trustees notes that for “cases where the property
appears to have value for the estate, the trustee must obtain
control over the property, which may include changing the
locks at the premises . . . .” U.S. Dep’t of Justice, Executive
Office for U.S. Trustees, Handbook for Chapter 7 Trustees, at
§ 4.C.3.f (applying 11 U.S.C. § 704). The DOJ also notes that
trustees “must immediately take all other steps which may be
reasonably necessary to preserve the assets.” Id. Here, the
Bankruptcy Court found, and the District Court agreed, that
the imminent damage to the estate’s largest asset would
reasonably lead a trustee in Swope’s position to believe that
taking control of the property was not only permissible, but
statutorily required.
The Supreme Court has cautioned that the question of
“objective legal reasonableness” with respect to clearly
established precedent should not be applied at too high a level
of generality. Anderson v. Creighton, 483 U.S. 635, 639
(1987). Phoenician makes that mistake by noting that its
rights to due process of law and to be free of illegal seizure
are “quite clearly established.” Id. But the existence of those
clearly established rights sheds no light on whether Swope’s
actions would violate them in the circumstances presented
here. Id. at 640. The cases Phoenician cites do not approach
the level of specificity required for clearly established law.
For example, several of those cases have nothing to do with
bankruptcy trustees, see Soldal v. Cook Cty., 506 U.S. 56
(1992); Bd. of Regents of State Colls. v. Roth, 408 U.S. 564
13
(1972); Ruiz v. New Garden Twp., 376 F.3d 203 (3d Cir.
2004), and the one case that does involve a trustee has
nothing to do with a potential conflict between a landlord’s
duties under state law and a trustee’s duty to preserve estate
property under federal law. See Beard v. Braunstein, 914 F.2d
434 (3d Cir. 1990).
None of the cases upon which Phoenician relies
involved a trustee attempting to preserve assets of an estate
under her care in the face of past and future damage to those
assets. And considering Phoenician’s lack of cooperation by
giving Swope a key that only opened the outer door, its
refusal “to keep the property adequately heated,” and its
failure to meet at the property and maintain insurance, App.
397, there is no law that clearly establishes the unlawfulness
of Swope’s actions. Accordingly, we agree with the lower
courts that “Swope, in accordance with her duties as the
trustee, took appropriate action to administer and preserve the
Estate Property.” Phoenician Mediterranean Villa, 554 B.R.
at 756–57. This conclusion is fatal to Phoenician’s appeal.
It strains credulity to suggest, as Phoenician does, that
“every reasonable official would have understood that what”
Swope did constituted an impermissible eviction that violated
due process. al-Kidd, 563 U.S. at 741 (internal quotation
marks and citation omitted). “[W]here an official’s duties
legitimately require action in which clearly established rights
are not implicated, the public interest may be better served by
action taken ‘with independence and without fear of
consequences.’” Harlow, 457 U.S. at 819 (citation omitted);
see also Pearson v. Callahan, 555 U.S. 223, 231 (2009). The
circumstances of this case required Swope to act quickly to
preserve the estate and she did so in a manner not contrary to
14
law. Accordingly, she should not be subject to suit for her
actions.4
C
Phoenician’s two remaining counterarguments are also
unavailing. It first argues that the fact that Swope “filed her
emergency motion for turnover and possession shortly after . .
. lock[ing] the Phoenician out of the restaurant” (she got the
key to the new locks on January 16 and filed on the same day)
should be interpreted as an admission by Swope that a
reasonable trustee would know she needed a court order for
possession before accepting the new key. Phoenician Br. 26.
This logic is faulty and would lead to undesirable outcomes.
There are several other reasons Swope may have sought the
Bankruptcy Court’s permission for these actions. As Swope
argued, that a trustee seeks to have “her action ratified by a
court, out of an abundance of caution, does not mean that she
acts improperly” if she acts before the court could respond.
Swope Br. 27. In this case, Swope claims she sought the
emergency court order as quickly as possible, and accepted
the new keys from the debtor only “because of the emergency
need to preserve the estate’s largest asset” from water and
other damage. Id.
The Amici explain that bankruptcy trustees often seek
post hoc court approval to ratify quick actions they take to
preserve an estate based on exigent circumstances. If we were
4
Because we hold that Swope is entitled to qualified
immunity, we need not address her contention that she is
entitled to absolute quasi-judicial immunity for the actions
she took before the Bankruptcy Court’s February 7, 2014
Order.
15
to interpret this practice as an admission of wrongful
behavior, it would upend years of custom and impair the
ability of trustees to protect estates or encourage them to
refrain from seeking court supervision of their actions. We
eschew such undesirable results.
Phoenician also claims that Swope “gave up her
qualified immunity when she testified at the hearing on
Phoenician’s request for a temporary restraining order.”
Phoenician Br. 28. According to Phoenician, because
“Trustee Swope never raised her immunity from suit at [the]
hearing” on January 24, 2014, and instead “testified at that
hearing with regard to the specific facts of the lockout,” she
waived her right to claim immunity later. Phoenician Br. 22.
It does not appear that Phoenician raised this argument
in either the Bankruptcy Court or the District Court, see
Swope Br. 26 (citing docket), so it is forfeited. See United
States v. Joseph, 730 F.3d 336, 341–42 (3d Cir. 2013). In any
event, the claim that Swope waived her immunity is not
supported by legal authority. She was not put on notice as to
any clear illegality at the emergency hearing; quite to the
contrary, the Bankruptcy Court rejected Phoenician’s motion
for an injunction and temporary restraining order after
holding that Phoenician did not establish a likelihood of
success on the merits. Moreover, Swope was not required to
assert her right to qualified immunity at the January 24, 2014
hearing since it was not a trial on the merits of Phoenician’s
damages claims against Swope. The hearing was to adjudicate
Phoenician’s motion for equitable relief and Swope’s
emergency motion for control over the property. As such,
there is no colorable argument of waiver here.
16
IV
For the reasons stated, we will affirm the order of the
District Court affirming the order of the Bankruptcy Court.
17
IN RE: J & S PROPERTIES, LLC, Debtor
PHOENICIAN MEDITERRANEAN VILLA,
LLC, Appellant
v.
LISA M. SWOPE, Esquire, Trustee of the Bankruptcy Estate
of J & S Properties LLC; JAMES FOCHT; J & S
PROPERTIES, LLC
No. 16-3366
FISHER, Circuit Judge, concurring in the judgment.
Bankruptcy trustees play a role in our federal judicial
system rooted in centuries of Anglo-American bankruptcy law.
Like their predecessors, modern-day trustees perform
functions that are essential to the judiciary’s orderly
disposition of a bankrupt’s estate. I would hold that the
Chapter 7 bankruptcy trustee in this case (hereinafter Trustee)
is immune from suit on the basis of quasi-judicial immunity. I
therefore agree with the majority that the judgment of the
District Court should be affirmed. In this separate opinion, I
explain why, in my view, the doctrine of qualified immunity
upon which the majority rests its decision is not properly
before this Court, and then set forth my conclusion that the
Trustee should be accorded quasi-judicial immunity.
I
Qualified immunity protects government officials
“from liability for civil damages insofar as their conduct does
not violate clearly established statutory or constitutional rights
of which a reasonable person would have known.” Harlow v.
Fitzgerald, 457 U.S. 800, 818 (1982). “The presumption is that
qualified rather than absolute immunity is sufficient to protect
1
government officials in the exercise of their duties.” Burns v.
Reed, 500 U.S. 478, 486-87 (1991). The Supreme Court has
thus admonished that the extension of absolute immunity
should be “quite sparing” and not extended “any further than
its justification would warrant.” Id. at 487.
It is my respectful submission, however, that the
Trustee’s Harlow qualified immunity defense is not adequately
preserved for our consideration. Qualified immunity “is an
affirmative defense that must be pleaded by a defendant
official.” Harlow, 457 U.S. at 815. The Supreme Court has
therefore long held that “the burden of pleading it rests with
the defendant.” Gomez v. Toledo, 446 U.S. 635, 640 (1980)
(citing Fed. R. Civ. P. 8(c)); see also Crawford-El v. Britton,
523 U.S. 574, 595 (1998); Thomas v. Independence Twp., 463
F.3d 285, 293 (3d Cir. 2006). As the majority recognizes, the
Trustee failed to invoke Harlow qualified immunity before the
Bankruptcy Court. Quasi-judicial immunity is the only
defense she pleaded. While our cases permit a defendant to
“raise qualified immunity as a defense at trial,” Sharp v.
Johnson, 669 F.3d 144, 168 (3d Cir. 2012), we have not
allowed a defendant to raise Harlow qualified immunity for the
first time on appeal. And understandably so, since the
Supreme Court has rejected efforts by courts to alter
established rules of procedure in immunity cases. See
Crawford-El, 523 U.S. at 594-97; Johnson v. Jones, 515 U.S.
304, 317-18 (1998); Leatherman v. Tarrant Cty. Narcotics
Intelligence & Coordination Unit, 507 U.S. 163, 164-69
(1993); Gomez, 446 U.S. at 639-40.
As I read the opinions of the Bankruptcy Court and the
District Court, neither decided this case on the basis of Harlow
qualified immunity. The Bankruptcy Court’s opinion does not
cite any Harlow qualified immunity cases. And while the
District Court did reference Harlow’s standard once, that brief
2
mention appears only in the court’s description of Phoenician’s
arguments on appeal. See 554 B.R. 747, 755 (W.D. Pa. 2016)
(“[Phoenician] argues that Trustee Swope is not entitled to
qualified immunity because she violated its clearly established
rights and because a reasonable Chapter 7 [t]rustee would have
believed that evicting [Phoenician] from the restaurant without
a court order violated its Fourth Amendment rights and
deprived it of procedural due process.”). The District Court
instead cited two quasi-judicial immunity decisions—Antoine
v. Byers & Anderson, Inc., 508 U.S. 429 (1993), and In re
Castillo, 297 F.3d 940 (9th Cir. 2002)—for the proposition that
such immunity “is historically accorded to trustees.” 554 B.R.
at 756. Though the Bankruptcy Court and District Court each
stated that the Trustee “is entitled to qualified rather than
absolute immunity” because she “did not act pursuant to a
court order,” id.; see 545 B.R. 91, 113-14 (Bankr. W.D. Pa.
2015), that proposition simply refers to the fact that quasi-
judicial immunity can at times be qualified rather than
absolute. See 6 Collier on Bankruptcy ¶ 704.04[1], p. 704-13
(Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2017)
(“Trustees who act within the scope of the authority and
discretion that they are given have been held entitled to quasi-
judicial immunity, and to the extent that they are executing
orders of the court, they have been held entitled to absolute
immunity.”) (footnote omitted).
That quasi-judicial immunity can be qualified does not
mean that Harlow qualified immunity is at issue. Unlike quasi-
judicial immunity, Harlow qualified immunity is a
contemporary doctrine. In Harlow the Supreme Court
“completely reformulated qualified immunity along principles
not at all embodied in the common law, replacing the inquiry
into subjective malice so frequently required at common law
with an objective inquiry into the legal reasonableness of the
3
official action.” Anderson v. Creighton, 483 U.S. 635, 645
(1987). While quasi-judicial immunity is rooted in the
common law, see infra Part II, Harlow qualified immunity is
not. A distinction between the two doctrines exists and it
should be observed.
Because neither the Bankruptcy Court nor the District
Court decided this case on the basis of Harlow qualified
immunity, the issue is not properly before us. Like the
Supreme Court, we are “a court of review, not first view.”
Cutter v. Wilkinson, 544 U.S. 709, 718 n.7 (2005); see Wood
v. Milyard, 566 U.S. 463, 473 (2012) (“[A]ppellate courts
ordinarily abstain from entertaining issues that have not been
raised and preserved in the court of first instance.”). This
precept applies as well in bankruptcy cases. Our precedent
instructs district courts to follow “the general rule that when a
party fails to raise an issue in the bankruptcy court, the issue is
waived and may not be considered . . . on appeal.” In re Kaiser
Grp. Int’l Inc., 399 F.3d 558, 565 (3d Cir. 2004). I would
therefore not absolve the Trustee of her obligation to raise
Harlow qualified immunity before the Bankruptcy Court.
II
Whether or not the Trustee sufficiently preserved her
Harlow qualified immunity defense, I believe this case should
be decided based on the historical tradition of according quasi-
judicial immunity to bankruptcy trustees sued by third parties
for actions taken within the scope of their official duties.
It has long been understood that the various immunities
from suit possessed by public officials at common law in 1871,
the year Congress passed 42 U.S.C. § 1983, are retained in suits
against state officials under that statute. See, e.g., Tenney v.
Brandhove, 341 U.S. 367, 376 (1951); Rehberg v. Paulk, 566
U.S. 356, 361-62 (2012). The availability and scope of these
4
immunities is the same in actions brought against federal
officials under Bivens v. Six Unknown Fed. Narcotics Agents,
403 U.S. 388 (1971). See Butz v. Economou, 438 U.S. 478,
503-04 (1978). Among the immunities firmly established in
the common law is the absolute immunity judges enjoy for
actions when carrying out their judicial functions. See Bradley
v. Fisher, 80 U.S. (13 Wall.) 335, 347 (1872) (Describing
judicial immunity as “the settled doctrine of the English courts
for many centuries” that “has never been denied . . . in the
courts of this country.”). Pre-1871 common-law courts also
extended quasi-judicial immunity to public servants
performing “official acts involving policy discretion but not
consisting of adjudication.” Burns, 500 U.S. at 500 (Scalia, J.,
concurring in the judgment in part and dissenting in part).
In Antoine v. Byers & Anderson, supra, the Supreme
Court adopted a two-step approach for determining when
quasi-judicial immunity attaches to the acts of officials other
than judges who are involved in the judicial process. First,
“[i]n determining which officials perform functions that might
justify full exemption from liability,” courts must undertake “a
considered inquiry into the immunity historically accorded the
relevant official at common law and the interests behind it.”
Antoine, 508 U.S. at 432 (internal quotation marks omitted).
Next, courts must “consider whether judges, when performing
that function, were themselves entitled to absolute immunity.”
Id. at 435. Stated differently, “judicial immunity is extended
to officials other than judges” when “their judgments are
functionally comparable to those of judges—that is, because
they, too, ‘exercise discretionary judgment’ as part of their
function.” Id. at 436 (brackets omitted) (quoting Imbler v.
Pachtman, 424 U.S. 409, 423 n.20 (1976)). This approach
accords with the “‘touchstone’” for the applicability of judicial
immunity, namely, “‘the performance of the function of
5
resolving disputes between parties, or of authoritatively
adjudicating private rights.’” Id. at 435-36 (quoting Burns, 500
U.S. at 500 (opinion of Scalia, J.)). And while Antoine’s
functional approach “is tied to the common law’s identification
of the functions that merit the protection of absolute
immunity,” the Supreme Court’s precedents “have not
mechanically duplicated the precise scope of the absolute
immunity that the common law provided to protect those
functions.” Rehberg, 566 U.S. at 364.
Applying the analytical framework set forth in Antoine,
Chapter 7 bankruptcy trustees should be accorded quasi-
judicial immunity for actions taken within the scope of their
duties that are necessary to the bankruptcy court’s adjudication
of a debtor’s estate. The bankruptcy trustees of today perform
quasi-judicial functions that trace back to their sixteenth-
century English predecessors. England’s first bankruptcy laws
were passed in 1542 and 1570. See 34 & 35 Hen. 8 c. 4 (1542-
43); 13 Eliz. c. 7 (1570). The latter statute “filled out the basic
parameters of the English bankruptcy system . . . and remained
in effect until the time of the American Revolution.” Charles
Jordan Tabb, The History of the Bankruptcy Laws in the United
States, 3 Am. Bankr. Inst. L. Rev. 5, 8 (1995). In addition to
naming acts of bankruptcy, the law vested in the Lord
Chancellor “power to appoint, by commission of the great seal,
certain persons to exercise the powers of the Chancellor over
the person and property of the bankrupt.” 8 William S.
Holdsworth, A History of English Law 470 (3d ed. 1922).
These commissioners “had substantial powers, originally akin
to a combination of today’s trustee and bankruptcy judge.”
Tabb, supra, at 8. They supervised a process that “mirrored a
modern straight liquidation case” wherein they would perform
“normal trustee-like activities of collecting, liquidating, and
distributing the debtor’s property to creditors, and more
6
traditional judicial activities, such as seizing property,
summoning persons to appear before them, and committing
people to prison.” Id. at 8-9. A statute of 1707, 4 Anne c. 17,
delegated these trustee-like duties to assignees—so-called
because they were assigned the bankrupt’s property. See also
Central Va. Community College v. Katz, 546 U.S. 356, 370
(2006) (observing that English bankruptcy assignees were “the
18th-century counterparts of today’s bankruptcy trustees”).
Early American bankruptcy law followed the English
system in many respects. Though the Framers gave Congress
the power to “establish . . . uniform Laws on the subject of
Bankruptcies throughout the United States,” U.S. Const. art I,
§ 8, cl. 4, no permanent bankruptcy legislation existed until
1898. Temporary legislation was in place, however, from 1800
to 1803, from 1841 to 1843, and from 1867 to 1878, each
passed in the wake of a major financial panic. At every step of
the way, Congress retained the three-part English model:
bankruptcy jurisdiction was placed in the district courts, those
courts appointed commissioners (called “registers” in the 1867
Act and “referees” in the 1898 Act) to assist the judges in
executing their duties, and assignees would perform functions
critical to the liquidation and distribution of the bankruptcy
estate. See Act of Apr. 4, 1800, ch. 19, 2 Stat. 19 (repealed
1803); Act of Aug. 19, 1841, ch. 9, 5 Stat. 440 (repealed 1843);
Act of Mar. 2, 1867, ch. 176, 14 Stat. 517 (repealed 1878); Act
of July 1, 1898, ch. 541, 30 Stat. 544 (repealed 1978).
Another antecedent to the modern-day bankruptcy
trustee can be found in the equity receivership commonly used
during the late nineteenth and early twentieth centuries to assist
with corporate reorganizations, especially with regard to
struggling railroads. See Tabb, supra, at 21-22. As this Court
has previously recognized, “[a] bankruptcy trustee is the
‘statutory successor to the equity receiver’ and ‘just like an
7
equity receiver, a trustee in bankruptcy is working in effect’ for
the court overseeing the bankruptcy proceeding,
‘administering property that has come under the court’s control
by virtue of the Bankruptcy Code.’” In re VistaCare Grp.,
LLC, 678 F.3d 218, 229 (3d Cir. 2012) (brackets omitted)
(quoting In re Linton, 136 F.3d 544, 545 (7th Cir. 1998)). So
to the extent equity receivers and nineteenth century assignees
performed duties that required the exercise of discretionary
judgment to assist courts in adjudicating bankruptcy-related
disputes, they would have enjoyed quasi-judicial immunity
from suit under the common law.
The courts of appeals have uniformly held that the
procedural and substantive immunities of equity receivers at
common law carried over to the bankruptcy trustees of today.
Thus, there is considerable acknowledgment that the common
law procedural immunity known as the “Barton doctrine,” see
Barton v. Barbour, 104 U.S. 126, 128-29 (1881), whereby an
equity receiver could not be sued without leave of the court that
appointed him, applies to the present-day bankruptcy trustee.
See In re VistaCare Grp., 678 F.3d at 232; Carroll v. Abide,
788 F.3d 502, 505 n.12 (5th Cir. 2015) (collecting cases from
ten circuits). Among the rationales courts have articulated in
favor of the Barton doctrine is the “strong interest” “the court
that appointed the trustee has . . . in protecting him from
unjustified personal liability for acts taken within the scope of
his official duties.” In re Lehal Realty Assocs., 101 F.3d 272,
276 (2d Cir. 1996); see also Vass v. Conron Bros. Co., 59 F.2d
969, 970 (2d Cir. 1932) (L. Hand, J.) (“A trustee is equally an
officer of the court; and [like a receiver] his possession is
protected because it is the court’s . . . .” (citation omitted)).
There is also a broad consensus that bankruptcy trustees
are substantively immune from suit under the doctrine of quasi-
judicial immunity. Generally speaking, there are “two types of
8
actions against trustees: breach of fiduciary duty claims
brought by parties interested in the administration of the estate,
and claims in tort or contract brought by third parties.” In re
Mailman Steam Carpet Cleaning Corp., 196 F.3d 1, 7 n.4 (1st
Cir. 1999). It is settled that a bankruptcy trustee may be held
personally liable for breach of fiduciary duty. See Mosser v.
Darrow, 341 U.S. 267, 271, 274 (1951); In re McKenzie, 716
F.3d 404, 413 (6th Cir. 2014); In re Mailman Steam Carpet
Cleaning, 196 F.3d at 6-7. Courts have also held that
bankruptcy trustees are covered by quasi-judicial immunity
when acting pursuant to an express court order. See, e.g., In re
Harris, 590 F.3d 730, 742 (9th Cir. 2009); Boullion v.
McClanahan, 639 F.2d 213, 214 (5th Cir. Unit A Mar. 1981)
(per curiam).
Phoenician’s suit is of the second type, as it alleges no
breach of fiduciary duty. Rather, Phoenician is a third party
raising a claim sounding in tort. In such cases, “a bankruptcy
trustee is ordinarily entitled to quasi-judicial immunity from
suit . . . for actions taken in his official capacity.” In re
McKenzie, 716 F.3d at 413; see In re Mailman Steam Carpet
Cleaning, 196 F.3d at 7 n.4; Ziegler v. Pitney, 139 F.2d 595,
596 (2d Cir. 1943); McRanie v. Palmer, 2 F.R.D. 479, 481 (D.
Mass. 1942). This immunity was recognized long ago in
McNulta v. Lochridge, 141 U.S. 327 (1891), when the Supreme
Court held that equity receivers cannot be held personally
liable in suits by third parties—the suit instead can lie only
against the receivership itself:
So long as the property of the corporation remains in the
custody of the court and is administered through the
agency of a receiver, such receivership is continuous
and uninterrupted until the court relinquishes its hold
upon the property, though its personnel may be subject
to repeated changes. Actions against the receiver are in
9
law actions against the receivership, or the funds in the
hands of the receiver, and his contracts, misfeasances,
negligences and liabilities are official and not personal,
and judgments against him as receiver are payable only
from the funds in his hands.
Id. at 332 (emphasis in original).
While the quasi-judicial immunity of bankruptcy
trustees does not extend to acts by a trustee that are ultra vires,
see, e.g., Leonard v. Vrooman, 383 F.2d 556, 560 (9th Cir.
1967), a bankruptcy trustee “is not required to obtain prior
court approval in order to invoke quasi-judicial immunity from
suit by a third party for actions taken by the trustee on behalf
of the estate and within the scope of his authority.” In re
McKenzie, 716 F.3d at 414. The Bankruptcy Court and the
District Court thus drew an unnecessary distinction between
“the absolute immunity analyses associated with actions taken
pursuant to a court order [and] the qualified immunity analyses
of actions undertaken absent an authorizing order of court.”
545 B.R. at 104 (emphasis deleted); see 554 B.R. at 756. As
already noted, while it is true that a “trustee’s derivative
judicial immunity is qualified” in certain respects, see 1 Joan
N. Feeney et al., Bankruptcy Law Manual § 4:16, p. 799 (5th
ed. 2016), the qualified nature of a bankruptcy trustee’s quasi-
judicial immunity is different from the doctrine of Harlow
qualified immunity.
Against this background, granting the Trustee quasi-
judicial immunity in this case is not a close call. The Trustee’s
efforts to secure the property of J & S’s estate—here, the real
property leased to Phoenician—were discretionary actions
performed within the scope of her statutory duties. The
Bankruptcy Code requires Chapter 7 trustees to “collect and
reduce to money the property of the estate for which such
10
trustee serves, and close such estate as expeditiously as is
compatible with the best interests of parties in interest,” and, in
connection with this responsibility, to “be accountable for all
property received.” 11 U.S.C. § 704(a)(1), (2). Both the
Bankruptcy Court and District Court noted the undisputed fact
that the Trustee’s duties included safeguarding the estate
property. See 545 B.R. at 108; 554 B.R. at 756. Those courts
therefore sensibly found that “a Chapter 7 [t]rustee has a duty
to secure and preserve estate assets, including changing the
locks to a building when circumstances warrant.” 545 B.R. at
113; see 554 B.R. at 757.
This conclusion is consistent with the guidance
provided by the Department of Justice’s Office of the United
States Trustee, which advises Chapter 7 trustees:
In those cases where the property appears to have value
for the estate, the trustee must obtain control over the
property, which may include changing the locks at the
premises, hiring guards, etc. The trustee also must
immediately take all other steps which may be
reasonably necessary to preserve the assets. It is not
always sufficient to wait until after the meeting of
creditors to take action to preserve assets.
U.S. Dep’t of Justice, Handbook for Chapter 7 Trustees §
4.C.3.f, p. 4-6 (2012) (citing 11 U.S.C. § 704). Neither the
Bankruptcy Code nor the Trustee Handbook specifies how
trustees are to exercise their duty to safeguard estate property.
A trustee must accordingly “exercise a discretionary judgment
as part of th[is] function.” Antoine, 508 U.S. at 436 (internal
quotation marks omitted). The Trustee is thus entitled to quasi-
judicial immunity for the discretionary acts she took in
furtherance of her duty to safeguard the property of J & S’s
estate.
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* * *
Because I would hold that the Trustee is shielded from
liability under the doctrine of quasi-judicial immunity, I concur
in the judgment.
12