United States District Court, E.D. Virginia, Alexandria Division
LIAM O'GRADY, UNITED SLATES DISTRICT JUDGE
matter comes before the Court on the Report and
Recommendation (R&R) issued by United States Bankruptcy
Judge Brian F. Kenney on December 21, 2018 (Dkt. 22). Judge
Kenney recommended that Plaintiffs suit against Defendant,
Plaintiffs former trustee, be dismissed as barred by the
Barton doctrine and the statute of limitations.
Plaintiff timely objected to the R&R, and Defendant
timely responded to Plaintiffs objections. The Court has
reviewed all the relevant pleadings, the supporting
documents, and the case law, and finds good cause to
ADOPT the findings and recommendations of
objects to four of Judge Kenney's conclusions of law.
First, Plaintiff contends that bankruptcy judges lack the
authority to require Barton doctrine authorization
of suits raising Stern claims. Second, Plaintiff
argues Judge Kenney erred in concluding that the
Barton doctrine applies to cases removed from state
court to bankruptcy court. Third, Plaintiff objects to Judge
Kenney's statement that the Barton doctrine
"compels" dismissal of Plaintiff s Complaint.
Fourth, Plaintiff disputes Judge Kenney's finding that
the statute of limitations began to run on the date the
underlying bankruptcy case was dismissed rather than the
later date when the case was administratively closed and the
Trustee was discharged.
to Federal Rule of Bankruptcy Procedure 9033(d), the Court
undertook a de novo review of Judge Kenney's
conclusions of law as to these issues. Fed.R.Bankr.P. 9033(d)
(stating that when a party objects to a bankruptcy
judge's R&R, the district court conducts a de
novo review "of any portion of the bankruptcy
judge's findings of fact or conclusions of law to which
specific written objection has been made"). The Court
agrees with Judge Kenney's conclusions.
Kenney properly found that the Barton doctrine
applies to cases raising Stern claims. In
Villegas v. Schmidt, the Fifth Circuit compellingly
held that parties are still required to seek approval from
the relevant bankruptcy court prior to filing Stern
claims against trustees under the Barton doctrine.
788 F.3d 156, 158 (2015). The Barton doctrine
establishes a jurisdictional bar to filing suit against a
trustee, and thus does not violate a plaintiffs right for the
merits of properly filed Stern claims to be resolved
by a district court. See Fed. R. Civ. P. 41(b)
(noting that a dismissal for lack of jurisdiction is not an
adjudication on the merits); S. Walk at Broadlands
Homeowner's Ass 'n, Inc. v. OpenBandat Broadlands,
LLC, 713 F.3d 175, 185 (4th Cir. 2013) ("[A] court
that lacks jurisdiction has no power to adjudicate and
dispose of a claim on the merits.").
Kenney also correctly determined that the Barton
doctrine compels dismissal of Plaintiffs complaint even
though it was removed to the bankruptcy court which appointed
the Trustee-Defendant. The Barton doctrine was
designed to protect Defendant from the need to take
any action to defend himself from a suit filed in
state court unless the suit was pre-authorized by the
bankruptcy court that appointed him. See McDaniel v.
Blust, 668 F.3d 153, 157-58 (4th Cir. 2012) (explaining
that one of the purposes behind the Barton doctrine
is to protect trustees from the costs and hassle of
unmeritorious litigation); In re Summit Metals,
Inc., 477 B.R. 484, 494-98 (D. Del. 2012) (holding that
Barton doctrine issues are not cured by removal to a
bankruptcy court); In re Herrera, 412 B.R. 839,
853-54 (D.N.M. 2012) (holding the same and noting that
"[o]nly by requiring any potential plaintiff to always
start in the bankruptcy court... can the process, and
trustees, most consistently be protected"). The
Barton doctrine must therefore bar any suit
initially filed in state court without the appropriate
pre-authorization regardless of whether (a) the complaint
states a valid claim or (b) the defendant moved to dismiss
the action immediately in state court, after removal to a
district court, or after removal to a bankruptcy court.
In re Summit Metals, 477 B.R. at 498 ("While
the Barton doctrine alone provides adequate ground
for dismissal" despite removal to the bankruptcy court,
"the Court holds, alternatively, that even if
leave of court could apply retroactively, [Plaintiffs]
Complaint fails to establish a prima facie case
against the Trustee and will be dismissed" (emphasis
added)). Further, even assuming arguendo that a bankruptcy
judge has discretion under the Barton doctrine to
permit a removed case to proceed if the complaint states a
valid claim, Plaintiffs Complaint did not state a valid claim
because its claims were barred by the applicable statute of
limitations. See infra. Judge Kenney therefore
properly recommended dismissal of Plaintiffs Complaint under
the Barton doctrine.
Kenney also properly found that the statute of limitations
began to run on the date the underlying bankruptcy action was
dismissed. When the bankruptcy case was dismissed on December
7, 2012, the estate reverted back to Plaintiffs control and
management. 11 U.S.C. § 349(b)(3). While the Trustee was
not discharged on December 7, 2012, after that date his
authority was limited to performing ministerial duties.
See Dismissal Order (directing the Trustee to make
specified payments). Hence, after the bankruptcy case was
dismissed on December 7. 2012. there was no longer any
concern about a filing by Plaintiff "interfering with
the Trustee's administration of the estate'" and
Plaintiff would have had standing to request leave of court
to file the present suit. Therefore, even assuming arguendo that
the statute of limitations should be tolled because of the
appointment of the Trustee and the bankruptcy court's
orders related to Plaintiffs standing. Plaintiffs Complaint
would be time barred because the Sleeper Suit was filed more
than two years after December 7. 2012.
found good cause to ADOPT Judge Kenney's
thorough R&R. the Court ORDERS that
Plaintiffs Complaint is hereby DISMISSED for
lack of compliance with the Barton doctrine and as
time barred under the applicable statute of limitations. The
Court further ORDERS that if Defendant still seeks sanctions,
including attorneys" fees. Defendant shall file a motion
and opening brief on that issue within thirty (30) days of
the date of this Order.
 A Stern claim is "a
claim the bankruptcy court is statutorily but not
constitutionally authorized to decide and for which it has
not received the parties' consent to proceed."
In re Renewable Energy Dev. Corp., 792 F.3d 1274,
1282 (10th Cir. 2015) (Gorsuch, J.).
Plaintiff argues that it was denied
standing until the Trustee was fully discharged based on
several of Judge Kenney's orders, but Judge Kenney's
interpretation of his own orders are entitled to deference.
Warnick v. Arrowsmith, 2017 WL 2999025, at *3 (E.D.
Va. July 14, 2017) ("If a bankruptcy court's order
contains 'any ambiguity or obscurity." a bankruptcy
court's interpretation of its own order, including an
opinion accompanying the order, receives 'substantial
deference."' (citing In re Tomlin, 105 F.3d
933, 940-41 (4th Cir. 1997), for holding that "[t]he
bankruptcy court was in the best position to interpret its
 The Court further agrees with Judge
Kenney that, having found the Complaint should be dismissed
under the Barton doctrine and as time barred, the
Court need not reach the other arguments raised by ...