American Bankruptcy Institute
44 IV. Proposed Recommendations: Commencing the Case
The Barton doctrine is addressed, in part, by section 959(a) of title 28 of the U.S. Code, which provides that “[t]rustees, receivers or managers of any property, including debtors in possession, may be sued, without leave of the court appointing them, with respect to any of their acts or transactions in carrying on business connected with such property.”169 Courts have interpreted section 959(a) as an implicit limitation of the Barton doctrine and have acknowledged that litigation not covered by section 959(a) requires leave of court.170 A litigant is thus required to seek leave of the court with respect to litigation against a chapter 11 trustee or other officer appointed by the court in connection with the liquidation or administration of a debtor’s estate, except as provided in section 959(a). Moreover, some courts have extended the Barton doctrine to counsel for the trustee appointed by the court to the extent that such counsel was acting at the direction of the trustee for purposes of liquidating or administering the debtor’s estate.171
Estate Fiduciaries: Recommendations and Findings
The Commissioners discussed the value of extending limited immunity to the chapter 11 trustee and similar fiduciaries for actions taken by them in their fiduciary capacity. In this context, the Commission reviewed the parameters of the Barton doctrine and its underlying policy justifications.
The Commission agreed that the Barton doctrine should be codified to clarify its scope and application to any trustee, estate neutral, and statutory committee and its members appointed in the chapter 11 case. The Commissioners found value in the following justification for such extension of the Barton doctrine:
Just like an equity receiver, a trustee in bankruptcy is working in effect for the court that appointed or approved him, administering property that has come under the court’s control by virtue of the Bankruptcy Code. If he is burdened with having to defend against suits by litigants disappointed by his actions on the court’s behalf, his
work for the court will be impeded.172
The Commissioners believed that this clarification would (i) allow any trustee, estate neutral, and statutory committee and its members to perform their fiduciary duties with confidence and focus,173 and (ii) eliminate unnecessary litigation concerning the application of the Barton doctrine and whether the court in which a litigant files the action has subject matter jurisdiction over the dispute.174 For similar reasons, the Commission voted to extend the Barton doctrine to any professionals retained by any trustee, estate neutral, or statutory committee or its members to the extent that the litigation involves the professionals’ representation of such party in a fiduciary capacity.
The Commissioners recognized that this recommended principle could also apply to cases filed under other chapters of the Bankruptcy Code. Although the Commission did not study bankruptcy
169 28 U.S.C. § 959(a). 170 See, e.g., In re VistaCare Grp., LLC, 678 F.3d 218, 224–25 (3d Cir. 2012). 171 McDaniel v. Blust, 668 F.3d 153 (4th Cir. 2012). 172 In re Linton, 136 F.3d 544, 545 (7th Cir. 1998). 173 Id. (explaining the importance of the Barton doctrine because without it, “[t]he threat of [the bankruptcy trustee] being distracted or intimidated is then very great”). “This concern is most acute when suit is brought against the trustee while the bankruptcy
proceeding is still going on.” Id.
174 Courts generally hold that if the Barton doctrine applies and the litigant does not obtain leave of the bankruptcy court, other courts do not have subject matter jurisdiction over the matter. See, e.g., In re Crown Vantage, Inc., 421 F.3d 963, 971 (9th Cir. 2005).