CERx Pharmacy Partners, LP v. RPD Holdings, LLC (In re Provider Meds, LP)

514 B.R. 473
CourtUnited States Bankruptcy Court, N.D. Texas
DecidedAugust 7, 2014
DocketBankruptcy No. 13-30678-bjh-7; Adversary No. 14-03031-bjh
StatusPublished
Cited by3 cases

This text of 514 B.R. 473 (CERx Pharmacy Partners, LP v. RPD Holdings, LLC (In re Provider Meds, LP)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CERx Pharmacy Partners, LP v. RPD Holdings, LLC (In re Provider Meds, LP), 514 B.R. 473 (Tex. 2014).

Opinion

MEMORANDUM OPINION AND ORDER

BARBARA J. HOUSER, Bankruptcy Judge.

This adversary proceeding arises from the on-going disputes between CERx Pharmacy Partners, LP (“CERx”) and RPD Holdings, LLC (“RPD”), among others. For the sake of brevity, the Court will not discuss the facts underlying this specific adversary proceeding (as they are not important to this decision), and will instead focus on the procedural posture of the adversary proceeding.

On March 17, 2014, CERx; Diane G. Reed, as Chapter 7 Trustee for Provider Meds, LP; John Dee Spicer, as Chapter 7 Trustee for OnSiteRx, Inc.; and Jeffrey H. Mims, as Chapter 7 Trustee for ProvideRx of Waco, LLC (collectively, the “Plaintiffs,” and, with James Cunningham, Chapter 7 Trustee for ProvideRx of San Antonio, LLC the “Trustees”) filed a complaint [Dkt. No. 1] against RPD; Alta Source, Inc. f/k/a Alta Air, Inc. and Tri Star Petro, Inc.; Laurie Gillum; and Randolph Gillum (collectively, the “Defendants”). The Trustees filed Plaintiffs’ First Amended Complaint [Dkt. No. 23] (the “First Amended Complaint”) on May 5, 2014, which RPD then moved to dismiss. Motion of RPD Holdings, LLC to Dismiss [Dkt. No. 31]. The Court granted RPD’s motion to dismiss in part and denied it in part; ordering that CERx be dismissed as a party plaintiff on certain claims without [475]*475prejudice. Order on Motion of RPD Holdings, LLC to Dismiss [Dkt. No. 32], On July 14, 2014, the Trustees filed Plaintiffs’ Third Amended Complaint [Dkt. No. 75], which is the live complaint as to the Trustees. On August 4, 2014, CERx filed CERx Pharmacy Partners LP’s Third Amended Complaint [Dkt. No. 119], which is the live complaint as to CERx.

On June 3, 2014, RPD filed its original answer and counterclaim, asserting various claims against the Trustees [Dkt. No. 41]. On July 28, 2014, RPD filed its Original Answer of RPD Holdings, LLC to Trustees’ Third Amended Complaint and Amended Counterclaims [Dkt. No. 105] (the “Answer and Counterclaims”). As relevant here, in its Answer and Counterclaims, RPD asserts a cause of action for breach of duty and willful misconduct against Trustees Cunningham, Mims, and Reed (the “Counterclaim”). On July 9, 2014, Trustees Cunningham, Mims, and Reed filed an expedited motion to dismiss the Counterclaim [Dkt. No. 62] (the “Motion to Dismiss”). Trustees Cunningham, Mims, and Reed state in the Motion to Dismiss that the Counterclaim should be dismissed under Bankruptcy Rule 7012(b)(1) for lack of subject matter jurisdiction because RPD lacks standing under the Barton doctrine to assert it. For the reasons stated on the record at the hearing on the Motion to Dismiss, as supplemented by this Memorandum Opinion and Order, the Motion to Dismiss will be denied.

This Court begins its analysis with the Barton doctrine. The Barton doctrine requires a party to obtain leave from the appointing court before bringing suit against a court-appointed receiver. In re VistaCare Group, LLC, 678 F.3d 218, 224 (3d Cir.2012). It is a jurisdictional rule. Satterfield v. Malloy, 700 F.3d 1231, 1234 (10th Cir.2012). The doctrine originated in Barton v. Barbour, 104 U.S. 126, 26 L.Ed. 672 (1881). In that case, the plaintiff sought personal injury damages against the receiver of a railroad, but she did not seek leave of the court that appointed the receiver to bring her suit. Id. at 127. The Supreme Court stated that “[i]t is a general rule that before suit is brought against a receiver leave of the court by which he was appointed must be obtained.” Id. Accordingly, the Supreme Court held that “a court of another State has not jurisdiction, without leave of the court by which the receiver was appointed, to entertain a suit against [the receiver].” Id. at 137.

Modern courts have extended the Barton doctrine to bankruptcy trustees. See, e.g., Satterfield, 700 F.3d at 1234-35 (“We now hold that Barton precludes suit against a bankruptcy trustee for claims based on alleged misconduct in the discharge of a trustee’s official duties absent approval from the appointing bankruptcy court.”); VistaCare, 678 F.3d at 232 (“[W]e hold that the Barton doctrine remains valid, and therefore ... a party must first obtain leave of the bankruptcy court before it brings an action in another forum against a bankruptcy trustee for acts done in the trustee’s official capacity.”); McDaniel v. Blust, 668 F.3d 153, 157 (4th Cir.2012) (“This principal has been extended to suits against bankruptcy trus-tees_”); Indus. Clearinghouse, Inc. v. Mims (In re Coastal Plains, Inc.), 326 B.R. 102, 111 (Bankr.N.D.Tex.2005) (“The Barton Doctrine ... was expanded to include claims against bankruptcy trustees.”).

At first blush, then, it appears that this Court would not have jurisdiction to hear the Counterclaim because it is against Trustees Cunningham, Mims, and Reed, and RPD has not sought leave to bring the Counterclaim. However, RPD argues that [476]*476because the Counterclaim was asserted in the court that appointed Trustees Cunningham, Mims, and Reed, “it would be absurd to conclude that this Court lacks jurisdiction over those claims-” Objection of RPD Holdings, LLC to Trustee’s Motion to Dismiss [Dkt. No. 64] at 2. Thus, the issue before this Court is whether the Barton doctrine applies to suits brought against a trustee in the appointing court.

This Court agrees with those courts that have concluded that a party-does not need leave to sue a trustee in the appointing court. For example, in Gollday v. Brady (In re Coburn), No. 00-40496, 2006 WL 2010852, at *2 (Bankr. N.D.Cal. July 6, 2006), the court stated that the Barton doctrine only applies to situations where a party seeks to sue a trustee in the non-appointing court. Similarly, the bankruptcy appellate panel in Kashani v. Fulton (In re Kashani), 190 B.R. 875, 888 (9th Cir. BAP 1995) stated that “the nonappointing court may not entertain suits against the trustee ... without leave from the appointing court.” However, the Kashani court further stated that leave is not required for a party to bring suit against the trustee in the bankruptcy court. Id.

These decisions are consistent with the Supreme Court’s opinion in Barton. There, the Supreme Court specifically stated that its opinion applied to situations where one court has appointed a receiver and suit is brought against that receiver in another court. Barton, 104 U.S. at 136 (“We therefore declare it as our opinion that when the court of one State has ... property in its possession for administration as trust assets, and has appointed a receiver ..., a court of another State has not jurisdiction, without leave of the court by which the receiver was appointed.”). So, from this Court’s perspective, when suit is brought in the appointing court, as here, the Barton doctrine is not implicated.

Moreover, this Court is persuaded by the policy argument advanced in CIT Communications Finance Corps. v. Maxwell (In re marchFIRST, Inc.), No. 08-CV-121, 2008 WL 4287634 (N.D.Ill. Sept. 12, 2008). In marchFIRST, CIT leased phone equipment to the debtor. Id.

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Cite This Page — Counsel Stack

Bluebook (online)
514 B.R. 473, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cerx-pharmacy-partners-lp-v-rpd-holdings-llc-in-re-provider-meds-lp-txnb-2014.