In Pro Per
Suing Bankruptcy Trustees

In recent years, the most common story submission WJFA receives is from people victimized by the bankruptcy trustees, who are supposed to administer cases for people and or businesses.

But many victims report that the bankruptcy trustee is a vampire prolonging their cases, as much as a decade, charging the person or business money until there is nothing left of the assets.

Creditors rarely receive anything. The only winners are the bankruptcy trustee and or their lawyer. Many victims want to know if they can sue a bankruptcy trustee for fraud. Below are recommendations from other victims. See disclaimer below.

Lawsuit Against Bankruptcy Trustees

Strategy

From: Kevin H-----
Date: Fri Feb 6, 2004 5:20 pm
Re: Suing a Bankruptcy Trustee

1. Sue them jointly and severally in their official and individual capacity.

Well, as I understood it, there would be the possible defendants of private corporations/parties, perhaps some government or quasi government officials (trustees/guardians/conservators).

Joint and several liability means that they are all liable for the whole debt. If you get all the money from just one then it is his problem to get a contribution from the rest. Several means that even if the main perpetrator manages to slip away, you can still get the accomplices.

2. If in federal court, then see the procedural issues in the McNamara case and go to the section on the RICO case.

When reading the McNamara case, look closely at the issues regarding the Federal Rules of Civil Procedure 12 B 6 motion to dismiss for failure to state a cause of action.

The fact is that when they file this motion, without an answer, by the time the motion is to be heard, they are in default and cannot be heard. The "12b6" is the "knee jerk" reaction for anyone who would claim any sort of immunity, or essentially demur (challenge the issues of law) to your complaint (although in Federal court demurs have been abolished).


3. The procedure is the same whether it is RICO, Title 42, or other Federal civil action.

In Federal court, the Federal Rules of Civil procedure (FRCP) govern the processing of the case if it is Civil. Bankruptcy and criminal use different rules (although there may be some overlap, or if those other procedures are silent on a topic, then the FRCP quite possibly could be consulted).

RICO = Racketeering (once legitimate enterprise, effecting interstate commerce, now infested with people committing felonies, having committed at least two such "predicate acts" within the last 10 years).

Title 42 - The 42 United States Code Section 1983 et seq... public welfare, violation of civil rights.

Hope this helps,
Kevin H-----

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From: Barbara W------
Date: July 15, 2006
Re: Suing a Bankruptcy Trustee

I wish to add three things to research and be prepared for when suing bankruptcy trustees.

1. Obtain Leave of Court: Most courts have case law that before a trustee can be sued, the party must have leave of the bankruptcy court. There are cases involving parties filing suit in state courts and ending up sanctioned because they failed to obtain leave of the bankruptcy court.

2. The Bivens Doctrine: This doctrine is based on judges asserting that trustees are appointed by the court. That is not true of chapter 7 and chapter 13 bankruptcy cases. Under the Under the United States Trustee Program, bankruptcy trustees are appointed to a panel and assigned to cases on a rotating basis. There is material available about the history of the U.S. Trustee Program, which was designed to eliminate judges from administrative functions, one of which is the appointment of trustees.

3. Quasi-judicial Immunity: Trustees use the orders of bankruptcy courts to give them color and claim of official right in their actions. A good argument against this defense is to use federal statute that sets forth that trustees are not required to have a license to practice law.

In other words, trustee's job description does not require that they are officers of the court. Additionally, they are paid on commission from assets in the case, which provides them with a personal interest in the outcome of said case.

In order to successfully sue a trustee, one must prove that the trustee went beyond his/her appointed duties. This would require using citations from the bankruptcy code to establish that the trustee went beyond the duties as set forth in the Code, although the Code is vague in many areas.

Barbara W------

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From: Ramkrishna T--------
Date: 7-15-06
Subject: Re: Suing a bankruptcy trustee

I think you should look at the Barton Doctrine, which requires court permission to sue the trustee outside the bankruptcy court. That does not mean that you need permission to sue the trustee in the Bankruptcy Court or the District Court, if you withdraw the reference.

I would suggest the following:

Prepare an adversary complaint (just like any other complain);

File a motion in the Bankruptcy Court and the District Court to withdraw the reference to that adversary complaint. Withdraw the reference means that you are asking the District Court to adjudicate what the Bankruptcy Court would ordinary adjudicate. You need reasons for that request. The bankruptcy proceeding is assumed to have started in the Bankruptcy Court because the District referenced it there. Withdrawal means you are asking the District Court to adjudicate itself. You can withdraw the entire bankruptcy proceeding or part of it, like a motion or an adversary complaint;

You ask for Jury Trial.. That is one ground for justifying withdrawal because the Bankruptcy Court in most circuits cannot hold a jury trial; and

You may have subject matter that may be outside the Bankruptcy Court's jurisdiction, which also justifies withdrawal.

If you do all this, I think that you can get around taking any separate permission to sue the trustee. If you ask for withdrawal of the entire bankruptcy proceeding, you most certainly should be able to sue the trustee. Worst case, if withdrawal is denied, you sue in the Bankruptcy Court and then appeal, if required.

The key is... do not wait to sue the trustee until after the bankruptcy is closed because you will have to reopen, etc...

Ram

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From: Barbara W------
Date: March 5, 2007
Re: Suing a Bankruptcy Trustee

While contemplating that RICO suit, research the Barton Doctrine. It's what federal judges have legislated from the bench, and important to study to see if there is a defense.

Additionally, as I understand RICO, the head of the organization has to be sued rather than the parties working under the color of that organization. This would effectively mean naming the Director for the Executive Office for U.S. Trustees as defendant.

Search for a case decision using "Spirtos" and "RICO." I believe it is available on the internet. It was filed in the 9th Cir. Court and was dismissed. The court sanctioned the plaintiffs on the basis that it violated the Barton Doctrine, thereby rendering their lawsuit as frivolous.

Barb

WJFA nor anyone representing it interprets law or provides legal advice. All information on these pages were provided by victims of fraud denied justice and this section is only meant as an insight for other victims having to undo a crime in civil court.